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February 2018 www.SecurityInfoWatch.com / Security Dealer & Integrator 43 I f you are not providing man- aged services in the cloud, you are missing out on an opportu- nity. at said, it is oen diffi- cult to navigate in new waters using dated charts. e cloud is scalable, efficient and effective, and offers security providers numerous opportunities for recurring revenue, including managed services such as access control, home automa- tion, video storage and retrieval, and others. Give them what they need, not what you have to sell – that means focusing on solutions, not products. ink outside the box – it is no longer just security or fire protection. Subscribers want solutions, and if you can't step up, someone else will. ese three recommendations exploit the extraordinary importance of RMR and make sure you protect your company as you navigate through the waters of managed services. 1 Approach security as a solutions provider. Approaching security as a solu- tions provider may be the single most important immediate strategy you can take in running your business. Many providers focus on – the "bid and chase" approach – which has a limited future, because getting new clients is essentially premised on price and the belief that all security integra- tors are created equal. Instead, focus on service and expertise, not price to get more (and better) clients. I would much rather provide val- ue-added services to a client who wants responsive, quality service – not someone who has sticker shock with my hourly rate. It is a tough lesson to learn for any service provider, but if you want to succeed today, you must make the transition from being just one more security contractor to a first- class solutions provider. 2 The magic of RMR. Plenty of security contractors do not understand the impor- tance of RMR until they go through the process of trying to sell their busi- ness. By then it is too late. It is terrible to watch an owner who has worked a lifetime to build an elec- tronic security business, only to realize the business has very little value to an acquirer, simply because the compa- ny's most precious business assets – its accounts – are tied up in relationships and not reduced to predictable, assign- able and enforceable service contracts. A security provider who wants to sell the business (and not have to stick around working as someone else's employee), should worship at the altar of RMR. While acquirers want to buy (and finance) good recurring revenue service and monitoring contracts, they will not pay much for business rela- tionships where the company's owners are the so-called "special sauce." My advice to integrators is to move as much of the time-and-materials ser- vice work (for which acquirers won't pay much) to periodic recurring ser- vice work under RMR-based contracts. Priced right, they can produce profit and long-term value. I am also a big proponent of lease RMR, which can be attractive to end-users, since they can avoid significant capital investment. 3 Protect the company. An effective contract for man- aged services should limit your company's liability just like it would for intrusion or fire detection. Standard issue analog-era industry contracts won't protect you for cloud- based services. Your managed services contract should include, among other things: an enforceable limitation of liability clause for cloud-related issues; provisions requiring the subscriber to indemnify your company in the event of a loss (even if your compa- ny's negligence caused the loss); and an effective waiver of the rights of the subscriber's insurer to recover losses (waiver of subrogation). Be sure to also have the right kinds of insurance, including coverage in the event of an internet-based loss. ■ » Eric Pritchard (epritchard@ kleinbard.com) is a Philadelphia lawyer who works to make the world safer for security and life safety providers. This column does not constitute legal advice; contact an attorney with questions. Navigating the Sea of Managed Services Three ways to exploit RMR opportunities while protecting your company Legal Watch BY ERIC PRITCHARD It is a tough lesson to learn, but if you want to succeed today, you must make the transition from being just one more security contractor to a first-class solutions provider."