In the fast-paced world of business, measurement is everything. “We are all measured as a business,” says Shaun Castillo, President of Preferred Technologies (Pref-Tech). “Banks measure us. Investors measure us. Insurance companies measure us. Some customers even measure us.”
It is impossible to quantify success and identify areas for improvement within a business without measurement. For Castillo, along with the other members of the Security Business expert integrator panel, key performance indicators (KPIs) are more than just numbers on a spreadsheet – they are the foundation for their companies’ strategy, culture, and ultimate success.
While a management team’s preferred KPIs to track may differ based on the type of security integration business it is – such as monitoring a company’s financial health, employee performance, or customer satisfaction – KPIs shape the way a security business operates every year, every quarter, and even every day.
Let's take a deeper dive into the KPIs that matter to various security integration businesses with Castillo, John Nemerofsky, COO of SAGE Integration, and Christine Lanning, President of Integrated Security Technologies (IST).
The Value of Measurement
For Lanning, KPIs aren’t just business metrics – they are the scoreboard that defines success. “It’s our only scoreboard,” Lanning explains. “I can tell someone that we are a great company and we are doing amazing things, but that’s very subjective.”
Lanning understands that KPIs aren’t one-size-fits-all. Companies in different sectors serving diverse customers must tailor their measurements accordingly. “My KPIs may not make sense to someone like John Nemerofsky or Shaun Castillo,” she explains. “Every company has their own KPIs that make sense to them.”
For Castillo, KPIs transform from numbers and graphs into a way to drive desired employee behaviors and ensure business success. “We really try to boil it down only to measure something if you want to drive behavior,” he says. “If the KPI isn’t directly correlated with a core behavior that we want to see, then we don’t measure it.”
KPIs at SAGE Integration serve a dual purpose for Nemerofsky: to keep operations running smoothly in the short term and to track progress toward strategic goals. “I look at our KPIs to measure day-to-day metrics such as return trips on service calls, efficiency, and utilization,” he says. “Our long-term metrics show how we have improved or how our business changes over time.”
Crafting Day-to-Day and Long-Term KPI Strategies
Different roles within Castillo’s company have different KPI focuses. “My KPIs as the business owner are a little further out,” he explains. “I look at the forecast and its accuracy. For a technician working in the field, their KPI could be the number of cameras they installed today. We all have KPIs, but they are geared and shaped towards a role in the company.”
For Castillo, long-term KPIs revolve around financial forecasting and strategic planning. “We look at our forecasted backlog by volume and by expected margin,” he says. “Forecasting financially allows us to know how quickly we can make new investments.”
His team also tracks seasonal metrics, adapting their approach based on shifting business needs. “One KPI we instituted last year focused on under-billing – meaning we weren’t billing our customers fast enough, which leads to cash problems in the future. Once we started measuring that, it completely changed (for the better).”
When it comes to selecting which KPIs to measure, Nemerofsky says he and his team choose the most impactful and measurable KPIs in each business segment, including Human Resources, finance, operations, sales, warehouse management, and purchasing. These carefully chosen metrics enable the company to maintain performance standards across all departments.
Beyond day-to-day operations, KPIs help IST plan for long-term growth. “Some of our government contracts last up to five years, so we plan our workload accordingly,” Lanning says. “That helps us determine when we need to hire more technicians or project managers.”
KPIs are not just imposed from the top down. Castillo emphasizes collaboration in developing key metrics at every level of the organization. “If I’m a technician, for example, I craft my KPIs with my supervisor, with my first-line leader,” he explains. “There are some blanket ones – like safety – but individual KPIs are shaped based on where someone needs to improve. Their leader should know them best, and if all employees help craft their KPIs and have a vote, then they have ownership in them.”
Castillo is also quick to note that KPIs must remain practical and measurable. “If it’s tough to measure, it doesn’t get measured,” Castillo insists. “We don’t want people spending hours a week trying to get data – if it can’t be measured easily, then we find some other measurement.”
Financial KPIs: The Foundation of Business Success
Nemerofsky closely monitors 10 key financial KPIs: gross profit margin, operating profit margin (EBIT or EBITDA), operating expense ratio, net profit margin, working capital, current ratio, liquidity, the Berry ratio, cash conversion cycle, and AR-AP ratio. These metrics provide a snapshot of the company’s financial health, guiding critical decisions about cash flow and investments.
