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Margin vs Value

by Brian Sims
Brian Sims BA (Hons) Hon FSyI: Editor of Risk UK

Brian Sims BA (Hons) Hon FSyI: Editor of Risk UK

This year’s Incentive FM Group Forum was convened to address the major issue of margin erosion in the UK’s contract security sector. Is this having a demonstrably detrimental effect on the safety of clients’ buildings and people (so too the ongoing viability of the security industry at large)?

Attendees at the gathering – which was held at Heron Tower in London’s Bishopsgate on Wednesday 18 February – also examined what might be done to address the commodity pricing approach and whether or not the industry is in fact selling itself some way short by broking labour rather than defeating risks.

Participants at the Forum were Jeremy Waud (Incentive FM Group), Craig Pickard (Incentive Lynx Security), Chris Wisely (Axis Security), Chris Kenneally (Cordant Services), Simon Chapman (Lodge Service), Paul Harvey (Emprise), Steve Hall (Ultimate Security) and Bobby Logue (Logue Corporate).

Chris Wisely, managing director at Axis Security, commented: “While it remains a clear challenge for businesses within the sector to generate margin improvement, we now feel that it’s acceptable to some of the more discerning customers to pay extra wherever a higher quality service can be evidenced.”

Echoing the views of many, Craig Pickard (managing director at Incentive Lynx Security) added: “Procurement processes focusing too heavily on price will often result in contracts that are underfunded and, ultimately, don’t achieve best value.”

What lies at the heart of the challenge ahead, then? Members of the discussion group suggested that, all-too-frequently, customers simply don’t understand what it is they’re purchasing.

Using this statement as a yardstick, the inference is that the industry must strive harder around educating its client base.

“The security industry is partly to blame for its own troubles,” urged Emprise’s Paul Harvey. “There’s no clear differentiation in the service and, in the absence of anything else, clients will buy on price. There’s too much of a victim culture. We need to step up to the mark and show where it is that we can add value.”

The assembled professionals were united in the belief that the security industry desperately needs to attract more good people or otherwise better train its existing personnel cohort, enabling them to help generate necessary change. A difficult task when set against falling margins, but the firm belief is that a determined and focused key account management approach would help in driving the aforementioned education process.

Attendees concluded the morning’s detailed discussions by brainstorming the idea of bringing together a number of security businesses and agreeing on a high standard of service offering – in other words a ‘Best of Breed’ solution – that can be tailored for end user clients. An admirable plan of action.

Pulling no punches, security industry strategist Bobby Logue opined: “The time is right to stop skirting around these issues and address them. We need to re-engineer the way that we sell security in order to deliver better value for the end customer.”

Chris Kenneally, CEO at Cordant Services, moved to reaffirm the core message. “The battle ahead is margin versus value. Many customers only understand cost. We need to change that situation.” Indeed we do.

Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK

March 2015

 

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