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Brink's news: profits up, Soros is among stockholders

Thursday, February 19, 2009
Brink's Home Security released Q4 earnings today. Below is a a brief AP report on that, and further down an item on billionaire and big Democrat George Soros, who bought a little more than 1,100,000 shares of Brink's Home Security stock before the end of the year, and before that stock price went up.
Brink's Home Security's 4Q profit gains 21 percent Brink's Home Security 4th-quarter profit rises on bigger subscriber base Wednesday February 18, 2009, 9:46 am EST IRVING, Texas (AP) -- Brink's Home Security Holdings Inc. said Wednesday its fourth-quarter profit increased 21 percent due to a larger subscriber base and lower royalty expense. Net income rose to $14.8 million, or 32 cents per share, in the fourth quarter, from $12.2 million, or 27 cents per share, in the year-ago period. On average, analysts surveyed by Thomson Reuters forecast a fourth-quarter profit of 39 cents per share. The estimates typically exclude items. The company said it benefited from a reduction in the royalty rate charged by its former parent for November and December. Typically, the rate equaled about 7 percent of revenue, but decreased to 1.25 percent in November. Quarterly revenue gained 7 percent to $135.2 million from $126 million in the previous year due to growth in subscriber base and higher average monitoring rates. The company said its subscribers increased to 1.3 million, up more than 6 percent in the same period a year ago. For the year, earnings increased to $57.1 million, or $1.25 per share, from $44.2 million, or 96 cents per share, in 2007. Analysts were predicting earnings of $1.59 per share. Yearly revenue rose to $532.3 million from $484.4 million.
And this on George Soros:
New Purchase: BRINKS HOME SECURITY HOLDINGS INC (CFL) George Soros initiated holdings in BRINKS HOME SECURITY HOLDINGS INC. His purchase prices were between $15.5 and $23.5, with an estimated average price of $19.6. The impact to his portfolio due to this purchase was 0.82%. His holdings were 1,146,542 shares as of 12/31/2008.

CSAA looking for 2009 Central Station Excellence Awards entrants

Wednesday, February 18, 2009
Get the Recognition Your Company and Employees Deserve! The CSAA has announced it's looking for entrants for it's annual Excellence Awards. Three years ago, CSAA initiated the CSAA Central Station Excellence Awards program to recognize the industry's central station, central station manager and the central station operator that best exemplified excellence in central station operation. In every industry, there are outstanding companies, managers and operators who all perform to the highest levels and standards. In fact, these are the companies and people that are constantly exploring new ways to raise the standards of performance and quality in an industry. The Board of Directors of CSAA feels that it is fitting that we continue to recognize the efforts of extraordinary companies and the extraordinary people who make them work. The CSAA Awards are open to all UL Listed and/or FM Approved Central Stations—including company-owned, proprietary, and wholesale (third-party) central stations. This year CSAA will again recognize the best central station and individuals with three distinct awards: The Central Station of the Year Award The Central Station Manager of the Year Award The Central Station Operator of the Year Award The winners will be announced and the awards conferred at the CSAA Awards Breakfast on June 24, 2009 during the 2009 Electronic Security Expo in Baltimore, Md. How to Participate IMPORTANT: New this year, you will be asked to submit some of your responses on a downloadable spreadsheet: 1. Click here to download the spreadsheet. (Please ignore any messages indicating that the file is corrupted). 2. Save the Microsoft Excel spreadsheet on your computer under a new name (do not complete the form on the browser). 3. E-mail the completed spreadsheet before April 8, 2009 to the CSAA. 4. Download the rest of the materials by visiting the CSAA. You will also receive a mailing with the main application form. 5. You may e-mail the rest of the application as well, or you may send 10 completed copies of the rest of your application to CSAA, 8150 Leesburg Pike, Suite 700, Vienna, Va. 22182; Attention: Celia Besore. If you have any questions, please contact Celia Besore at 703-242-4670, Ext. 16. The deadline for submitting your Awards entries is Wednesday, April 8, 2009. All materials submitted are held in the strictest confidence. This is your opportunity to let your central station, your best manager, and your best operator get the recognition they deserve. Thank you for your commitment to raising the quality and standards of our profession and good luck!