“1A and 1B are the top line and gross profit margin on my P&L,” Nemerofsky says. “Next are AR and AP on my balance sheet. Utilization, field efficiency, and gross profit margin are critical in any business of any size, and we align that with the financial management of cash flow and AP and AR inventory management.”
When financial performance falls short, the key is identifying the root cause, Nemerofsky adds. “If return trips on service calls increase, is it because our technicians need training on a specific technology? Is it because I have not stocked the right product on my technicians’ trucks; or, is it a problem our technology partners are experiencing?”
Such financial KPIs are also crucial for maintaining records in ongoing business valuation; in fact, these are the first metrics requested by business brokers, private equity firms, and other entities active in the mergers and acquisitions space in this industry.
“Even though we are not planning to sell, we want to be a company that’s always ready,” Lanning says. “If someone were evaluating us, they would want to see our financial performance, job costing, and overall efficiency. If you don’t track that, you’re not ready.”
Adds Castillo, who also noted they are not actively looking to sell: “We want to have a valuable business, and you determine value by how much someone would pay. We certainly conduct valuations and examine the same factors that a private equity firm would analyze. We want to be healthy in those ways.”
KPIs in Government Contracting: The CPARS Advantage
Unlike companies focused on enterprise commercial work, IST’s top projects tend to come from government customers, and those come with built-in performance assessments.
“In the government space, for contracts over a certain dollar threshold, you get rated by the contracting officer,” Lanning explains. “They call it CPARS, the Contractor Performance Assessment Reporting System.”
CPARS evaluations assess contractors based on criteria such as schedule performance, timeliness, and budget adherence. “Once the CPARS are submitted for that contract, they’re viewed by every contracting officer in the U.S.,” she explains. “They can look up our past performance and see how we’ve been rated. For any government contractor, it is all about that past performance.”
To ensure excellence, IST ties technician incentives to CPARS ratings. “When we have contracts with embedded personnel, such as techs doing maintenance work, they get a bonus based on the CPARS rating,” Lanning says. “If they get a good rating, they get a bump. If they receive an excellent rating, they receive double that amount. It gives them an incentive to do a really good job.”
The stakes are high, as poor CPARS ratings can follow a company for years. “Even a ‘satisfactory’ rating – a 3 out of 5 – is considered ‘just OK,’” Lanning says. “That’s not what we want. We aim higher.”
As for its enterprise commercial clients, while IST has not adapted its CPARS-based KPIs to them, Lanning indicated that it wasn’t such a bad idea. In the meantime, to gather deeper insights into its enterprise commercial customers, IST holds regular meetings with them. “Depending on the client, it could be monthly or quarterly,” she says. “We ask open-ended questions, like ‘Would you refer us? How are we doing? Is there anything we could do better?’”
Whether government or enterprise clients, customer satisfaction ranks among Castillo’s highest-valued KPIs. Pref-Tech conducts quarterly Net Promoter Score (NPS) surveys and closely monitors customer retention. “We use NPS because if my customers aren’t happy, nothing else matters,” Castillo says. “Great customer satisfaction in a profitable manner – we have to do both.”
Operational and Other Business KPIs
In addition to financial metrics, key operational KPIs ensure efficiency among technicians and project managers. “We focus on utilization percentage, efficiency, project closeout percentage, revenue forecast accuracy, return trips on service calls, and client satisfaction,” Nemerofsky says.
With decades of experience, Lanning says she and her team have a firm grasp on financial metrics and expectations. What gets her more excited are operational metrics – particularly efficiency. “Technician utilization is huge,” she says. “A few years ago, Chuck Wilson from NSCA (the National Systems Contractors Association) showed me a great calculator that displayed how much money you lose for every 15 minutes a technician isn’t working in the field.”
Sales KPIs are also important. “We track gross profit margin because it reflects the health of our business,” Nemerofsky says. “Days from quote to close help us maintain a backlog, while average quotes per month and average quote size help sustain our long-term pipeline. We also monitor average RMR sales to increase overall business RMR.”
KPIs can be vast and extend beyond operations and finance into areas such as inventory and purchasing, HR, marketing, and fleet management.
