The Big Three

Guest commentary
Tuesday, August 1, 2006

Sales competition, partnerships and corporate culture define the new sales cycle
Understanding the new dynamics that security convergence brings to your market presents one of the steepest learning curves for the physical security industry.
This involves new thinking about competitive selling, partnering and corporate culture. I refer to these topics as the Big Three.
As the sales decision cycle for security convergence migrates toward IT and executive management, it plays into the sweet spot of IT vendors and their channel partners. As technology has evolved over the last 20 years, new products have developed new champions within major enterprise and government accounts. For example, as Cisco developed routers and Sun Microsystems promoted the concept that the "Network is the Computer," the network /system administrator position gained clout across the organization. These relationships were instrumental in deploying these new technologies and greatly impacted the careers of the people recommending and installing this equipment.
The network administrator became vital to the vendor selection process. Essentially, the network administrator has the keys to the IT infrastructure castle. You must understand this individual/group's responsibilities regarding deployment of new products across the network. If you cannot establish yourself as a credible integrator/supplier with this person, your sales campaign is not going to happen. This means understanding IT infrastructure issues, speaking IP, open systems and interoperability for starters. Understand the Golden Rule: Do not introduce additional complexity to the network and directly onto this person's plate. You must make your solution work in their "open" network and provide ongoing support to ensure success. Remember one thing about IT: They don't want another vendor in the account. They want fewer vendors.
Instant IT credibility is a tall order and may not be feasible for many security integrators from a timing perspective. However, you can establish IT credibility quickly within major accounts by having a like-minded IT partner who shares your focus on security convergence. You win partnerships like you win new customer accounts, with IT credibility within your organization. Your company needs to excel at three basic functions to win; understanding IT competition, partnering with selected IT vendors and changing your corporate culture to embrace convergence.
When the competition heats up against major IT vendors and their channels in major accounts it will be brutal on some physical security manufacturers, size notwithstanding, and their channels. This is for two reasons: first the IT vendors have established relationships with the recommending and buying influencers; second, years of cutthroat competition in the open systems market has made them very aggressive and creative in winning business.
For example, IT vendors have perfected the art of discrediting performance benchmark information. They will purchase a competitive NVR and 32 IP cameras and have an independent testing lab publish results. Some physical security manufacturers inexperienced in these selling tactics will walk directly into a knockout punch. If your published performance claims are not accurate or, worse, way off the mark, you may never live it down. IT vendors will not only highlight your poor performance on every sales call, they will make it part of formal industry sales training and publish numbers in every press vehicle possible.
Once this credibility is lost your own customers will look at you funny. We used to call this tactic "benchmarketing" and the strategy is all about making your competition play defense on every sales call. If you kill your competitor's credibility you kill their sales cycle. Your performance embarrassment becomes the buyer's business embarrassment.

The key issue when partnering with an IT vendor and/or their channel is to have some internal IT technical and sales experience. This is lesson number one for the physical security market. Spend some money on internal IT sales and technical expertise or you can't compete in major accounts long term. Let your perspective partner know you understand the basic IT issues. Remember that it is not necessarily in their interest to have multiple overlapping physical solution partners. It is imperative you highlight the immediate and future market opportunity your partnership provides. What differentiates your product/company from others in your space? Barring a unique patent position or very high barrier to entry for your competitors, you may sink or swim based on your sales strategy and partner support processes. This might involve a large customer account you bring to the table to highlight as a security convergence reference.
The 80/20 rule holds true here, as with most things. I do not see the IT vendor community coming into the physical security market to buy up major integration/manufacturing companies like Stanley Solutions or Diebold. I just don't see the value add in the sales channel, the product line, or the customer base. Any Fortune 1,000 accounts you have today probably spend 10 times as much with the major IT vendors. A $100 million integrator is on the small side in the IT industry.
I see IBM, HP or Cisco buying smaller software companies like Broadware, CoreStreet or Vistascape and educating their existing channels on these solutions. Not to say one of those players won't grab Pelco for their customer base or video expertise, but they will certainly cut it up for parts. Only Pelco's best sales and technical people, the top 20 percent, will make it over the long term in a more competitive and better compensated IT sales organization.

One business lesson that transcends time and industries is that senior management must accept and embrace change to succeed. More importantly, they must understand that accepting change on accelerated terms is not always in their short-term best interests, but must be embraced nonetheless. In this instance, the IT industry has a proud history of being change agents.
Remember that Intel had a very large and successful memory business when it correctly recognized they would be beaten badly by their Japanese competition in the future. Rather then wait, they took the painful steps to change direction and enter the semiconductor market. This meant a painful transition and the exit of some senior management who were not on board. All these changes were in the best interest of the company. This transitional phase will follow its course in the security convergence market as major parent companies become frustrated with missing numbers and the high costs of pursuing yesterday's businesses opportunities. The companies that win in the end will be those that recognize business trends, embrace change, and master the Big Three.

Dan Dunkel is president of consulting firm New Era Associates.