Appreciating automation: How one Toronto-area alarm company is using smarter systems
My experience is that most “pure” alarm companies (where the object of the business is primarily installing and monitoring alarm systems) do not make much money along the way — despite paying their owners’ below market salaries — even if they have more than 1,000 accounts.
This is an ongoing problem and pushes the owner into diversifying into other parts of the industry (e.g. cameras and access control). Some sell their accounts as a result. One big reason for this lack of profitability is the low selling price of the alarm systems being installed as compared to 25 years ago. As these low installation prices are not likely to change, companies have to look at other options to make money.
It is perhaps not a coincidence that one other characteristic that most alarm companies display today relative to other industries is the number of tasks that are still done manually. Think about how many manual tasks there are: setting up the account in the station and then the billing system separately, handling key-holder and station updates, the billing function or sending out insurance certificates. It takes manpower to do all these tasks.
In my travels I have found one alarm company that sees the automation of manual tasks as a key step towards being more efficient and eventually making more money. The company is A & J Security, owned and run by Andy Chow and located in Markham, Ont. Andy is a computer science graduate who has applied his knowledge of computers to the running of his alarm company. Specifically he has written a special software program to automate as much as possible. His reasoning is, if done properly, this software eliminates labour, ensures that tasks are actually done (and done more accurately) and at the same time keeps the customer informed of all changes to their account. The bonus is that this same software will make A & J much more valuable when it comes time to sell.
Let’s look at the highlights of this company so you can see what automation can do: 2,400 alarm accounts with cellular and interactive, 100 per cent on signed contracts, 100 per cent on PAP billing, 100 per cent on call forward lines, 100 per cent uploadable/downloadable, average monitoring rate of $30/account/month, all on the same brand of equipment, an annual attrition rate of less than four per cent, 20 new install per month. This is certainly a buyer’s dream but not totally unique.
But what is really noteworthy is the business is manned by one salesman, four technicians (one dedicated to service), one inside customer service person who helps with IT. Andy and his wife (part-time) look after all administrative and financial issues. When you are in the office you would not know they are managing 2,400 accounts. Very few service calls. No paper. Calm and order. Andy tells me once a quotation for a new system had been created, almost everything after that happens with a push of a button. Secondly he thinks his system could handle another 5,000 accounts without much more manpower.
All new business is input into the system starting with a quotation which is emailed to the client for approval along with the monitoring contract. When the quotation is approved, it is converted into a work order by pushing a button and given to the technician. After installation, the work order, adjusted on site if necessary, is converted to an invoice and the account is set up in both the station and the company’s software system automatically.
Insurance certificates are created automatically and emailed to the customer. All accounts have an email address. Monthly PAP billings have invoices that are emailed to customers. The system automatically catches expired credit cards and NSF billings and emails customers. Any changes to the monitored accounts for key-holder or zone changes are made in A & J’s software and automatically sent to the station.
There are checks and balances all the way through the system. No account gets installed without an approved quotation and signed monitoring contract. All changes to a customer accounts are emailed back to the customer. There are automatic price checks on all new installations and service calls — even on monitoring rates. Signals for testing the system are sent to A & J and from there to the station.
There is one good check that happens from the automation that I have not seen anywhere else. There is an automatic check between the number of accounts being billed and the actual accounts on the monthly monitoring station bill. This ensures that A & J’s accounts all get billed and that the station cancels accounts in a timely manner — two big problems today.
I could go on. Automation does other things for A & J. It ensures many of the important tasks do get done, it is super quick, it helps eliminate human mistakes, is very helpful if you want to get reports on the business and if used properly makes communication with the customer easy. Every change to a customer’s accounts is communicated by email to the customer.
I think automation is one very good way to produce a profitable and very saleable alarm company.
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