The February issue of SECURITY SALES & INTEGRATION includes the feature article “Service With a Recurring Revenue Smile,” which addresses how to successfully incorporate service and maintenance agreements into an installing company’s portfolio. One of the sources cited in the piece was Mike Vertolli, CEO of Vineland, N.J.-based ComTec Systems.
Vertolli, who joined the company as a member of its technical engineering team in 1989, offers a unique perspective for electronic security professionals since his firm began in telecommunications and later expanded its success there into IT and security. Following is the first of a two-part Under Surveillance interview in which Vertolli talks about how he is extending what he learned in those allied fields into security, and the great opportunities he sees.
How has the security part of your business grown in comparison to your telecommunications and IT divisions?
Mike Vertolli: Proportionally, right now, it represents almost 40 percent of the entire company, probably closer to 50 percent. But it’s been growing at a rate of probably 10- or 20-percent faster than any other division. We would anticipate by 2012, 75 percent of our business would actually be coming from security-related technology sources.
Has the bulk of that come from going to existing customers that you had and bundling it, or was it mostly new business?
I think after we did our marketing research, we have about 2,000 active customers that used us in a variety of ways prior to us even doing security. In polling our customers, we were deciding what types of technology initiatives they had in the next few years and what types of concerns they had. Almost all the customers were talking about security in some flavor, which may have required card access or security cameras. All in all, security cameras, or the security environment in general, was one thing our existing customer base was looking at investing in. The second item we noticed was on a national level that homeland security was going to be a well-funded vertical for us. So we targeted companies and government facilities that actually would benefit from some of that funding.
When you got into security and as you move forward with it, do you have personnel who are specifically trained for those competencies or do your people pretty much have to know it all?
We have three divisions here, but really our IT engineers have taken over the real core programming and deployment of more advanced security applications. Our technicians, who were typically the people turning the nuts and bolts, they are the ones that do 90 percent of projects’ hanging and deploying. The engineers, who are IT-level support people, whether they are programming an NVR or a DVR or programming access panels or setting up a Microsoft server, to them it’s very much the same type of algorithms and programming.
I find it interesting you’re coming from the telco and IT side of things. It appears to me in doing so and now with security that you are effectively giving the end user a one-stop solution so they don’t have to interact with so many different providers. It’s a cohesive approach I would think clients would find appealing. But in doing that do you find you have any tugs of war or issues with facility IT managers with respect to accessing and tying things into their enterprise networks?
Years ago, as IT telephony applications grew we started touching the network and recognizing the concerns of IT professionals. We quickly learned if you don’t embrace their concerns and the capabilities of the system and how they impact their network, they’ll never like what you’re doing. So a big part of moving into security was just a natural course of action because the direction security has taken is the same telephony took in that it’s all becoming an IP-addressable device on somebody’s network. A big part of our position upfront is talking about the advantages of a completely IP-based system where everything resides on the network down to an analog system, where it just might be an addressable IP port to programming. It’s a collaborative effort and the customers usually tell what they are comfortable with. There is not a good fit we can tell anybody for any one application. It’s usually them telling us in the end where it makes sense.
Do you ever look at some of the technology in IT or communications side and wonder why security is not taking more advantage of it as well?
Sure. With security, over the course of years the product capability started far exceeding vendors’ capabilities of installing and maintaining it. So there became a ramp-up period of time, and this happened in telecom, I guess, as well. There becomes a ramp-up time where either vendors that had other strengths in IT were going to embrace installing these security applications or security companies were going to embrace cross-training their personnel on some of the new advancements. If the advancements stay so far ahead of what their vendors are capable of doing, they are not sold. I know from a manufacturer’s standpoint they need to make sure they are developing, installing and servicing the applications that can be sold. So I think over the next few years as maybe their customer base and their vendor base grows and goes through market share and intelligence, a lot of the applications that we know are possible will start actually becoming more of a core feature set.
I would imagine that some of those things could potentially lead to more recurring revenue.
Yes. We have video where people can watch some of our camera systems from their BlackBerry phones. They have wireless cameras where they just physically put their cameras in, and they can just move them around as they see security fits. We have small solar panels that actually snap into the back of some of the cameras that actually power them up and transmit wirelessly. We have intelligent modules that populate screens to make physical security more useful. There are redundant servers that we use on the IT side that can very easily be plugged into any network for advanced storage applications so that they don’t have to keep buying these large NVRs or DVRs. They can utilize more IP-based applications that already exist to support the security side. The list goes on. There is a lot that’s currently available and it’s changing the mindset of how to look at security.
With some of those though, do they open up potential to new vulnerabilities?
Vulnerabilities are usually whatever is exposed to the outside world. Some of the neat things about security systems, even versus phone, is we don’t have much access to the outside world. We’re actually a privatized network. We can actually run our IP cameras alongside their computer network, send it to an NVR and actually never touch the outside world. So we’re not really worried about viruses and people intruding on the network or having much access. Most of the applications that we do put on the network are very well protected. They are treated as if they were any other server.
As physical security continues to become more network and software based, there appears to be a tremendous opportunity to offer upgrade services for things like upgrades, updates, patches, improved drivers, etc.
It is tremendous. People are recognizing this stuff is touching the network, and the network is always changing. Microsoft changes applications. Someone’s got to reload these NVRs and all these things that are physically touching. They have to be updated in accordance with networks as they become mandatorily upgraded. If things are just left, and they don’t have the support agreements in place, they basically just created an inherent problem. They will have to address it one day. When they have to address it, it’s usually a rip and replace, and that’s not really a good approach. Most IT professionals, for what we’ve seen, are very organized and they want to know their liability and how their network is protected.