Industry Specialists Detail RMR Opportunities With Managed Access

During ISC West 2012, SECURITY SALES & INTEGRATION’s Editor-in-Chief Scott Goldfine sat down with four industry experts to talk about their success with managed access control. The roundtable is featured in SSI’s June issue. The following is an extension of that conversation.

Please provide some general information about yourself, your business and your experience with managed access control.

Randy Brown: I’m with Fahrenheit 451 Fire and Security out of Calgary. We’ve been doing managed access seven years, which is about as long as we’ve been in business. It was before it was hattrix or Kantech was even involved, actually. We were doing it by modems in some of the old sites, doing it for a little while.

Steve Sharp: I’m with DigiCOM out of Cincinnati. We’ve been doing security since 2004, and specifically we’ve been doing the managed system since roughly 2009. We’re still working to move more into that market versus the capital project-type market.

Doug Penson: I’m with My Managed Security Inc. My Managed Security was created, actually, following the hattrix launch, as I owned another security company for 18 years called SECUR-U. Looking to obviously sell the managed platform, I saw definitely the need for our company and our clients that we would take it one step further and capture the dealer component. Now we’re launching live with active accounts in our portfolio for over a year now. It’s really fantastic.

Ken Robison: I’m with California Commercial Security. We’re based in San Diego, Calif. Our company’s been in business since the early 1990s, starting out with locking hardware, just securing buildings in terms of locking systems, keys, and so forth. We got into electronics in 1995. At that point we were mainly doing access control and alarm systems. Then in 2000 we started managed access, before it was really known as a hosted or managed-type solution, or a remote vendor solution. Since then, at this point I think we’re at about 138 accounts, and two years ago approximately Kantech developed the hattrix product, which we’re now very joyous about and it’s working out very well. At this point electronics and the managed-access site is about 80% of our business versus 20% locking hardware, which is a big flip from 100% hardware.

Could you specifically detail the types of services you have clients on contract for as well as those that you offer and hope to sell?

Brown: We offer obviously the managed-access component. We’re doing hosted video as well, fire and burg monitoring, way more fire than any other service. And you were saying 80% of your business, well 50% of our business is fire; the other 50% is security. We go into buildings like this and test the fire alarm system. It’s not necessarily recurring revenue, per se, but we’re in there every year doing that. It’s not really contract but they have to do it every year and we’re always there. That’s how we sell the most clients.

Sharp: We started up on a lot of enterprise systems: security, IT video, and a lot of CCTV and never really had a product, a niche to back fill into the small and medium size businesses. Too, our business was tilted toward capital projects and we kind of wanted to flat line that a bit and develop a reoccurring monthly stream that would help us get through the down times a bit when capital dollars are drying up.

When the recession hit in 2008, it really forced us to accelerate that thinking, because at that time we were 100% capital projects pretty much. It was a very tough time. We had to change our entire philosophy, the way we were viewing business. Now we’re roughly about 40% RMR with 60% capital projects. It was just a model that I don’t think was built for long term. That’s what really drove us to looking at this and heading down this path.

Penson: Our integration company focuses on a lot of card-access video and security, both residential and commercial. With having that clear understanding of that RMR model and the burglary side of things, when hattrix introduced the whole three-tiered plan hosted hybrid managed, I jumped all over it because selling Kantech access control for 18 years, you can certainly see where the pain points and challenges are with that platform, dealing with the infrastructure, the updates, keeping it current, the training with the clients. And there’s also that onsite need that needs to be required for assisting the client.

When I saw the capabilities and could foresee the future potential of the integration with the whole managed component, I was all over it. To me, it was something I’ve been waiting for, for many years. When it came out, it re-energized me in the industry. I was actually getting fueled by it. I could hardly sleep. I was totally ecstatic about this new technology and how it was going to help our business and grow our future as a company. It’s certainly all the right timing came into place, for sure.