File under: Well, of course

Wednesday, February 18, 2009
Goverment Computer News gives us the following headline today: Physical security and cybersecurity go hand in hand Revelatory, I know. And I'm not trying to bust on GCN. I think they're among many who are just now coming to the same conclusion. And this isn't even about "convergence." It's about making sure you control access to your data center, keep track of your laptops, make sure people don't just walk out of your facility with USB drives filled with data they're not supposed to have access to. The thing is, public companies are way out in front on some of this because of Sarb-Ox regulations, which require that you have an audit trail of who had access to what data, those same regulations put in place by the U.S. government, but apparently not practiced by the U.S. government. Shocker. This seems to be the crux of the problem:
In the early days of computing physical and cyber security were one and the same. Mainframe computers were locked in computer rooms and accessed by hardwired dumb terminals. But as computers became smaller, smarter and more ubiquitous, property and data were dealt with separately and there traditionally has been little reintegration of physical and cyber security. Today, data in any form can be the most valuable asset in any organization, government or private, and the proliferation of devices on which it resides means that physical security is becoming as critical to protecting it as cyber security.
There seems to be a logical problem with that paragraph. As in: At first, we locked the doors to the computer room, then computers got smaller, so we didn't worry about controlling access to them anymore. Huh? Anyway, what's done is done. And if anyone read my live blog of the Focus event last week, you'll remember that this obliviousness to the importance of protecting data is widespread, according to Dan Dunkel:
“One major concern is that $200 billion annually in intellectual property theft is occuring. U.S. doesn’t manufacture much anymore. It’s our technology and intelligence, and it’s getting ripped off by the Chinese, the Russians, the Israelis, the French. It’s a huge, huge problem.
Sure, intellectual theft can happen via hacking, but it can also happen via someone walking off with your laptop. This is why it's not surprising to me that every time I ask about biometrics, integrators tell me they sell most biometric access systems for the protection of data centers and data rooms. The data needs protecting more than anything else the facility. As in, from GCN:
True, breaches caused by hackers can generate huge losses and big headlines. The recent hacking of Heartland Payment Systems Inc. potentially exposed data from hundreds of millions of online transactions a month for an untold number of compromised persons. But don’t ignore the physical risks. One of the largest government data breaches occurred with the 2006 theft of a Veterans Affairs laptop containing records of more than 26 million persons. That incident has cost the VA $20 million in a settling a class action suit.
I'm not sure why people are just making this connection now, but it's worth reiterating, so kudos to GCN for putting it out there to their readership.

Robbie Murray dead at 61

Wednesday, February 18, 2009
This sad news arrived from Potter Electric Signal Company on Friday. I thought I'd share it as many of you knew Robbie Murray.
It is with great sadness that Potter Electric Signal Company, LLC announces that Robinson ‘Robbie’ P. Murray, Age 61, passed away on Thursday, February 5, 2009 at Columbia Presbyterian Hospital in New York. Robbie was hired by Potter in May 2008 as Global Product Training Manager for the Fire and Security Division. Prior to Potter, Robbie held several key roles within the industry over the last 25 years. These roles included 10 years as ADT Security System’s Manager of Fire Design and 11 years as Cooper Wheelock’s Director of Global Business Marketing “We were extremely fortunate to have of Robbie as a part of the Potter family, even if it was only for a brief time.” says Hugh Blair, V.P. of Potter’s Fire and Security Division. “Robbie had such an extensive understanding of the product and people and will be missed greatly both as a colleague and friend.” says Blair. Robbie is remembered by many as living life to the fullest and enjoying every moment with his family and friends. Robbie is survived by his devoted wife, Barbara Sue (nee-Sabatino) and his loving daughter, Ashleigh

Videolarm sells for $45m

Tuesday, February 17, 2009
In what seems to be a good sign for the security industry in general, large component manufacturer Moog (not, I think, the maker of the legendary Moog synthesizer) has purchased Videolarm for a princely sum of $45 million. I say "good sign" because it seems as though Moog is diversifying its assets to avoid getting hit too badly by the economy, and it seems to think security is a pretty safe bet. Assuming their M&A team don't suck at their jobs, its good that smart money guys don't think security will be too badly hit. I say "princely sum" because, without knowing very much about the deal, it seems $45 million to acquire a manufacturer with $19.5 million in 2008 revenues is a pretty good deal for Videolarm. If camera and housing manufacturers are being valued at 2.25x trailing 12 months sales, that's great. The company paid a lot, too, for QuickSet, which makes PTZ motors and gears. So maybe Moog is cornering the market on pieces and parts of IP cameras. It will be interesting to see what else they buy in security. I'm trying to line up a call with them.

Professor Polk: 'Evil Persists'

Friday, February 13, 2009
Here are some notes from CapitalSource's Bill Polk's talk at the Barnes Buchanan Conference. Professor Polk gave an informative and amusing lecture on the state of the debt markets. (He's not actually a professor to my knowledge, he just seems like one.) He provided nice historical perspective on the "immense volatility" in the markets today and some scary details about being in the "midst of unprecedented challenges to the global financial markets." Times are tough and the price of debt is going up, but (like Mike Barnes and others) he called his message "relatively positive for the security industry." In perhaps the most repeated phrase of the conference, Polk said security's not a bad place to be because "Evil persists and the capital markets know it." Debt may be getting more expensive for security companies, but "let me assure you that there are industries out there that don't have a prayer of raising a dime of debt." "Expect to see more club deals," he said. "More lenders working together to structure deals to diversify risk." Adding to something Henry Edmonds talked to me about before the conference, (Edmonds is CEO of The Edmonds Group in St. Louis and a former business partner and business school buddy of Polk's) Polk said the "distressed transaction market will open up." In some instances the deals will come up not because the operating company itself is in trouble, but because the "hedge fund investor is in trouble." (Here's the story I wrote from my conversation with Henry.) And, repeating something I've heard Polk say before, "a great CFO is a great investment," especially now. He advised alarm companies to "go out and get a great guy or girl and treat them well."

