Recurring Revenue Models From ihiji and enerG Offer New Profit Streams

December 18, 2013

Homeowners use the portal and/or Android and iOS apps to adjust thermostats and view video, select and view multiple locations, and receive system notifications. The ihiji invision system remotely detects, diagnoses, and resolves issues with any connected devices on a network.
Some integrators report struggling to adapt a recurring revenue model to their businesses, yet new products designed for just this that are both consumer and dealer friendly have been popping up as the industry looks to new business models to adapt to the changing market.

The Client Care Plan issued by cloud-based system monitoring and service provider ihiji is one such product, as is the Home Awareness and Energy Management System from enerG.

The ihiji invision system remotely detects, diagnoses, and resolves issues with any connected devices on a network. The Client Care Plan offered with invision is an annual preventative maintenance service contract that include remote monitoring and management, as well as regular firmware upgrades, annual 25-point system inspections, and other ongoing maintenance. The inivision system was designed specifically for integrators to implement on projects of any size and scope; ihiji offers the IT Managed Services program for commercial projects.

“The Client Care Plan is the result of hundreds of conversations and hours spent with integrators around the world and is made up of over 85 pages of resources, providing everything an integrator needs to sell service contracts,” said Michael Maniscalco, ihiji co-founder and VP of technology.

The enerG Home Awareness and Energy Management System is based on Z-Wave technology to control, customize, and automate all connected devices in the home. Homeowners use the portal and/or Android and iOS apps to adjust thermostats and view video, select and view multiple locations, and receive system notifications.

Monitoring energy consumption per device– in both watts and dollars–is a major aspect of the enerG system. The homeowner can set energy goals and adjust their usage and habits to improve their energy footprints. A geo-fencing feature allows users to define rules or adjust settings when designated individuals leave or approach the home.

Integrators can choose from Z-Wave’s expansive network of components to build a system, including thermostats, smart energy meters, indoor and outdoor cameras, lighting control, and electronic door locks.

In addition to the hardware and installation costs that the integrator charges, clients pay a monthly service fee, available in two tiers, to enerG for access to the system. Dealers receive a commission check from enerG every month as a result, meaning they don’t even have to manage the subscription or billing. In addition, enerG plans to conduct marketing toward the homeowner to help drive additional sales and commission opportunities for dealers.

“We are trying to change the way integrators bring products to the end-user,” said Greg Brett, enerG president. “We found a way to bring to market a range of offerings that customers want and create an RMR stream for the integrator in doing so.”

For ihiji, an RMR is the right type of solution for the changing custom installation model. “Today’s control and entertainment systems are more affordable, and this opens the door to new customers who would have otherwise been priced out of what were historically more expensive solutions,” Maniscalco said. “While these systems are more affordable now than ever before, the associated technologies have become more complex and network-centric, requiring a new service model that more efficiently manages all of the devices and connected components.”

Dealers Weigh in on the RMR Debate

As evidence of the dealer interest in recurring monthly revenue, all three classes ihiji instructed this year at CEDIA were sold out.

Steve Presti of Easy Access Distribution, a New England enerG distributor, asserted, “This type of product line is what our dealers need to expand their base of business. The technology is hot, the back-end logistics are in place, and the system is quick to install. Homeowners will find the system to be enjoyable to use and in many instances, the cost savings achieved through the energy management can offset the monthly subscription costs.”

The topic has also emerged recently by Residential Systems’ bloggers Todd Anthony Puma, who made the case for why TiVo should offer installers an RMR, and John Sciacca, who explained why these contracts don’t work for his company.

Sciacca, while laying out this case, asked readers to weigh in on how they’ve overcome his objections. Here are excerpts of two comments the blog solicited:

“As most in our industry know this can be a 24/7 job. Many problems are resolved over the phone, so no further revenue is added from these interactions. I know that we get a ton of referrals from existing clients, so I (mentally) write off the phone time as good advertising.” – Dallas Dingle

“There’s no such thing as money for nothing. You need to schedule regular maintenance calls as a part of your contracted systems therefore placing the onus on the client to schedule them in advance. With regular maintenance calls there will be fewer problems. Regular maintenance calls can bring in additional revenues as the customer’s needs change.” –Jeff Magnell

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