Buyer Beware: Manufacturer Viability Issues Can Cost You

Due diligence can ensure you don't buy a system made by a company that won't be around long enough to provide bug fixes and tech support.
Published: July 18, 2010

Choosing a security product or manufacturer used to be a lot easier. While it was full of complexities, the focus was traditionally on the product and its merits. You made a list of what your objectives were, compared features and functionality, and occasionally did a shootout. Sometimes you used an expert to help, but the product or the system was the main focus.

Selecting an integrator was simpler as well. You checked references, called around, and looked at prices and past performance. Maybe word-of-mouth played a bigger part or made you predisposed to liking someone, but rarely did you venture into the financial aspects of the selection process.

As a result of current economic conditions, most campuses find they no longer have the luxury of just looking at part of the picture. The financial story behind a manufacturer, vendor or integrator is now a major part of the consideration process. In fact, it’s the first point of review on most projects. Considering that the financial longevity of a supplier will impact so many aspects of your project, it’s foolhardy not to give due diligence its due.

Manufacturers Must Be Stable

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Financial stability is arguably more important in a manufacturer than an integrator. If an integrator goes under, another integrator can usually be found to complete the project and support the system. In fact, if you’ve structured the payment terms and project supervision properly, replacing an integrator is usually nothing more than an inconvenience. Not so with a manufacturer.

Look for firms that are profitable and have the resources to withstand an extended downturn. Many start-ups or companies that are expanding rapidly are heavily reliant on venture capital. While this funding was readily available several years ago and is starting to materialize again, not all of the business plans that qualified for vast quantities of money will receive such support today. Most campuses are extremely risk averse in this area; there are just too many good companies to choose from to take chances that a key partner will disappear.

A company being acquired by another company is not usually a good sign either. While this is harder to predict, a knowledgeable industry expert can usually gauge the likelihood of this happening and steer you clear of companies on the edge. Even a merger of two strong companies usually has casualties as duplicate product lines are eliminated. Development can change focus, and upgrades that have been promised may never materialize. With smaller companies, the issue is even more pronounced.

Financial difficulties often lead to staff reductions that can impact campuses even after the system is installed. In an increasingly software focused world, lacking staff to perform comprehensive bug fixes and upgrades often forces a system user to either perform costly system upgrades long before they are planned or put up with deficiencies that can compromise the safety and security of a facility.

In difficult times, the natural selection process doesn’t work as well either. Manufacturers are less likely to walk away from a job, even if they know their products aren’t a perfect fit. We’ve seen many projects where the manufacturer simply misrepresented its products to get the job, or promised an upgrade that never materialized. While this is sometimes the nature of the competitive sales process – promise anything to get the job – it is particularly evident during lean times. Sometimes it takes some skill to determine what’s real and what is an empty promise.

Strategy & Planning Series
Strategy & Planning Series
Strategy & Planning Series
Strategy & Planning Series
Strategy & Planning Series