Barnes Buchanan update

Friday, February 13, 2009
I returned late Friday night from the Barnes Buchanan Security Alarm Conference, but haven't had time to blog about it because I've been busy with our March issue which has now been sent to the printers. There will be lots in the March issue about the conference, but here are a few highlights and some fun stuff that won't be in the book. First some background: BB is a conference that brings together the financial people and dealers and integrators for the purpose of talking about what's going on in the market. Presentations delve into market values, operating metrics, growth patterns and predictions, industry trends, new technology--you get the idea. It's co-sponsored by Barnes Associates, an investment banking and consulting firm that specializes inthe security alarm industry and the law firm Buchanan, Ingersoll & Rooney. It takes place at The Breakers in Palm Beach, and, as one speaker said: "We were all wondering if people were going to come to Palm Beach to The Breakers this year." Guess what? Attendance was up this year. Not by a lot, and some of the faces had changed, but there were about 10 more people there compared to 2008. There was plenty of talk about financial Armegeddon in the markets and sobering signs in the industry, but the outlook from Barnes and others was that things could be a lot worse. Compared to other sectors, the security industry is doing OK. Here's the newswire story I wrote for this week with some more details. In addition to MIke's much-anticipated talk. I feel like "much anticipated" is part of the title, but it's true. The room is packed for that presentation and people are always clambering for the hand-out. Really. An investment guy I was talking to grabbed two of them when they were handed out. There were company presentations including one from George Broady of Kings III of America, who, in an aside, quipped about the benefits, these days of not being a public company. He was quoted over and over during the conference. Daniel Demers, CEO of Reliance Protectron was asked about the Canadian economy and how it compares to the U.S. economy.
The economy in Canada? My vision is that the Canadian banking system is completely different. We read that it’s one of the best the world … Plus there are laws in place to prevent people from accessing property they cannot afford.” With that said, Demers noted that “80 percent of our economy is tied into the United States. I predict within six to nine months it’s going to hit us. We can feel it already.
If you happen to have a 12-year-old son, like I do, you may have heard of the movie Paul Blart Mall Cop. I hadn’t been tempted to see it, but may have to now. Seems one of the movie’s co-writers worked at Doyle Security (in Rochester, NY) in the 1970s when it still had a guard business and that experience was the inspiration for this movie. John Doyle, CEO of Doyle Security told the crowd this during a presentation he made and noted that the movie exceeded his expectations. Joe Nuccio of ASG talked about health care and government being a strong vertical for them, something that others involved in systems integration also said. Ira Riklis of COPS stayed on-message during his presentation: He had this message for lenders: a company's alarm accounts are your collateral. If you have them at a proprietary central station during tough times, that's risky. Wholesale, and more specifically, COPS, is the way to go. John Murphy CEO of Vector and CSAA booster was perhaps even more on-message than Ira. His message: Join the CSAA; it's your responsibility--especially if you're among the top three alarm companies. He said joining CSAA is the smart thing to do. Also, when in Rome, (at a CSAA meeting) do as the other CSAA members do: Network. And another post script: Wholesale monitoring is not necessarily the way to go for everyone. ApxAlarm had a big presence at the event. I counted four executives and there may have been a couple more. More impressive was that Apx had its very own suite, where it held a series of meetings from 9-6 on Thursday. That’s what the sign said outside the large room that everyone had to pass on the way to the Ponce de Leon room where the Barnes Buchanan presentations took place. This post is almost as long as one of Sam's. I'm going to quit here, but I've got more notes from BB for later blogs. Stay tuned.

LoJack launches SafetyNet to track and rescue wanderers

Friday, February 13, 2009
LoJack, best known for helping bust crooks who try to steal your car is moving into people tracking with the launch, announced this week, of LoJack SafetyNet, which fills a market need for a solution that tracks and aids in the rescue of people who are at risk of wandering, including those with cognitive and developmental disabilities like Alzheimer's, autism, Down syndrome and dementia. The SafetyNet launch comes on the heels of LoJack's acquisition of Locator Systems, which provided technology to Project Lifesaver International (PLI), a network of more than 900 law enforcement/public safety agencies nationwide, which have been trained and certified in the use of electronic search and rescue technology. LoJack is now in the process of rendering Locator Systems technology more durable, eliminating equipment costs for law enforcement and public safety agencies, and establishing a working relationship with PLI. This seems like a natural expansion of the PERS market, and one that PERS providers could potentially get in on. It brings to mind a recent story I wrote on WindTrac and its admonishment that the industry do more, exploit all the avenues for growth before it, and go mobile. I'll be adding quotes from Paul McMahon at LoJack when I talk to him.

So, do the cops in Indiana still support ECV?

Thursday, February 12, 2009
Maybe I've got Michael Phelps on the brain, but this story struck me as particularly amusing:
SOUTH BEND, IN (AP) - Mother Nature helped police uncover a home marijuana-growing operation. Police say a gust of wind set off a security alarm at a home in western St. Joseph County Tuesday, prompting Indiana State Police Trooper Mick Dockery to investigate. Dockery found the back door of the home open. Inside the home, his police dog indicated the presence of drugs. Police found 19 marijuana plants and 40 grams of processed marijuana. No arrests have been made, but St. Joseph County prosecutors are reviewing possible charges against the homeowners.
Anyone know the central that dispatched this? I'd love to know if they used enhanced call verification? Because I just can't imagine why some stoner who's growing dope would purchase and maintain a monitored security alarm. Was he scared someone would steal his dope? Then go after the guy for grand larceny? Makes you wonder if the cops are still so in favor of ECV, right? I mean, if they had reached this guy on a cell, do you think he'd have recommended the police investigate the premises? Just how many drug arrests is ECV preventing - that's what I'd like to know. Also, this strikes me as a perfect market for InGrid and Total Connect and the like: The dope-growing market. Clearly, these guys want to protect their stash, so I'm sure they'd love an alarm system that sent an alert by text straight to their mobile devices. You know, they're out at the burrito joint, taking care of their munchies, when all of a sudden they get a text: "Motion in Zone 1." Stoner 1: "Dude, did you put the dog out?" Stoner 2: "Dude, I don't know, dude. Maybe?" Stoner 1: "Ah, man, Total Connect just texted me: Someone might be stealing our stash!" Stoner 2: "That's cool. I've got the camera rigged up to my iPhone. Hold on a sec and I'll see what's the haps ... Yep, it's toootally the dog! We're all set, dude. Can you pass the hot sauce, man?" Maybe InGrid could make one of their cool promotional videos along these lines with guys from Pineapple Express? I renounce all copyright to the above script, if so. My gift to them.