 

Robison:As I mentioned earlier we do lock hardware services which means we also handle electronic hardware. That really complements on us the card-access side because we don’t have to sub anything out. Also if there are any issues we can take care of everything for the customer. There’s no third parties involved, so we really feel that’s a big plus for us as a company.We also do intrusion detection, CCTV. We also do fire control as well. Across all those different products we offer service agreements, as well as extended service agreements and warranties. To differentiate, one is more of a maintenance agreement, similar to test and inspect that we do on the fire side of things. But on the other side, we do maintenance agreements that are the same thing as a test and inspect, but we also cover that with an extended service warranty.

All those things are very valuable in our industry, of course, because recurring revenue is what builds the value of your company almost completely, so it’s very important to also be able to track that as both on your growth side of things as well as attrition, so you have that to show what the real value of your company is.

Right now, I am extremely excited about the access side of things which is why we started it so long ago. But now what’s really got me excited is the hosted video. So that’s something we’re looking at very carefully right now to find who we’re going to be able to partner with to really get into that very heavily, particularly on the false alarm reduction side of things, dealing with burg systems. If we can do video verification of an incident, or maybe it’s not actually an incident, thereby not having to dispatch the police department, so there’s really huge value in that and I think we’re going to see a lot of growth in that area.

One of the interesting things about systems-integration business in general is how many value-adds a lot of the integrators bring and they’re not getting all the financial rewards for that all the time. They want to do such a good job, but sometimes you leave money on the table.

Brown: Even talking to some IT guys, we did an upgrade special edition system a little while ago and it was a cheap software but talking to the IT guys, “For a couple of dollars a month I could just manage this for you, and you never have to worry about it again.” He says, “Really?” He takes it to his boss and he didn’t go for it but Canadian Freightways would love to get that offsite and not have to worry about keeping their computers current and all that. But talking to IT guys they can justify it like that.

Penson: One of the things I really love about this is we’re now being proactive instead of reactive. So now we’re not dealing with problems, we’re dealing with these issues as they’re arising because we’re on top of it, aware of it, managing it rather than being reactive when they’ve lost their computer onsite, they’ve lost their hard drive, they’ve lost their thousand users. Now we’re delivering a service confidently that is encrypted, secure, protected, in a protective environment, managed, and we can really assist our clients which is what I love.

I had a hosted client on the phone the other day and they were wanting to change an access group and asking some questions about it. I actually logged into their account and was asking them questions as I was changing the account. He said, “You know Doug, when can I expect that?” I said, “It’s done.” He got off the phone, went and swiped it, and I E-mailed him and said, “What’s wrong; you didn’t believe me?” It’s instantaneous and customers aren’t used to that level of service. They’re usually waiting for delays, waiting for service technicians. We live in a demanding world. It’s a now society. Everyone wants things now. They don’t want it later.

If you’re not delivering on the now, you’ve lost that client. So the managed side of things is a phenomenal way of doing business. It’s improved our relationship with our clients, which is great.

Sharp: I think they’re more open with it, to have discussions like which way they should go with technology or if they’re having problems because it’s much more tight-knit, whereas they don’t look at you like you’re trying to make a buck off them, they’re looking at you more the way partners would. I’ve noticed that, definitely.

Robison: You’re always touching one another and it builds that trust between you.

Sharp: They become very open with you.

Robison: It opens the door for you to make many more offerings and network with other technologies that they may need.

Penson: One of the things that I love is that when we’re speaking to a client now we can actually provide them with solutions. Give you a perfect example: we have a small multitenant facility where their doors are on unlock schedules and let’s say tenant B needs to have that door unlocked until 9:00 because they’re expecting clients but then the client doesn’t show up. Now they’ve been paying staff to be there onsite for that additional hour, rather than being able to lock the door and off they go. Now, with the Web station, and we give them access as a hosted customer, to literally log in and lock the door. It’s powerful. It’s a small thing but it provides a lot of power. You can’t do that with traditional platforms. It’s changed the way we do business, really.

When you’re doing the managed access, do you have to build in extra redundancy to protect that data? How do you handle that?Robison: Yes, this is part of what he was talking about. People don’t realize the value they really get from managed-service providers like us, right from the automated reports. When you install a system for a customer, you can train them to do these things. You can train them to run a carding activity report every month, make sure you’re backing up your data onto a mapped network drive so it’s off the PC that you’re — you can tell them all this stuff. You can write it down for them, put it in a binder for them, and unfortunately for the most part they will not do this stuff.

