The business of securing networks in the IT world has traditionally been offered as a service. This market has grown to include intrusion detection along with an array of threat services. These offerings are sold to technology directors or CSOs who have a great need for secured monitoring and notification support around the clock.
The functions required, and that are most needed, can be provided by a central station where highly trained and vetted operators with related expertise currently monitor a variety of other security events and communications. Many traditional security companies already offer and support these services for their customers. What is changing is an improvement in the technology that allows the delivery and analysis of these services. Forward-thinking central stations with solid IT infrastructure can and are supporting these business needs with state-of-the-art software and systems.
An emerging channel in this business is “device monitoring.” As technology continues to mature and improve, installing security contractors have an ever-more compelling story to share with their current and prospective clientele about the provisioning of network monitoring services.
Poll of Clients Reaches Across Vertical Markets
Until recent time, installing security contractors would have had to reach beyond the familiar developers and vendors in the security industry to implement a platform as part of a network monitoring proposition. Nowadays entrusted providers such as Secured Global Solutions (SGS), AvantGuard Monitoring, USA Monitoring, Security Central and Siemens, to name a few, are helping propel the channel. Technological advances are at a point where a dealer can partner with a monitoring center and offer these cutting-edge services along with their existing portfolio.
The potential is huge; the offerings are valuable to end users in various market niches and can be incredibly profitable for dealers and integrators. The key is affiliating with the right technology partners and monitoring centers.
It can be overwhelming as you investigate and realize the depth and diversity of the services side of the IT industry. A smart and balanced approach to entering this channel requires dealers to identify a niche they are comfortable in supporting and working it diligently toward success. Following is an informal overview of some facts regarding IP services and monitoring:
- Central stations are the alarm industry version of a datacenter and offer great value.
- Most alarm companies are comfortable with and excel at providing services. Studies have illustrated that security companies are viewed as trusted partners over cable providers.
- Convergence is just an overused term for what is going on everywhere. Consolidation and acquisition of technology is changing in every industry.
- It’s an unfortunate reality that the alarm industry is viewed as being too small and grows too slowly to attract large companies/investors that desire more rapid growth opportunities.
- SGS estimates that approximately 25% of all intrusion, video surveillance and access control products are not installed by traditional alarm companies but instead by IT companies.
The underlying theme in each bullet point is that IP services are now broadly marketed — and integrated. Survival as a business will require greater knowledge, new technology, new business offerings and new approaches to service delivery.
Network Security Dwarfs Alarm Industry Revenues
As amazing as it may sound, the alarm industry is pale and very small when compared to the larger IT industry. Consider the overall IT industry is a $1 trillion market. The annual service component of the IT industry is approximately $150 billion annually or about three times the total of the alarm industry. You can drill down and parse this in a variety of ways and the result will be the same: Network security and related services is larger than the entire alarm industry.
Most existing revenue generated in the security industry (especially recurring revenue) comes from older technology. It is essential that dealers and integrators evolve or they stand a great risk of extinction. You hear this mantra a lot on the residential side of the business, where home automation and controls has taken the industry by storm. New entrants to the industry started knocking on doors and educating consumers that automation systems are more than about security. This philosophy has offered a great value proposition for the consumer, as well as for dealers, and is rapidly becoming the new standard. The revenue is higher and the proposition is greater; dealers not taking a proactive stance are dealers that are losing ground. Fittingly, network and IP monitoring should be viewed in a similar fashion.
Although the technology is very different and many of the customer targets are different, it is new revenue. In fact, it is greater revenue and the channel is expecting to subscribe to these services from their most trusted vendors; vendors that can provide them with answers to all of their security needs. This includes intrusion, access control, video surveillance, etc.
So, in a nutshell, as this proposition continues to grow and become more of a standard offering by the large national and international companies, the independent dealer stands to lose customers and therefore lose ground. It really doesn’t make sense to allow this to happen. A proactive choice of engaging in this market will not only help mitigate attrition, it will create new revenue streams with greater margins and all around profits than the existing channel.
Partnering Is Essential to Network Monitoring
To better understand the opportunities offered by IT network and device monitoring, let’s check in with a few of the players that are paving the way for dealers to succeed in the channel.
AvantGuard is a national provider of third-party monitoring services based in Ogden, Utah. Led by its president, Josh Gardner, the company has burnished its reputation by staying ahead of the technology curve. AvantGuard is just one of the organizations that have invested heavily to strengthen its infrastructure by adding the elements necessary to offer network monitoring to dealers across the world. To fuel the necessary bandwidth and global connectivity, the company’s infrastructure is built on the SGS platform. According to Gardner, the company operates a secure monitoring call center that has more technology and security than some network operating centers. So why did he take a considerable leap of faith and pursue this channel?
“It just made sense; the need for IP monitoring is growing exponentially. We have the expertise and infrastructure and our automation partner is an expert in this field,” he says. “We decided that our dealers deserve the right to compete and grow in this great market and we wanted to be their partner of choice.”
IT network and device monitoring is a segment where partnering is especially essential. The many facets include the development of the platform, deployment, hardware, monitoring, selling, installing and servicing. Hank Goldberg, a co-founder of SGS, is a driving force in working with dealers and central stations that desire to jump into this space.
A subject that Goldberg, an industry veteran, can expound on is the many advantages that traditional dealers have long held over other technology businesses in the security space. He is emphatic when asked if such a competitive advantage can be maintained by traditional dealers that adopt a network security offering.
“Absolutely, yes! It comes down to three elements. Dealers have great customer relations; their customers really trust and respect them. The central station is a new-world datacenter with a special emphasis on the delivery of a variety of security solutions. And, of course, the dealers’ IP knowledge in the field that they currently support on a daily basis.”
Someone who knows more about network security and IP monitoring than most others is Bill Brousseau. He is a partner and founder of the network security side of SGS. Installing security contractors taking the proposition of network security to existing and prospective clients is no small notion. Because Brousseau originally hails from the IT data security world, he can provide a unique perspective of the rigors and opportunities that traditional physical security dealers can expect to encounter in the channel.
“The IT services industry is thriving by providing a multitude of optional services to their customers. New IT services are a necessity because of the rapid changes in IT and everyone is running as fast as they can,” he says.
Brousseau says that when he joined SGS in 2007, he was amazed at the uni-dimensional approach to alarm monitoring. In that time, there has been movement to expand monitoring capabilities with, for example, voice and video.
“The idea of knowing more about a customer allows you to provide better service and alarm dealers need to move beyond simple alarms,” he says. “As I work with alarm dealers, I see IT monitoring as a natural extension of services that will build a new source of revenue. The customer confidence and trust combined with technology that has gotten easy to monitor make network monitoring a great fit in the alarm industry.”
This is a fact that can be readily observed in the traditional security industry. More and more companies are enhancing and modifying their offerings in order to expand into network security and monitoring. Some companies are branching into the segment by acquiring other firms with the necessary skillsets and expertise to accelerate their new proposition. One such example is Vector Security’s acquisition of the managed services specialist Industry Retail Group (IRG) in August 2013. Here, a forward-thinking traditional security company recognized and expanded its portfolio strategically. This is both a proactive position to earn more revenues through broader technologies and a defensive position to keep new competitors in the space away from their customers.
Like it or not the electronic security industry is no longer analog-centric and is steaming full force ahead into the digital world. It makes perfect sense to leverage the expense and expertise currently housed in many security companies toward network security and monitoring.
The quantity of qualified partners grows every day. The revenue is very attractive as is the value proposition to the client base. Investigate how you can take your place in this developing channel and expand your earnings while protecting what you have already built.