Live from Gillette Stadium

Wednesday, February 11, 2009
1:10 p.m.: I've always wanted to write that as a title for a blog entry. Of course, that's because I wish I had Mike Reiss's job at the Boston Globe... Anyway, I'm at the Focus event put on by PSA Security and 1nService, which has as a goal encouraging more cooperation and partnership between their respective memberships - security integrators on the one hand, and IT/networking integrators on the other. So far, we've had lunch (vegetarian-friendly - nice!), and done some chit-chatting. Talked with Mike Hanlon, who's with Viewpoint CRM, the video-monitoring central station that's the third-party backbone behind Integrator Support, a company that PSA's Bill Bozeman helped start up and for which he serves on the board. Hanlon and Paul Bodell from IQinVision were talking about getting more integrators on board with the possibilities that video monitoring offers. One cool application Mike mentioned: At a new retail installation in Freeport, Maine, there will be kiosks on the street with interactive maps and such, but best of all there will be a help button that calls up a live operator - video and audio - at Viewpoint, of whom you can ask questions and get information. Not exactly security, but it's a security integrator that's doing the installation. Right now we watching a video about the integrated building from Panduit, whom I don't know well. 1:12 p.m.: Paul Cronin, head of 1nService is leading people through the sponsors. Paul Bodell is talking now: "We have the largest install base of megapixel cameras in the world ... we're profitable ... the company itself is built on putting more intelligence and processing out on the edge of the network. We were the first company to do image cropping on live images ... we're waiting for the analytics market to catch up with us." 1:15 p.m.: Bart Nanni from Intransa: "We're a manufacturer of IP storage .. we provide a very low-cost solution ... there's an awful lot of data that needs to be stored somewhere and managed effectively ... we have an IT background, been in physical security for the better part of a couple of years ... bringing reliability to the marketplace for highly available and fault-tolerant systems ... We are a member of PSA, which has done a fine job for us as a partner." 1:17 p.m.: Kelly Carlberg from Cisco: "Ray Columbe is here as well ... my role is how we manage our partners ... I'd like to hear some of your challenges. This is a new market for us ... we put partners together with partners, help them navigate Cisco ... then deploying a solution for customers ... 30 percent of our time is spent on how we go to market, it's not longer having a physical security partner, going in soup to nuts, do everything, today it's changing significantly. If it was nothing more than replacing coax, we wouldn't see the changes we see today. We're seeing multiple solutions collapsing onto the network ... customers looking for using that network for multiple things. Our challenge is to build programs that ensures that the customer is getting the solution deployed the way they expect it to ... they might understand the physical security evaluation, but they might not understand what happens when you put the solution on a WAN ... the IT guys know that no problem, but they might not know what a request-exit on a door is. We're starting to see video shared with UC, interlocking physical and logical security ... we're trying to allow all these different partners to work together. I want to hear what makes your job difficult, what you'd like to see from us in terms of putting together a program." 1:21 p.m.: Paul Cronin: "We're trying to create meaningful relationships so people can form partnerships afterward ... We're going to hear a couple of presentations and then we're going to break into two different groups ... your card is either pink or blue (it has nothing to do with anything) ... that will break the group up and then we'll share some insight. I'll be speaking about the IT side of the world, and Bill Bozeman will work with the networking member companies to provide insight into the physical space ... feel free to cross-pollinate." 1:23: Moving to the presentation area, to hear from Dan Dunkel and others. 1:35 p.m.: Paul Cronin: "Where is the industry today?" Having some technical difficulties. The video doesn't work. So, moving on to what is 1nService. "We're 10 years old - picture yourself at an industry event, and it seems like 10 years ago a lot of our member companies would get together and provide a lot of insight into x. So we thought maybe we should actually spend time sharing best practices and talking. You're scattered all over the continent, and you do x and I do y, and there's a little bit of a crossover, but not much, and I'd like to do x but I don't know how. "So we formed a corporation that enables the members to provide solutions and products outside of what they do themselves ... and to help with geographic reach of providing solutions ... and it's CEO to CEO, HR to HR, it's exchanging documents, comp plans, assessment documents, what's a project manager job description, then we hold forums where we educate our members and tackle some of the tougher issues. "At our CEO summit last month in Miami, for example, representing about $900 million in revenue, we talked about how we could penetrate the market and then work on how to team up and sell someone else's solutions so I'm the one neck, but I'm the trusted one neck. "Break out sessions: What's your number one painpoint? Out of the 33 companies that participated, it was interesting that they had similar problems. When you take those minds and put them together and talk strategically, out of that comes solutions that allow you to solve those problems. On another note, what are you CEO doing strategically, how are you approaching this market? These types of venues happens four times a year." "We're member driven, sponsored by suppliers. It's a lot of listservs. If you need a non-compete, a pricing model, you go out to the network and people share that information." 