Michael Pope (left) and Joe Nuccio particpate in the "MegaTrends" session during 2013's ESA Leadership Summit.
I had the good fortune to be able to again attend the Electronic Security Association (ESA) Leadership Summit, this year in Orlando, Fla., Feb. 18-22. It is always an outstanding event with lots of terrific educational sessions, meetings, presentations, and networking with many of the industry’s most successful installing and monitoring company owners and operators. What follows here are select highlights so those who were not able to attend may benefit from the viewpoints and knowledge that was shared among the 300 or so conference attendees.
“Finding Your Place in the Residential Interactive Services Market”
Pat Egan, president of Lancaster, Pa.-based Select Security, is fully embracing selling these kinds of services, saying his company put around 1,300 interactive systems online in 2012. “It’s a better customer. They touch the system more and pay more RMR [recurring monthly revenue],” he said. Egan also dismissed the perceived threat of telephone and cable companies that have entered the market taking this business away from security providers. “Forcing bundled services onto people is not cool. Customers want things when they want them and bundling does not for that. The phone and cable companies come and go, but they are easy to outsell. Sure, they will get some business but they sell to the lower-end, high attrition customer,” he said.
“A lot of people don’t want a utility doing security,” agreed Michael Pope, president of Middleburg Heights, Ohio-based Safety Technologies Inc. (STI). “There has never been a better time for this market, boosted by all the advertising the large companies are now doing, all the apps out there and just the high awareness everywhere,” he said. Pope also talked about what a breath of fresh air interactive services are after the hard times of 2011. He said it is time for a new paradigm with the lessons learned from those challenging economics and the imperative to be innovative, saying his new company motto is, “It it’s not broken, break it.” Pope said the appeal of interactive services help consumers see past the price because they are relevant. “Things like thermal control make sense to customers. And anyone can afford interactive services now; it’s no longer just for the well off,” he said.
Moderator Brandon Savage, senior vice president of Customer Experience for Hollywood, Fla.-headquartered Devcon Security, pointed out the challenges of bringing personnel up to speed to enable success in residential interactive services. Salespeople, technicians and support staff all need additional training as well as a fresh perspective since it is a new model and approach to the marketplace. Egan and Pope both uniformly agreed with that assessment.
“Teaming for Success on Commercial IT Solutions”
According to a recent ESA trends survey, the percentage of security contractors’ commercial revenues attributed to IT networking solutions will go from 12% in 2010 to 39% by 2014. This session detailed how Select Security is partnering with an IT support services specialist, Guidant Partners, to offer clients outsourced network management. Nashville, Tenn.-based Guidant has positioned itself as a managed services provider (MSP) and generates $240,000 RMR from just 32 clients. Primarily targeting small to medium-sized businesses (20-100 people), the firm typically gets things started by replacing almost all existing network infrastructure. “Management tends to look at IT as being associated with problems, but this helps eliminate most potential problems,” said Guidant Partners CEO Steve Burgess. “It’s a different model in that the less work we have to do, the more money we make.” The firm is also able to provide the majority of support remotely, eliminating the cost of service vehicles. The back-office solution is aimed at SMBs they tend not to have the knowledge or understanding of IT networking nor the budget for full-time internal support staff. Burgess says the company offers multipoint solutions that allow it to maintain healthy margins and avert commoditization. Steve Firestone, executive vice president of Select Security, said the partnership is still in its early stages but believes it could lead to significant opportunities.
“Interactive Services in the Light Commercial Market”
While the subject of interactive services has mainly been knocked around for the residential market, there is also plenty of opportunities to sell it to smaller commercial customers. Greg McLochlin, director of the Dealer Development Group for Honeywell, discussed how critical it is to transform from being a strictly security provider to an automation provider thereby securing more future business. He explained how to create value for customers by using a variety of sensors to provide critical alert notifications for a wide range of critical systems that can also deliver messages to mobile devices. “There is no limit to the applications. It’s all about focusing on business value,” said McLochlin. He gave retail and banking as two prime examples of prospective interactive services customers. Dee Ann Harn, CEO of San Jose, Calif.-headquartered RFI Communications and Security Systems, stressed how end users total want control but not the ultimate responsibility. “It’s about marrying direct self-monitoring with the response of a central station,” she said.
“State of the Art in Retail Security and Complementary Technology Solutions”
The big takeaway from this session was for security contractors to explore the potential opportunity to sell, install and manage content for digital signage in retail, campus and other application deployments. Digital signage is a relatively new area with huge upside growth projected, and a market well suited for security integrators to tap into since it is just another type of device and system being installed and operated by clients they already serve. Steve Paley, president of Sarasota, Fla.-based Rapid Security Solutions, described how his company is just getting into digital signage by providing the displays and some subsequent management of them for Goodwill Industries. Although currently commercial A/V contractors are installing the bulk of digital signage the specialization remains wide open. Paley also talked about the opportunity to provide retailers with networked solutions and recruiting personnel to do so. “It is easier to teach those with IT expertise security than security techs IT. And it’s essential to make sure the end user understands the limits of service,” he said, cautioning against the dangers of taking on an IT help desk type role. An additional RMR discussed was offering clients monthly audits of their video surveillance systems to ensure they are functioning optimally.
“ESA MegaTrends Meet ESA MegaMinds”
This session again featured STI’s Pope along with Joe Nuccio, president and CEO of Beltsville, Md.-headquartered ASG Security, adding reaction and perspective to ESA’s recent MegaTrends Study of its membership. “Larger security companies are able to better withstand erosion of accounts when it happens as in more recent times with the economy. Larger companies also tend to do more acquisitions,” said Nuccio, responding to the study’s findings that larger companies are growing faster than smaller ones. “Larger companies have better processes in place,” said Pope. “And customers today are looking for bigger companies to deal with.” Both agreed 2012 was a better year than 2011.
The study also indicates interactive services are a growing trend or commercial and industrial applications, as well as the already well publicized residential demand. “It’s a no-brainer for small commercial clients,” said Pope. On the subject of business analytics for clients, the interest level is growing but very few security integrators have yet figured out how to deliver those services. ESA Executive Director Merlin Guilbeau pointed out that regardless, providers must now know not just security but also specifics about how each clients’ business operates. The customer type with the fastest level of growth right now was identified as single-family homes. “The telcos and cable companies are getting the awareness level up, which is great for all of us,” said Pope. “I agree that they will create a nice little market opportunity for everyone, but they might be getting more market share than we know about,” said Nuccio. Guilbeau closed the session urging security providers to take telcos and cable companies very seriously as competitors because the playing field is very different from their past forays into security.
Be sure to read my “Between Us Pros” column in the March issue of SECURITY SALES & INTEGRATION in which I detail for the first time a new study soon to be release by the Alarm Industry Research and Education Foundation (AIREF), whose board meeting I also attended during the ESA Leadership Summit.
Scott Goldfine