August 2012
By Bill Lydon, Editor
Greg Bodenhamer, Vice President of Industry End User Marketing, Solutions & Services, and I discussed Schneider Electric’s system integrator initiative. Bodenhamer is responsible for Schneider Electric’s internal integration and services group and has been building a program to cooperatively work with independent system integrators. He stressed that their goal with the system integration program is collaboration and cooperation. He believes the U.S.
Automation Services market annually is $12.4 billion with a 7.6% average growth rate - about 2/3 delivered by independent system integrators.
Bodenhamer emphasized the overall goal is to put the customer first and provide the most effective and efficient solution when making decisions on the best integration organization for projects. He defined the elements of the program around three factors, offers, logistics & support, and integration.
Bodenhamer believes that Schneider Electric has developed a unique program to work with independent systems integrators to satisfy customer requirements. He emphasized that there are various criteria from customers when selecting a system integrator including size, financial viability, and sometimes geographic reach for projects. He noted Schneider Electric’s own integration group is a good fit for worldwide projects. He cited an example of integrating a solution for General Motors in Detroit that needs to be exactly replicated in Beijing. “There is an example of a requirement from an offer standpoint, from the end customer that maybe I as a manufacturer can fulfill better than some of the integrators,” said Bodenhamer.
The elements of logistics and support that Bodenhamer discussed were material availability, support, knowledge about the client needs, and financial buffering. Financial buffering relates to things such as payment terms. He cited an example where a client due to financial situations may want to split project payments over two fiscal years or they require other unique terms and conditions that are unacceptable to a manufacturer but could be perfectly acceptable to a distributor partner or an integration partner.
Bodenhamer noted that Schneider Electric expects systems integrators to deliver good quality solutions with measurable benefits. “Not all integrators think that way,” said Bodenhamer. “There are a lot of integrators in the market that are technologically positioned. There are a few out there still that are pushing technology for technology sake.” His term for this is “technical bigotry” where an integrator wants to be the thought leader technologically for a customer.
“Those business models tend to create almost an unhealthy dependency on the integrator,” said Bodenhamer. He emphasized that Schneider Electric’s focus is on true value for the customer.
Bodenhamer pointed out that with $63 billion of installed automation equipment in the U.S. and more than 80% of it is 20 years or older, there is a large opportunity for system integrators to have an ongoing service contract and upgrade relationship with customer that is not project driven. Regarding the opportunity for both independent system integrators and Schneider Electric, he noted that the size of the opportunity will dictate who is best suited for the project. “There is a large area for all of us to play well together based on competency and collaboration,” said Bodenhamer.
Bodenhamer stressed that he must bring leads to independent system integrators since they have expensive variable cost resources that they need to keep busy. Schneider Electric has localized their approach to system integrator partnerships. This can be based on geography or application expertise. For example, in 17 geographic locations Schneider Electric distributors have been assigned named accounts that they are responsible to service. When the customer has projects that require a system integrator, the distributor will select a Schneider Electric authorized system integrator to become the distributor’s execution arm.
He also described an example project where Schneider Electric partnered with system integrators that had specific applications expertise. In all cases, the Schneider Electric local management will oversee this process with regular opportunity reviews at least monthly and quarterly territory business plan reviews.
In the U.S. Schneider Electric is targeting automotive, food & beverage, water/waste water, mining/metal/minerals, retail logistics (examples: UPS, FedEx, DHL, distribution centers for big box retailers), and federal government port/boarder security.
There is a large and growing opportunity for systems integrators to help industrial companies implement energy conservation within their facilities. Schneider Electric has a compliment of products to achieve this.
System integrators are being pursued by many automation vendors as a way to satisfy customer needs and increase their business. The devil is in the details. There needs to be enough value for customers to make these relationships work.