1:40 p.m.: About 20 people in the room, by show of hands, are 1nService members. Cronin: "So, who could help us find value. First we found Panduit, which led us to the physical security market. And then Bill [Bozeman] and I met 18 months ago, and we explored how that partnership could work. So turning it over to Bill..." Bill Bozeman: "The partnership wasn't that easy - an 18-month romance that we were finally able to close. So thank you for that help in that Paul. I was really, really wrong about my initial reaction to, understanding of, and comments about the whole convergence deal. Maybe it was pride, or my competitive nature. It started as us vs. them. Who was going to own the customer. It was the physical security vendors asking who was going to win the battle. Would it be the network savvy integrator, or would it be the physical security integrator. So we fought back and forth in the trade journals. And I would discuss who would win the battle. "But that just isn't going to work, guys. It will be all about partnering. There will be the occasional integrator who can do it all. Have all the Cisco certifications, know everything about wireless, and know everything about physical security. But they'll be few and far between. "So, thanks for coming out to this. If you guys just talk together, this event is a success. And this is an experiment. We have more physical security guys here - so, you guys, go find the blue badge guys. I don't think the blue badge guys have the same skill set in physical security that you do. "One example. I attended an event, and they vibe was that all the networking guys thought security was going to be easy. And I said, "Who's the AHJ?" Not one of them knew. If you don't know who the fire marshal is, you're not doing anything in security. Bill talks about his presentation at Barnes Buchanan last week. "This was the first year convergence has been talked about there. Things like managed services, which we call RMR in physical security, were talked about. The people with the money, they call it managed services. Tremendous discussion on the worth of managed services. The RMR on a home, they'll pay 36-44x. The financial geniuses see a similar value on managed services. Physical security integrators are struggling with this concept. They either don't get it or they're paralyzed with fear about how to get there. Burg guys got it 30 years ago. 1:48 p.m.: Things that are wrong about PSA Security. "We're not just small companies. We have large companies. We have public companies. Have to be at least $2 million to join. We have about 230 security systems integrators. Someone who spends the majority of his time installing, designing, monitoring controlled access, CCTV and their peripherals. We're not really life-safety, as in fire alarms. "Things are doing very well in Canada. Latin America not so much. It's hard to get paid in Latin America. So we clamped down on the credit and that's when the sales dried up. "We have incredible training. And I'm not talking about sales deals where the Sony rep stands up there for an hour and talks about his product. Last year we had a certification that lasted six days. And we don't make a profit at our PSA-TEC event. We try to break even, but we don't. It's the only event of its kind. "We're going to be working with ISC to do their CCTV and their access education. It's very close to a partnership. "We spent more than $100,000 on a national accounts program that's open to you to do for free. Partnerships are really hard, it's not just a handshake. We took this to the lawyers and the accountants and created a book on how to work together. All the way to resolving disasters. How to handle arbitration. "There's no sense recreating the wheel, so use this. It's expensive to do this stuff on your own. "We have approximately 190 some-odd vendors that we manage. Most of them are very specific to physical security. That's 90 percent of our core. Now, thanks to guys like Paul Cronin and Ray and Kelly, we're bringing in Panduit, megapixel products, things that will be interesting to the networking integrators. "Just think about how you can partner. We have the documentation. That's set. The partners are here." 1:55 p.m.: Paul Cronin: "So, as part of our partnership, you can join 1nService at a premium price, and 1nService integrators can buy with PSA pricing. And 1nService guys can come to PSA Tech." Bill Bozeman: "For example, we have an IT track there, and we're not experts in that, so we brought in 1nService to do that for us. Plus there's a business track and a physical security track." Cronin: "One of our members is a Cisco and networking trainer." Here's the video of where we are. It's working now. A film called "405." A guy is driving on his own down a deserted closed highway, the 405, and a plane is about to land on his head. He freaks. The plane lands behind him and rear ends him. He's now going 120 mph. There's a granny driving slow in front of him. He's honking the horn. She's not hearing. They go right by here. The plane and the guy in the car stop. The granny drives by and flips him off. Cronin: "Sometimes you just wonder: Is there a plane landing on my head. So I'm turning it over to Dan Dunkel, who'll talk about convergence. Not whether it's coming. It's coming." 2:00 p.m.: Dan Dunkel: He can't get his presentation to go full screen. I love it when high-tech guys can't make their presentations work. But I appreciate irony. Now it's working. "Recessionary decision making" - Is recessionary a word? Dunkel: "We're clearly in a recession. One thing to point out though: Convergence is an overused term. Talking about convergence, think about your pda. It's not a static term. It's not phsyical security applications on an IT network. Now you've got your electronic wallet, and soon that PDA will diagnose your heart attack. Just because Blackberry recorded bad earnings today, doesn't mean people aren't designing things to work on it and using the device to deploy a security policy. Cisco provides the intelligent network that makes these things possible. Convergence is just a bunch of phases." More presentation problems. "This has never happened to me before." Moving on without the slides. Now slides again. "In a recession, traditional spending is cut significantly, and business risk becomes a priority. ROI and TCO become much more important. Networks and storage are 2/3 of the budget. You have to be conversant in where that network and storage are leading. That's where a vendor like Intransa can help you - how video is going to impact data storage and management. "Strategy starts to trump tactical. IT is going to start getting a lot more invovled in security spending, because risk is changing, and many companies can't keep pace with the threats. So the demand the CSO places on his vendors is going to be changing, demanding a lot more. You're going to have to understand intelligent networking and storage infrastructures. "So, what's different this time? We're much more globally connected, but e-crime, which constitutes a lot of things, identity theft, fraudulent software, and e-crime passed drugs this year as the most profitable illicit activity. So we're now