My point is they don’t realize the value unless we do a good job in understanding what their needs are and conveying them what the value of our services are, which includes setting up all these automated reports, alerts to the customer, as well as having mirrored hard drives, redundant backup in offsite storage of the data, which is what your question was, and that’s absolutely correct. These are just some of the many values that we provide to the customer, that unless we do a good job of explaining it to them, they won’t understand their return on their investment.

Penson: Absolutely, and one of the things that we’ve just implemented recently is now we have our server location which is managing all of our clients, but with the Kantech application you actually have typically a four server-type application so you have your server, your redundant server, your gateway, and your Web station.

These are all mirrored drives, all the great capabilities that need to be in place. We’ve also taken that step to put our redundant server at another facility, outside our main server facility, as another redundancy for data security and information. So it’s always updating that redundant server that’s offsite, even in a second remote location. Now we have the client site, we have a remote location where the servers are, and now we have a third remote location where that redundant server is sitting in case of fire, or any type of critical hazard. That client can have 99% uptime which you can’t promise them with a traditional platform in their business.

Brown: One of the things that they don’t see obviously is how much money we put into our computers. Last year we put in $50,000 into our servers. When I first started with hattrix I had these six servers in a rack. Now I’m down to one server, it’s all virtual. It’s super redundant. Everything’s backed up.

One night I was doing a backup. I didn’t disconnect the gateway and I had a failure so I brought down customers’ sites. It was pretty severe. For about four hours the phone was ringing off the hook. We had a snapshot of the server so once I finally got my IT guy on the phone because it was after hours, he just restored it, and everything was back to normal. We did learn a good lesson about disconnecting our gateway before we upgrade.

Can you give me an example of how you prove the value of managed access control to clients?

Penson: I’ll tell you a funny story. My wife’s CFO in her company really monitors their expenses. They were a traditional client of ours, and when we converted them to a managed account, my wife said, “You’re going to make a lot of money doing this because if you can sell this to our CFO, a lot of people are going to buy this product.” One of our selling features was he was at home, just arrived home to his family. It’s a 40-minute commute to the office. Got a call from the cleaning company that a door was left unlocked because someone had unlocked the door and didn’t relock it. He hopped on the phone and called my wife to put me on the phone. There was nothing I could do to get into his facility via any type of VPN access. So he had to get in the car, drive 40 minutes back to work, get in touch with the IT consultant, walk him through which server was the access server, what was the code to the IT room, what’s the login password and user credentials to get onto the server once he located it in the server room, lock the door. All of this takes time and time is money — to drive another 40 minutes back to his residence and continue having dinner with his family. Now he simply logs onto the app. In this case it was the Web station at the time, lock the door, done. If I showed it to you, you’d want to buy it. It’s powerful.

Sharp: I think it’s going to be a very good selling tool.

Robison: Definitely.

Penson: I throw an iPad on the table when I’m going to a meeting, and obviously people have Apple products to begin with, look at Apple as a company. They’re in the software as a service business. Imagine that. Do you know what iTunes is? Is it a software as a service company? Literally put the iPad on the desk of the IT person I’m meeting with, and the manager in charge of the project, and it sells itself. “Oh you mean you’d like to do this, click, click, click.” “Yeah that’s exactly.” “Is that easy enough for you? If you’d like it more complicated we can certainly make it more difficult for you. It doesn’t need to be though.”

As an integrator let’s talk about two sides of the same coin. What top three qualities do you look for in a supplier partner for managed access? And what top three qualities do you think the end user should be looking for in their managed-access provider?Sharp: As far as the manufacturer, I think it was important to us to have somebody that was really behind their product and basically willing to go all in on it because you want to see a constant flow of features added to it, like the app coming out today. That was important, things we’d asked about a couple of times; we’ve got end users asking for that. They were more than willing to put that onto the drawing board and bring it out. It’s been this constant flow of steady improvement, reinvesting, marketing, and I think all those are important to a dealer as we’re trying to sell their product. We want to have that support behind us.

