Kratos Gears Up for More Security Conquests
Despite its national presence in providing integrated solutions in numerous vertical markets, the credo at Kratos Public Safety & Security is never stray from the true needs of the customer. In an exclusive interview with EVP Jim Henry, find out how the firm leverages its parent company and how a core belief system is helping propel it to new heights.
Do you beta test systems and technologies?
Henry: We have a video lab in Fairlawn, N.J., with every frequency of light — from above the visible spectrum to below the visible spectrum. It was first developed in the late 1960s. It’s matured every year since then to accommodate the new technologies. We’ve expanded that into an integration lab now that is not just video-centric, but also ingests the other technologies.
We’ve gone so far as to build mockups of customers’ facilities there. Of course, we have the luxury of incumbent customers in virtually all these vertical markets so we can vet them in the field but with a proper understanding this is new technology in the field.
A demo room is very limited. Let’s say it’s a health-care vertical or transportation vertical. It’s a lot more meaningful for me to take them into one of their peers in a real-life customer setting, where I’ve had an account for in excess of five years, deployed new technology that has met expectations, we maintained it beyond the first installation, it’s gone through multiple iterations of upgrades and enhancements. That is a lot more meaningful than bringing them into a glitzy showroom.
What is the process for vetting new products in the lab?
Henry: We invite camera manufacturers to the lab. The only thing we really require on the front end is give us your data sheet. All I want to see first is does your product meet what you say it does. You have no idea how often that doesn’t happen. A number of these products are offshoots of something in either broadcast or the consumer industry. Things like that happen. When they don’t meet the spec, we won’t say, “You’re out”, but we’ll go back to them and give them the information. It’s empirical. Here’s our test equipment. Here’s how we came by that information. We allow them to come back to challenge it. If there’s still a disconnect, we say you either have to correct the product to meet your specs or change your specs to meet the product.
Does the vetting process also involve scrutinizing the work of consultants?
Henry: In some cases it is validating what a consultant has done. Many cases we find things the consultants don’t see. There are a lot of really smart consultants out there. They don’t have the wherewithal and the resources to be able to do the level of field-testing that we can do independently. They are in many cases just dependent on what the manufacturers tell them. Sometimes they’re given information that’s not maliciously incorrect. Manufacturers just don’t know.
When you’re deploying systems on bridges that require a flagman and lift trucks at 2 a.m. or we’re deploying systems on a live fire range for the military, that’s not something you say, “This isn’t working, we’ll just come back out tomorrow.” There’s way too much advance planning that has to occur. You really have to vet out the solutions both individually by product and as an integrated solution prior to. Our testing, our validation goes beyond just the individual component testing, but it goes into system testing in our facility with all of the devices connected before we will deploy that out into the field. That really mitigates the surprises and interruptions to the schedule.
What is your philosophy on recurring revenue?
Henry: Recurring revenue has always been a misclassified term. We evolved as a systems integrator more so than as an alarm central station. The traditional interpretation or definition most associated with [the latter] is monthly RMR for sending out reports on monitoring activity. But we’ve always believed, and I think now the industry’s moving more to our definition, RMR includes repeat business with the same customer, not only the managed services, operational support, running reports, embedding people into operations.
Consider a customer that over the course of 20 years has spent an aggregate of $20 million. Those are incremental standalone projects, but they are all enhancements to the growth of and morphing of an operational system. Those activities — whether they be on the sale, installation, construction, infrastructure work, technical work, etc. — that’s all coming from a customer’s system. It’s not as simple as this RMR monthly bill. I think in reality it deserves to be considered RMR.
What is your opinion on pushing hosted or managed services?
Henry: We are able to now whittle down some of the hardware infrastructure that gets deployed as we move into Software as a Service [SaaS] or managed services and provide some of those from the cloud. It is a natural progression of the kind of relationship we’ve already had in providing these solutions into the field. It’s about doing it in such a way where we don’t have a prejudiced drive because we’re so RMR-centric. We’re not leaning out of the foxhole to deploy that kind of back-office or back-hall support artificially because it serves our business purpose. We understand all elements of it.
There are cases where the field hardware makes sense or it’s required by policy by the customer. There are applications where the offsite service or cloud services make sense. Most often, it’s going to be a hybrid of the two, not one extreme or the other. Again not being prejudicial to be driving our agenda, but as an integrator trying to provide best-in-class solutions for the customer. That also includes where to leverage the managed services for your customer as opposed to where does it make sense to deploy more of an on-premise solution.
How do you develop profitable models around these services?
Henry: I believe that water seeks its level. Rather than forcing the business model to dictate how you roll it out into the field, keep your focus on solving the customers’ problems and doing it with the greatest amount of risk aversion and with the tools that you have available to you. Don’t look at it as a bifurcated milestone, “OK, we’re getting out of this analog topology, we’re going IP. Oh we’re getting out of IP, now we’re going into cloud services.”
No, you can have a hybrid of all of that and that makes the customer less fearful because he’s not going cold turkey into some other new platform. Few customers are going to do that. Understand where the industry is going, make the customer aware of the pros and cons of some of these developments going forward, and be literate in all of them so you aren’t artificially forced to either end-of-life an old system or lean too far out of the foxhole with a new platform just because it might have a particularly attractive RMR business model to it. There
are those that have caused themselves some credibility gaps because of that attraction.
Our approach is to understand where the customer is now, what they need to do, how long we can keep the legacy systems running. But also make them aware of where the industry is going, and the benefits, efficiencies, sometimes the cost savings of doing that. So migrating their system from analog to digital to cloud, they’re doing it at their own pace because they can see the cost benefit and the operational benefit. Not because I stick a flyer under their nose that says your product is end-of-life.
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About the Author
Rodney Bosch, Senior Editor
Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.
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