By diversifying into access control and surveillance cameras, three dealers discuss how this has enhanced their managed services offerings.
Have you heard about the latest opportunity in managed services? Security. That’s right, security.
As more dealers make the move into managed services, access control systems and surveillance cameras that hang on a network represent a natural extension to a dealership’s existing managed network services offerings and a viable diversification opportunity.
Document Solutions, Inc. (DSI) in Albuquerque, New Mexico, Marco in St. Cloud, Minnesota, and Perry ProTech in Lima, Ohio, are three dealerships that already have a successful track record selling physical security systems.
Perry ProTech’s Three-Pronged Approach
Perry ProTech offers network security, end-user training around security, and physical security. At Perry ProTech, physical security encompasses access control, video surveillance, and security alarm systems.
“With those three, you get into that internet of things because our devices are IT-enabled and are on the network, which brings a whole new set of complexities to someone who’s been used to managing analog systems,” noted Dave Rees, CTO, IT/networking, at Perry ProTech. “Customers are looking for companies like us to not just manage their network but manage the security piece as well.”
“We definitely understand the network and bandwidth, and data requirements, and it’s an easy transition for us to help a client,” said Perry Carfagna, president of Perry ProTech’s IT division.
Rees describes the evolution of security into a managed service as the “new norm,” as security solutions have become more robust, and the need to pull data and stream video over the network is a necessity.
By combining physical security with its managed network services offerings, Perry ProTech has found a formula for success. The dealership has experienced consistent double-digit revenue growth with profits a little higher than that since it began offering physical security systems about five years ago.
The physical security solutions Perry ProTech sells were selected from an IT perspective.
“We didn’t just pick a product to throw on a network,” said Carfagna. “We did a lot of homework around choosing the right products [to create] more of an IT solution than [a company] that just sells physical security.”
He explained that Perry ProTech understands security from a networking perspective, how to integrate with Microsoft Active Directory, and the requirements needed to send high-quality video over a network.
Looking at physical security as a managed service, managing a physical security system could be as simple as going out quarterly and cleaning and focusing a customer’s cameras to operating as the customer’s IT department.
“That’s kind of the full spectrum,” said Rees. “It can be a simple maintenance contract to we do everything for them.”
Perry ProTech doesn’t do it all themselves. It typically subcontracts for the cabling work and has a partner that assists with the integration of the access control systems and cameras. Perry ProTech will also engage a third party to do intrusion and top-down video monitoring for some customers that don’t have their own security staff to monitor what’s being recorded by the cameras. Either way, there’s a monthly subscription fee for managing a customer’s security systems.
Physical security systems are sold by the dealership’s account managers who are backed by subject matter experts. It isn’t easy finding subject matter experts, which is why Carfagna said the dealership is now looking to hire someone to serve more as a business development manager who they can train on the product and processes.
“The person needs to be highly detailed, understand customer communication, and be able to work with groups of teams because physical security is our networking group,” explained Carfagna. “It’s IT, it’s the customer, it’s our account managers. We have a strong technical team that if we find the right person, we’ll teach them how to leverage that and understand the product at a deep enough level to be dangerous.”
Much of the competition that Perry ProTech runs up against are standalone security companies, as well as the occasional AV company or interconnect company that installs phone systems and runs cables, or a sister company to an electrical contractor. In the state of Ohio, an electrical company must have a sister company to handle the fire alarms. That company might also install burglar alarms and cameras, and run cabling.
“They do a great job most of the time in providing a [single] point solution, but getting them to do a multisite location or an integration with a surveillance system and access control, those integrations are more complex, and in most cases, beyond their capabilities,” said Rees. “That’s our differentiator and what gives us a competitive advantage.”
The majority of Perry ProTech’s customer base for its managed services offerings, including security, are SMBs, as well a large hospital and a large insurance company.
“The nice thing about securing someone’s premise is it goes everywhere,” said Carfagna. “Everyone needs it, and it’s that insurance policy they’re looking to buy. It’s the one piece of our business that can go from the smallest to the largest customer pretty easily.”
Marco’s Holistic Approach
Todd Vojta, director of AV/physical security at Marco, has three decades of experience selling physical security systems. He joined Marco nearly three years ago after it acquired his IP technology company. Vojta described Marco’s approach to physical security as holistic, tying in the logical piece (protecting data) with physical security that protects people and property. It’s similar in a lot of ways to Perry ProTech’s approach.
Services that fall under the physical security umbrella at Marco include video surveillance, access control, emergency response, mass notification, and parking lot coverage””all of which encompass video and audio solutions, as well as mass notification systems.
The logical piece is particularly interesting. Vojta references Hitachi Social Intelligence Analyzer, software that analyzes social media and web pages, as well as investigations and alerts, to identify potential threats in real time. A solution such as this might be presented as an option when Marco meets with a customer or prospect to gain a better understanding of their security challenges and needs.
Do customers realize a solution like this exists?
“What people usually say is I need video surveillance, cameras, or need to be able to lock down [the premises] so people can’t get into the building, but they don’t understand the deeper components,” explained Vojta. “How do they get in, how do they move about the facility, why are they concerned?”