looking on how to protect intellectual security. And their global supply chains are at risk. They're about just in time, not about worrying what happens when a port is blown up. "Unprecedented amount of insider theft is taking place now. These are all issues for the CSO, the CIO, the CFO, and the board of directors. e-crime is rarely prosecuted, which makes it more productive. "The 'Unshakable IP Trend': the network is responisible for $3 trillion in transactions, a quarter of the U.S. GDP, so the IP network is here to stay and it's not going anywhere. It's got to be more secure, but it's got to be there and it's got to combat the global threat. "One major concern is that $200 billion annually in intellectual property theft is occuring. U.S. doesn't manufacture much anymore. It's our technology and intelligence, and it's getting ripped off by the Chinese, the Russians, the Israelis, the French. It's a huge, huge problem. "They're even more a target in a recessionary environment. "So, look at what the intelligence agencies are seeing today. Former DNI Mike McConnell said for the first time at the end of 2008 that cyber crime is a serious impact on the country's economy. First time it was ever mentioned in a national intelligence estimate. Smart companies that are watching this are realizing that their supply chains are at risk. The recession is not going to stop them from funding the protection of that supply chain. Spending on that is up 44 percent. They're laying people off, but they're not going to stop spending on securing networks and business operations. They have no choice. They can't ignore the risks. "Chinese hackers stole 30 million pages of information from NASA. They're tremendously difficult to catch. "When you start thinking about a trusted enterprise, what are they going to expect from their integrators? You've got to understand the global IP network, what an intelligent network is, and how to secure it. And you'll have to understand storage, too. IT is having more of a say in spending. Everybody is jostling for the limited budget, and IT is having more of a voice at the table, especially in a recession. "Collaboration between applications is important. Security is information, and the real benefit of that is sharing the information. So you can't do that with proprietary silos. We can debate whether it's a good thing or bad thing and what it does to margins, but it doesn't matter. The nature of risk is changing, becoming a lot harder to mitigate. You have to sell in a much more strategic way. Single-point solutoins are going to be a tough sell. "You have to be much more of a project manager than an installer, find those applications that are going to be the next generation of security and how they're going to be deployed on the network. You have to address blended threats strategically. "If I was an integrator right now, I'd be out there hiring an IT guy who understands these threats. Now is the time to take chances. Get some cyber experience on your staff. Companies want to limit the amount of vendors they have, as well, so if you have more staff who can do more things you can stay with a company and get more of the sale. "The requirements on integrators are going to be a lot more demanding. Start to see where those trends are occurring and where the money is going to be spent. On protecting the company, the brand, and the shareholder." 2:18 p.m.: Cronin: Was that a commercial for Dell? Industry consultant Adam Thermos: "There's a conspiracy against the Macintosh." More presentation battles. "I like the bleeding edge of technology. And I'm bleeding often. Here are some of the applications where we've been successful specifying IP networks. I never end up with an all IP solution, though, I always end up with hybrids. But I like the take-off point to be IP, and here's why: "As far as I'm concerned, we're not in a recession in the security marketplace. On the IP side, we're moving forward at a 12 percent increase in terms of expenditures. When the times are good, they buy security, and when the times are bad they buy even more security. The idea that there's a recession for security is purely a psychological thing. "There's a lot of fear out there, but our market is pretty safe. "So, why IP networks? When the system goes down, it's IT's fault! But really, I like lowered cabling cost. Pulling Cat 6, I can drive video, PTZ controls, and not have too many cables. Compression is a problem, blue-outs and pixelizations are a problem, it's a threat all the time. Bandwidth restrictions are in place. But from a budget standpoint, it's something that the client finds more palatable. I like to start from low budget. "And it allows me to have more scalability. With devices now we can scale everything. Adherance to standards is important, open databases, using the same standard protocols the IT folks have for the transmission of video and data." This guy is moving really fast and has a thick accent. So I'm going to cease with the direct quoting and start summarizing more. 2:26 p.m.: Thermos: More benefits of IP: Best of breed components, data redundancy, synergies through system integration, operational efficiencies. Right now his DVRs are all dying out, he says, and he's looking at edge storage and NVRs much more. Basically, he starts wanting to go IP, but ends up having to use hybrids systems. Full disclosure: He says he's never put out a 100 percent Cisco system yet. I'm not sure about why that disclosure has been made. Refers to Dunkel's presentation: Intellectual Property theft is a huge problem. It's just that no one talks about it because it's not tangible. You talk about it and people's glaze over. But that's where the real threat is. No one should care about the theft of actual equipment. He's tearing his hair out about bio-lab security. Look at Bush having signed an executive order about bio-security. It's a new frontier. The CDC is as good as the FAA is for airlines. Something about what if there's a dog infected with AIDS walking around in your neighborhood. There may be a language barrier thing going on. Says that we're beyond cable. We're pretty much all wireless now, he says. 100 MB wireless transmission. 20 miles. He's firing through all kinds of installations - NYC, Coventry, North Providence, Pawtucket, big municipal video installations. 750 cameras in Boston alone, 5,000 at the city's university's. Basically, he's showing us dozens and dozens of wireless IP video installations. A joke about selling Israeli technologies to the Germans and the Poles. A Chinese central station. Way too much information he just fired through. He says almost all the money came through private money. Says he hasn't seen a dollar from the DHS. He would go to the poor house if he relied on public money. Problems: compression, quality of picture, people are still saying that the analog picture is better. It's true. He says he has to destroy the picture to send it around. 