Penson: I think it’s the same on both ends. I think it’s no different. I am looking for the same solid support platform service and ease of use from my supplier as my clients are looking from me. They want that credibility. In many ways the client doesn’t know what they’re buying. They have to trust that the provider they’re dealing with is a reputable firm that will lead them down the right road by interviewing them and asking them the right questions and really determining what their requirements are and providing them with the product that’s going to work well for them.

The one thing about Kantech, they have great support. They’re right on top of it when you need it. You call them and say I’m having an issue with something and it’s 5:00, it really doesn’t matter. They’re there to help you and keep your uptime there. We all have a lot of money invested in this and our clients are investing in us. So it has to be the same on both ends, to answer your question. We’re looking for the same thing they are.

Everybody in the world has a new product they’re coming out with and new companies but when you have a company like Kantech that’s been around for years and years, and they have a great track record, have a stable platform, stable location, they’re owned by Tyco so they’re financially stable. There’s a lot to say about that.

Sharp: The fact of the matter is anybody can sell boxes and sell panels and there’s a lot of smart people out there and a lot of great companies but how do you separate yourself? Really the only thing there is support, customer service; those really are the things that are difficult. They require sacrifice at 5:00 at night or 6:00 at night or midnight or whatever it is. Are you dealing with the people who are willing to sacrifice time to make sure that your problem goes away, and I think that’s critical.

Brown: It’s a funny story actually; I had called into tech support and I had a problem. I was doing a 35-five story tower and I couldn’t tell you what the issue was. But they recorded it as a bug and one year later he called me and said, “We just released a new version, it’s fixed.” I’m like “What’s fixed?” I couldn’t even remember the problem but he followed up a year later. That was impressive. The guys have been awesome. They’ve had some issues with a lot of new guys because they’ve got growth going too, but as soon as you make it clear that you need somebody more advanced, they’ll pass you on. Their technical support is key. You have to have it.

The other thing that I think is important is the training. We’ve been approached by other card-access manufacturers, saying we’re spec’d on this job and if you come with us you’ll be able to bid this job and get this work. But they never follow up. You ask them certain questions, the hard questions, the technical questions, they never come back, they never follow up. They want you to go down to Boston for a week’s training. That’s expensive from Calgary — before you’ve even quoted a job. Kantech’s always in our neighborhood, always offering training. They’re there every month, every two months offering different levels of training for our people. Now with webinars it’s even more often. It’s awesome to get the training.

Robison: As far as manufacturer, I feel that the obvious is that they have a quality product. After that, current technology assurance is extremely important, meaning that that company has the capital or willing to put forth the capital to maintain growth in its product and the value of its product and the offerings that they have, in other words, keeping everything up to date.

Training is extremely important but I think one of the most important things aside from all that is they’re a company that feels that they are a partner with us, the customer. That is very important, that they are willing to build a relationship and be partners with us because let’s face it; we all serve the same customers. The end users, the product that we install, in our case, is from Kantech. That customer is not only a customer of ours but also the manufacturer in this case, Kantech.

Support obviously is important as well and that goes along with training in my opinion. But as far as what the end user should be looking at in us, I think it’s the same thing as Doug said. I think that we need to be operating a quality product which there’s two tracks to that. There’s the actual product we specify for the customer. Are we specifying the right product for their application? And the track of quality is the quality of installation. That’s very important. They need to know that they have references from others about the quality of our installation for instance. Then of course that we’re going to be providing good service.I think it’s the same too that we’re willing to be a partner with our clients, that we’re there for them whenever they need us and as Doug said early on, I think it’s very similar in those two directions except for the fact that we’re the ones that have to provide the field service.

Brown: Our predominant product we use 100% of the time is Kantech but we’re corporately trained in other products that are currently in the field that we have to manage and maintain. But it was the team behind it. There’s relationships, there’s friendships, there’s trust.

They’re embedded in the trenches of what they do and know it forward and backward. It makes a world of difference, other than just a sales rep selling you a product. This is an industry where people tend to move around a lot within the industry and stay in the industry and have a relationship within the industry a long time, and have a huge background. That’s something you can count on, you can put your money on that kind of stuff.

Sharp: It’s predictable.