Here, too, there’s a recurring-revenue element, resulting from ongoing software updates and downloads, and service management, as well as 24/7 monitoring on the back end through a third-party organization. Software and firmware updates are typically offered under a subscription-based model. There’s also a managed services model where Marco monitors a customer’s screens to make sure their cameras and devices are operational. Often, if a camera goes offline, the client might not know that until they review the video. Marco can also monitor the videos on behalf of the customer, but that tends to be the exception rather than the rule.
The third financial opportunity comes from an operational standpoint support where Marco does the monitoring, helping the customer identify incidents faster than they can.
“It’s all about time,” observed Vojta.
DSI’s Professional Approach
DSI began selling Mobotix surveillance cameras about a year ago. DSI CEO Phil Hauser was initially turned onto the cameras at a Konica Minolta dealer meeting. When those products didn’t materialize from his vendor, he went direct to the source.
Mobotix makes outdoor cameras, indoor cameras, and thermal cameras that can detect and register objects and people using a thermal signature, even in total darkness at more than 100 meters, and monitor temperatures to within a tenth of a degree.
DSI has quite a few clients in the education space, a prime consumer of video surveillance products. DSI’s strategy for selling security is similar to how it approaches other segments of the business where a product or subject matter specialist is brought in after the sales rep uncovers an opportunity.
“You definitely need a go-to person that knows security,” emphasized Hauser. “This has more moving parts than what a traditional copier dealer is used to because you need to work with a third-party integrator with an electrical license.”
Another critical factor for building credibility and getting started in the security space is leveraging established customer relationships. Here, Hauser believes the dealer channel has an advantage over a traditional blue-collar alarm security company.
“We come in with a totally different level of expertise and professionalism and that really helps us with the relationships we’ve built in the traditional copier and managed services space.”
Getting into the physical security business is not for everyone, especially if the dealer doesn’t have the IT infrastructure to support this initiative.
“If the dealer is already providing networking and managed services, it’s a shoo-in,” said Hauser. “But, there is a learning curve. We got our teeth kicked in on our first three deals.”
He attributes those early issues to learning the pricing structure and understanding the different components of these products, as well as the need to partner with a third-party integrator with the proper licensing for installation.
“And you need the support on the backend from the manufacturer because it is different than placing a copier,” he added. “With that said, I’m very excited about the future. Security is a topic from top to bottom that every business and organization is concerned about and is going to be the growth engine of our company going forward.”
Let’s Get Small
The dealer channel is no stranger to evolving technology, and surveillance cameras are an example of this evolution. Over the past three years, surveillance cameras have become less expensive and smaller, and offer greater compression of data and higher quality images than previous generations. On the back end, the ability to analyze data faster and more thoroughly has also improved.
“The whole AI component is alive and useful in video surveillance,” said Marco’s Todd Vojta.
These cameras can now track individuals based on what they are doing, what they are wearing, or by a physical characteristic. License-plate recognition is another area that has seen huge improvements. While that’s not new, the ability to get closer to vehicles has improved dramatically. Before a camera had to be within 40 feet of a vehicle and at a 35-degree angle to read a license plate. Now, license plate information can be captured from a greater distance and at a looser angle.
Retail, education, government, and enterprise businesses are logical target markets for these types of security systems. While those market segments continue to grow rapidly, with prices coming down and the technology easier to use, the low- to mid-market and SMBs can now afford them. These systems also allow users to access the information and images they’re capturing on their mobile devices.
“If I’m off site and I can view what’s going on onsite, that’s the driver,” said Vojta.
Financing the Physical
The leasing industry isn’t taking security lightly either as they see more interest among office equipment dealers around physical security systems.
“There are a couple of dealers we are actively executing transactions for, but we’re doing it very carefully because it is somewhat new to our world and can be very risky,” acknowledged Jennie Fisher, senior vice president, general manager, Office Equipment Group, at GreatAmerica Financial Services Corp.
“Whether it’s security, IT, or print, everything is pushing toward “˜as-a-service’ model,” added Greg VanDeWalker, senior vice president IT channel and services, at GreatAmerica Financial Services Corp.
VanDeWalker has experience dealing with the AV channel, a channel that has expanded its offerings to include security systems. He noted these companies are trying to push things to a monthly payment solution.
“There are a couple of different ways we can finance those,” he said. “The point we try to get across to them is that whatever financial instrument we use to lease it, finance it, or rent it, they are able to give that customer a monthly payment solution.”
While the AV channel isn’t known for selling under a monthly recurring revenue payment model, VanDeWalker sees this as a huge advantage for imaging dealers.
“They know how to sell a monthly payment, they know how to bundle, so the selling motion for a copier dealership should be very easy,” stated VanDeWalker.
GreatAmerica views security as an opportunity for dealers to diversify.
“Whether you’re a copier dealer or pure-play AV company, every channel is being challenged with how to diversify their business and control more things on the network,” observed VanDeWalker. “In our IoT world, everything hangs on the network and there’s a battle to control everything on the network. With the toolsets available, you can remotely remediate and monitor this stuff so there are opportunities for either channel to go in for monthly recurring revenue from managed service dollars.”
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