2:37 Bill Hall, manager of access systems for Logan Airport: "The Logical Security of a Physical Security Network" Again, I'm going to go with summarizing. Getting tired of typing at full speed. Was a design engineer for MAC Systems. Worked with Dr. Thermos. Logan took a hard look at itself after 9/11. Wanted to take the system up to a significantly higher level. I was part of the consulting team at that point. In summer 2005 we layed out the new access and video system. It was quite a place to be. It's a campus like a college and university, and I did that with Dr. Thermos and the MAC systems days. But an airport is different. It's very dynamic. The weather and the economic conditions of the airlines affect us, but federal regulations don't allow us to go below a certain level of security. It's a big challenge. Now, being the end user, I've got a different view of the whole thing. Our whole system is based on an IP-based network. Dedicated network for the security network, which runs access control, badging, video management, and security incident and metrics reporting. Badging is different than access at an airport. It's a credential management thing, with different levels of vetting. More than 800 active portals. More than 700 cameras. This is a lot to manage, even if it's not as big as some airports. We realized in the early days from looking at the legacy system that it wasn't going to meet our needs. We needed the encoding of cameras and the central storage of information. The key to the whole thing is the successful operation of the network. We need to have a real-time operation of portals. Even though it works independently of the network, the FAA says we have to always be live with the portals. Have to know if real-time if something is breached. If you're a network integrator, you need to understand some basic needs of physical security, and if you're physical security, you need to understand the basics of the network. Just because a vendor tells you a camera is IP doesn't mean you can string 500 of them on the network and expect the system to work. Dedicated network: We started from step one and established a new network, even though one was in place. ACS control of network switch locations. The network switch is just as important as the door. If the network is compromised, the whole system is compromised. Where are you going to put the network components, how are you going to control access to them? Ours are in cabinets that are locked, in doors that are managed by access control, and we restrict access to those cabinets to only people who need to be in those cabinets. If you don't secure the network you risk being compromised. Multi-factor authentication of all network devices. We use MAC addresses, the network fingerprint, if it's not in a table then the device won't operate. If it's a work station that uses a log on, that needs to be authenticated through the system. The IP address of device is assigned. It's not just dynamic. If you have thousands of devices, you have to have a clear plan on how you're going to manage those addresses. Shape traffic through the network, profile the data devices. A network switch is a giant house full of doors. Some people throw all the doors open, but there's some vulnerability when you do that. We closed all the doors and asked what each appliance actually needs for doors to be open. That takes a lot of planning and time, but when you're done you have a lot of control of what data is moving across the network. Security integrator tips: You need to be knowledgable of network technologies. You need to understand, not necessarily certified, but know what a VPN is, what secured portals are, the fundamentals. Talk to your peers about what a product needs to operate on the network. Understand the capabilities and limitations of your systems. Don't just think, yeah, I need a network to hook my system up to. Know the limitations - how many users, what stream rate, who has access and how, get into the details of how they operate on the network. Work with a network integrator to secure the network. Lock out unauthorized access. And not just external. Internal. Could be a disgruntled employee. Define clear roles and responsibilities. Have a plan for who does what on the system. Work with the IT group there that's the client to make sure you have the resources you need to make the system work. Bill is actually a manager in the IT group. That signalled to him that this was a technology job first, a security job second. There are others who handle the "security." If you can work with a manager, say, who's your counterpart on the other side, IT vs. physical. 2:58: He's doing some tips for IT integrators. I'm taking a rest. 3:03: We're breaking into those groups now. This might not lend itself to live blogging. And my left hand is kind of numb after 4,300 words typing. We're getting another video, though, which looks to be Abbott and Costello. It's the bit, "What's your job?" "I work in a bakery." "What do you do?" "Loafing." "What? How do you get paid for loafing?" "Yeah, you gotta join the union." "What? I gotta join the union of loafing?" Pretty funny, actually. The idea is that if you can't talk the language of the industry, you're going to look like a boob. "My mother was one of the best loafers in the family." "You're not a loafer. You're just a lazy, good-for-nothing..." "What? I'm a great loafer!" Anyway... 3:16 - in the breakout session: Questions the physical guys are asking Paul Cronin about the networking side of things: 1. Bandwidth (apparently, this is a question as a word) 2. How do you find good networking techs and what do they cost? 3. VLAN? What's up with it? 4. Aren't there lower margins in networking installation? Paul's just collecting questions at this point. He's got another video, but he punts that. Now talking about crossing the chasm between IT and Physical. Having someone who can successfully navigate the jump. That leadership has to be someone you have a lot of confidence in internally, or someone external you bring in with serious contacts and knowledge base to revolutionize your organization. It's sitting down with a plan for measurable objectives. How many people to get trained, what percentage of sales will they account for, what are the milestones we'll manage by. It's very important that you create a strategic plan for getting across the chasm. Get your employees thinking about a major change for the organization. Join 1nService, PSA, other organizations. (well, no duh...) You need to invest time in getting to know people in the other adjacent market. Partnerships should be in the strategic plan, but maybe two years out - build the relationships first. 