“We track margin increase on project closeout, inventory turn, min-max percentage, and technology partner rebates,” Nemerofsky says. “For HR, we track time to hire, cost to fill a role, offer acceptance rate, and employee satisfaction percentage.”
SAGE’s marketing-based KPIs focus on client acquisition and conversion to gauge the effectiveness of marketing campaigns and customer retention strategies. The company’s fleet management KPIs ensure logistical efficiency. “We track utilization rate, vehicle downtime, and average service time per stop.”
Castillo and Nemerofsky both prioritize employee safety KPIs, tracking training, total recordable incidents, and lost time per injury – to name a few.
Tracking and Management: AI Meets KPI
To streamline KPI tracking, Pref-Tech recently hired a financial planning and analysis specialist. “That person helps us build Power BI reports so that we can give the scorecard – the KPIs – to folks in as real-time as possible,” Castillo says.
Put simply, technology plays a crucial role in KPI tracking. IST relies heavily on software to track and display KPIs. “First and foremost, KPIs come from data, so it is important to have a good system to collect it,” Lanning explains. “Then the second piece is how you display that data.”
While digital dashboards make KPI tracking easier, they can also create information overload. “At one point, our system was tracking 50 different service ticket metrics. That’s just insane,” Lanning admits. “You have to figure out what’s actually important.”
This is where AI could make a significant impact on KPI management. That said, it is still in its infancy. “I really want AI to work for this, but I think it’s going to struggle unless it truly understands how a particular business functions,” Lanning says. “Otherwise, it could just create too much data without enough actionable insights.”
“A key innovation that would enhance KPI measurement and tracking is a more advanced AI-driven decision-support system that tracks KPIs and provides actionable recommendations,” agrees Nemerofsky. “Instead of just identifying issues, it could suggest corrective actions in real-time.”
AI’s ability to analyze vast amounts of data could also reveal trends and inefficiencies that might otherwise go unnoticed. “It might reveal some deficiencies or other things to measure, perhaps,” Castillo speculates. “That’s what AI does really well – analyzing a bunch of data and allowing us to see things we can’t see.”
Additionally, “leveraging AI-powered voice or chatbot interfaces for real-time KPI queries and insights could make data more accessible for security professionals on the go,” Nemerofsky adds.
KPIs and Company Culture
For all three business executives, KPIs are deeply intertwined with company culture.
One key tool for Lanning is the “5-5-5 Meeting” – a common business strategy that involves quarterly check-ins between employees and their managers. “It’s called a 5-5-5 because you go over five job expectations, five core values, and five key metrics,” Lanning explains. “For each one, we rate employees with a plus (excelling), a plus-minus (inconsistent), or a minus (underperforming).”
This simple system helps IST reinforce its company culture. “For example, accountability is a core value,” Lanning says. “If you’re a plus-minus on accountability, that’s a conversation that needs to happen.”
Lanning’s approach to KPIs is also rooted in a commitment to transparency and continuous improvement. “We have screens all over the office displaying KPIs for sales, ops, and service,” she says. “Every Monday, we have an all-hands meeting to review our numbers.”
Nemerofsky’s concept at SAGE is similar, citing five guiding values that ensure each KPI aligns with the company’s overarching mission: “Our KPIs start with leadership and are based on five core principles: client obsession, employee engagement, social responsibility, innovation, and financial growth,” he says.
SAGE furthers this with an incentive-based approach that not only keeps employees engaged but also aligns their performance with company goals and culture. “We communicate KPI expectations and results monthly and reward employees with a quarterly bonus of 10-20% of their base pay,” Nemerofsky says.
Ultimately, Castillo sees KPIs as a tool for continuous improvement. “If the KPIs are comfortable and easy to achieve, they are not hard enough,” he says, adding that if someone doesn’t hit their KPIs for a period, they set out to understand why. “Then, we put some things in place to change behaviors, and that leads to achieving the KPIs.”
Ultimately, KPIs are more than just numbers – they serve as a tool for advancing, promoting, and rewarding a company's culture. Lanning sums it up with a familiar axiom for business leaders: “If you want to be a good company, you take care of your customers; if you want to be a great company, take care of your employees. That’s what drives long-term success.”
