Unsustainable Pricing can lead to Reputational Damage to all Parties, warns BSIA’s Zeidler

Geoff Zeidler - BSIA Chairman
Geoff Zeidler - BSIA Chairman

In our Infologue.com 2012 end of year review, we highlighted the race to the bottom by some security businesses as a result of unsustainable pricing, writes Infologue.com publisher, Bobby Logue. The British Security Industry Association (BSIA) has a right to be concerned on behalf of its members, who are required to meet their association’s high quality standards. Whilst there is no “silver bullet” to be found to resolve this critical issue, Zeidler’s caution to both procurers and suppliers of security services is timely.

Bobby Logue
Infologue.com publisher, Bobby Logue

Last week at the (BSIA) annual lunch, the association’s Chairman Geoff Zeidler, spoke of his concerns for the Private Security Industry in an era of austerity, at the BSIA annual lunch last week;

“First, a couple of “austerity” situations to consider where the results are visible:

When tendering for 111 services the procurement process accepted a bid from NHS Direct at a price that proved undeliverable, and blamed the supplier for bidding too low.

When the food industry tried to drive prices too hard it ended up with horsemeat in value products.

These cases ended up damaging all parties without it being clear who was to blame.

“Last year’s SRI survey highlighted that the authority of customer’s security managers relative to procurement was declining. This year’s investigates the impact of “bundling” and implies that how Security is procured is very varied and unclear. This means we have a less knowledgeable customer; a more confused procurement picture; a market where success means “nothing happens”; and “austerity” which wants more for less. This is dangerous mixture.

“So what should we do when asked to deliver “more for less” – and the answer is not to blame Procurement who, although they push hard, need to know their suppliers are sustainably profitable.

“First if we are to preserve quality and reputation, the only safe way is to do things differently. I believe that as a regulated service where technology and people work together to manage risk – Security is a separate service that should be procured as such. “Different” then needs customers to design their budgets and procurement to allow supplier groups to provide all the tools to manage risk as the best route to reducing cost, rather than trying to commoditise the elements. Many members have been trying to convince the market of this for some time, and I hope the BSIA can promote case studies that ensure more customers listen.

“The second is if suppliers are in a commoditised tender. Here suppliers need to be clear about what represents sustainable profitability; the changes that they will have to make to deliver lower cost; what operational and reputational risks this may create and (as a BSIA member) ensure that they do not create a situation where they have to reduce quality of staff or management focus to the point they risk delivering “horsemeat” – or declare that the tender was unsustainable.

“In Private Security you only know the quality of service when it is tested; and failures hit reputation. In the face of “austerity” we are pressed to reduce cost without always detailing “how”. The legacy of these decisions may not come out tomorrow, but over the next three years; and if we, as BSIA members who are the benchmark for quality in the industry, do not resist competition based on reduction in quality of staff and management we will never build the reputation and trust that we need to grow our industry. We must be proud of what we do, and not undervalue it.

“From conversations with BSIA members across both systems and manpower sections it’s clear that we all need to improve our ability to express the true costs and value of good Security to Procurement, and make sure Procurement understand what sustainable profitability looks like. The BSIA will focus on the first of these – but individual members, talking to their customers, are the only people who can do the latter; and we must all be honest.

“In summary, I hope that by next year the Industry will be celebrating an environment where sustainable profitability is better understood; competition is more focused on innovation; and our long term reputation and trust has been preserved to allow growth through more partnership working with the police and other public service bodies in the future.” Concluded Zeidler.

BSIA Website