3:22 - still the breakout session You need to ask your clients what skills you need to have. Don't be afraid to say, I don't consider myself an expert in IT, but I'm vested in learned to provide you support. What do I need to be able to do and know. How do you get the type of people you need to lead this charge? First, organically grow it. Second, look outside to merge or acquire. Three, just put together employment opportunities that will attract experienced people to your organization. You can give them an opportunity to be a major player in your organization and in the security industry. Technical people like to be great. To give them that challenge, to be a productive member and be a part of making others successful through this revolution that they can help lead. That's huge. Certifications are important. It's a differentiator. If you have a strong client relationship, you might win a war with an IT company, but if you're in a straight-up competitive environment, it's going to be all about the certifications. It's a professional development road-map as well. Give them milestones and as they grow, you grow. It's very important. Marketing. Market yourself as an agent of change. You are on the wave, not getting run over by the wave. You're not waiting. You're soliciting new opportunity in your market space. In networking, marketing is what we do really well. We have every different type of document that highlights how we approach business. Part of that plan also needs to include what you're doing to prepare and what's relevant in your organization. Customer perceptions: Typically CIOs or CSOs. Talking about 250 employees to maybe 2,000 employees. That's where the majority of us are. The mid-tier marketplace. We're not competing on price, and we're not at the low level. We differentiate ourselves with story-line approaches. We have procedural based services. Things that are routine. Level 0, 1 engineers. It's customer care. (He's talking about proceduralizing a process. That's a mouthful.) Something like network monitoring, gathering information from the devices, and use that to troubleshoot networks. It's like the monitoring you do at the central station (he uses finger quote marks when he says central station and pronounces it like it's French or something), except we call the client, not the cops. We say there's a problem and that we're dealing with it. Now moving on to "On-Going Support." (The slide says 27x7. Apparently there are 27 hours in an IT company's day...) You'll need an after-hours rotation for that. (Of course, those central stations are 24x7, so this isn't a problem for security guys.) Our biggest problems are a loss of power, or the client made a change and didn't tell us about it. It's almost never equipment. A lot of times it's an application masking an equipment problem. You talk about bandwidth. Putting video on a network can really mess with a network. Who's problem is that? Is it the network guy's problem? Or is it the physical security guy who installed the camera? Actually, it's the person who designed it - the only guy not in the room. But really, it's the client's problem. And we need to figure out a way to fix it. A lot of you have resident or scheduled engineers at a site. It's less prevalent on our side. It's IP-based so it's mostly remote management. Professional services: We're charging something from $175 to $225 an hour, and it's portal to portal, which means you've got to have someone who can show up and fix a broad array of problems. Probably more sophisticated than your typical physical security tech. One of our biggest problems is that we have a lot of higher salaries. Bring your people in at the bottom level and move them up. Don't get trapped in buying a lot of top-end talent. That's not going to give you the same benefits. You need to leverage your organization. A lot of what we do is pre-paid consultation. We spend the time to plan ahead of time and make sure our network is still viable years from now. We need to allow them to substantiate their investment today. That allows them to have a planned out document that talks about what's going to power the business. It's all about application, application, application. As you talk to the CIOs, they want business talk. And this is where the high margin is. You win the client there. We'll do a five-day assessment, give them a list of parts, and let them go source it. The margin on the parts is nothing. It's all about the professional services and the consultation. You know the entire client network now. You can talk about logical, physical, the intelligent building, you can talk about a whole host of different things. Most of us play in these core technologies, generally three or four of these: Voice/IP telephony, LAN/WAN infrastructure, Wireless networks, servers, work stations, security (firewall, authentication, VPN/Cloud, intrusion detection), Data Center (applications, storage, power, cooling, business continuity). IT Solutions Pricing Review: Average product margins: 8-15 percent Manufacturer deal incentives: 5-10 percent Direct support contracts: 10-15 percent Service Margins Flat rate projects: 20-25 percent Labor rates: $60 - $175 Hr, 15-25 percent margin Advance Services: $150-$225 Hr, 20-30 percent Value Added Support services: 25-25 percent Managed Services: 35-45 percent 3:45: Paul still talking: That's why we're liking the top-level consultation. The more value we offer, the higher margin we get. Managed Services for us are very big. You can do a lot of it in the procedural part, you can put the change management into it, network optimization, things you can bundle. The networking guys are great at bundling - project management is very big. We don't need it all, but we like to make it be a bigger package. Never do what you're presented to do. Get higher, wider and deeper. Next steps: All the stuff he talked about at the beginning - find a partner, package yourself, get a leader, certifications, be an agent of change, etc. Next up is the cocktail hour. I'm pretty much done with the blogging at this point. I'll have a summary story on tomorrow's newswire. But if you've gotten this far, maybe you don't feel like reading that... See you tomorrow. Hoping to have a video with Bill Bozeman and Paul Cronin up later in the week.