Reach Systems looking for partners

Managed access manufacturer exploring sale of company, technology
Monday, July 12, 2010

OAKLAND, Calif.—Glenn Forrester, CEO and founder of hosted access manufacturer Reach Systems, has founded successful IT-based companies in the past, but has perhaps never been as confounded by a channel as he has been by the security industry.

Before entering the industry, “we spent a lot of time talking to dealers and integrators and trying to figure out what it is they needed,” he said. Hearing the need for more RMR and for an access control system that could address large organizations with lots of small door-count facilities, he created Reach Systems (formerly Edge Integration), a hosted access control solution that could keep the cost of initial installations low, provide recurring revenue to installing integrators, and integrate large numbers of small installations into one comprehensive access control system.

Unfortunately, Reach has struggled to find distribution and channel partners who are willing to embrace this relatively new model (Brivo has a similar proposition).

“We built what everybody said they wanted,” Forrester said, “but no one really came to it.” Now, while the company remains committed to supporting its current dealers and products, Reach has another opportunity to apply its technology in the corrections marketplace and is looking for “a partner that has a distribution channel, but needs technology ... someone who can exploit the opportunity that we have created with this next-generation technology.”

And the technology does have its proponents. Assa Abloy has been promoting to its dealers the Reach solution as one way to take advantage of its WiFi and PoE lock sets, said Bret Tobey, intelligent openings business development and product manager for Assa Abloy. “Reach kind of surprised us,” Tobey said, “which is the reason we were willing to raise their profile. We gave them the SDK and they in a very short amount of time had product functioning ... And another thing that’s interesting about Reach, when you look at the cost of materials and the cost of getting a site up and running, Reach’s model really cut that to the bone.”

In some ways, that’s very attractive for end users in this economy, but it might not fit with what integrators are looking to do in a time of reduced revenue streams. “This economy has dealers much more focused on delivering immediate value,” theorized Tobey. “People stick to their knitting in this kind of time, rather than expanding their businesses.” Further, sales people that are seeing their commissions shrink might not be excited about smaller initial sales, even if there is monthly revenue on the back end.

That’s been Forrester’s experience as well. “The owner of the company will sign up in a snap,” he said, “but getting their people to sell it is a whole different story. Do they change their compensation structure? That’s not easy, and they’ve still got to support their other lines.”

Reach’s experience jibes, too, with what industry observers like Bill Bozeman, CEO of PSA Security, have been seeing: While more systems integrators realize the need for service-based, recurring revenue, it’s hard to get them out of their traditional contracting mode.

This conservative, long-view mode in which the security industry operates is what makes Forrester think his technology might be better suited to a larger company that doesn’t need to grow sales of the technology as fast as a start-up does: “We are very flexible about the structure of a deal,” he said, noting that he and his team would be willing to provide ongoing support, “but we basically understand our own limitations vis a vis building a distribution channel from scratch.”