physical security

A few developments surfaced today out of the SecureNet Technologies camp. The Longwood, Fla.-based company, which provides video monitoring services and interactive home features, announced the launch of the SecureNet platform, a system that gives alarm providers a cloud-based management service.

The system is designed to increase the speed of alarm responses while improving their accuracy by eliminating errors caused by traditional notes-based dispatching systems, the company noted in a news release.

As we continue to see, there are several benefits for central stations who deploy a cloud-based platform. First off, it improves redundancy in the event of outages or natural disasters. It also reduces the man hours required for continual technological upgrades. Interestingly enough, while SecureNet’s platform is clearly moving with the hosted solution wave, it is also offered as a traditional on-site service.

The other piece of news, less of a strictly monitoring nature, is that SecureNet has joined the Z-Wave Alliance, a group of technology companies that design wireless home control products based on the Z-wave wireless communications standard.

SecureNet’s Interactive Gateway Modules, a line of hardware devices that integrate with the with alarm panels, is designed primarily for its adaptability to home management services. The devices use Z-wave technology to control and communicate with interactive video monitoring, access controls, as well as an array of home automation features.

In the coming days I’ll be following up with SecureNet to get a closer view of these latest developments.  

As I encounter new theories and projections about PERS valuations, I continue to find a refreshing lack of uniformity among the experts. That’s not to say there aren’t areas of agreement. There are. Those watching the market often cite similar determinants of valuation, like attrition rates, cash flow and the costs of creating new accounts. But experts seldom endow the same metrics with equal importance.     

For example, Barry Epstein, president of Dallas-based Vertex Capital, believes reducing attrition rates to be a critical component of increasing PERS valuations. Conversely, Mark Sandler, a principal with SPP Advisors, downplayed the importance of churn, saying instead that a company’s value hinges more on how efficiently they can redeploy their units.

Today I came across a presentation on PERS valuations delivered by Henry Edmonds, president of The Edmonds Group, at the Medical Alert Monitoring Association conference held last week in Orlando. Edmonds’ insights reflect another nuanced interpretation of the market. In the presentation, he boiled PERS valuations down to four key metrics: cash flow; churn (attrition rate); growth rate/new account volume; and creation cost.

Just as vital for maximizing value is the ability of dealers to compile solid data on these metrics, Edmonds noted in one of the slides.

Edmonds developed some pretty in-depth calculations that he believes dealers should be cognizant of. For instance, churn rate metrics should account for total lost RMR on a trailing 12-month or trailing six-month basis. That figure should then be divided by average outstanding RMR. With respect to the cash flow, Edmonds advises dealers to focus on adjusted EBITDA and steady state free cash flow.

Edmonds’ presentation also offered a trove of information about buyers. He noted that buyers will create finance models for target companies, develop key assumptions based on a target company’s past performance and determine a capital structure based on current market conditions.

Edmonds also provided the following aphorism: “Buyers never pay more than they think they have to.”

In the coming weeks I plan to speak with Henry Edmonds himself to get a more in-depth take on PERS valuations and the state of the market in general. Stay tuned.

Over the course of my two days at the Dynamark Convention, I had the good fortune of speaking with several knowledgeable industry veterans, and I’d be remiss not to mention some of them in this space. Whether at the vendor show, educational sessions or during my tour of Dynamark’s central station, I found no shortage of folks with industry expertise.

The vendor show featured a vibrant mix of companies, with virtually every facet of the industry represented, from access control and video surveillance to fire alarms and intrusion detection. There were distributors like ADI, which had a booth, and several attendees from The Systems Depot, including CEO Robert Pinion, who gave me a thorough description of the company’s new call center, a 20,000-square-foot facility with an efficient layout that's rapidly adding new employees. In the spirit of the season, there was some gridiron chat weaved into the industry-specific discussions. As it turns out, Pinion’s son is a punter for the No. 3-ranked Clemson Tigers.

Those very same Clemson Tigers travel north this weekend, heavily favored in their matchup with Syracuse, the alma mater of Tom Piston, vice president of sales & marketing at Dynamark. Piston, along with Lamar Shroyer, IT director at Dynamark, guided me and SSN publisher Tim Purpura on a tour through the central station. Shroyer showed us a veritable wall of servers and systems, which included Bold Technologies’ Manitou automation platform, as well as servers from Israeli-based Tadiran Telecom.

Keith Godsey, Dynamark’s vice president of central station operations, answered a few questions about Dynamark’s training procedures. Training typically lasts two weeks, and operators accrue greater responsibility as they ascend to higher levels of training. Interestingly enough, Godsey noted that 80 percent of their operators have been at the station since the facility opened in 2011—no small feat for a profession typically prone to high turnover.  

To conclude, I wanted to mention a final element of interest about the conference: The presence of companies offering peripheral services that both dealers and central stations are leveraging for value. I spoke with Joseph Narkin, director of business development at Demand, a marketing and business development firm that works with alarm companies, including Dynamark, and whose cold-calling team is comprised of qualified prison inmates (Narkin himself is a former prison inmate who said the company contributed tremendously to his rehabilitation and reintegration in society).

I also spoke with John Latimer, senior account executive at Keller Stonebraker Insurance, based in Hagerstown, Md. The company works with alarm companies, both dealers and central stations, to help transfer and mitigate risk—legal concerns of no small importance to the alarm industry as a whole.

In summary (I fully intended this update to be just that), my first voyage as part of SSN was a valuable and diverse experience, and the folks at Dynamark, and many others with whom I happened to cross paths, were nothing short of welcoming and bright.

Embrace new technology. Adapt. Preserve a human connection in sales and seize the opportunities provided by a market that's bound to become more aware of your products and services. Those were some of the words of wisdom offered by Wayne Alter, founder of Dynamark, and Wade Moose, CEO of The Systems Depot and Elk Products, in the keynote speeches at the Dynamark Convention 2013.

A spirit of optimism pervaded the basic message, and both Alter and Moose were engaging speakers, knowledgeable and honest, with a penchant for weaving helpful and often funny personal stories into their advice for dealers. Early into Alter’s keynote, he predicted the penetration rate for the market would see a spike between 5-8 percent in the not-too-distant future. It’s a lofty projection, but one grounded in the likelihood that market awareness stands to rise appreciably in the coming years due to the influx of new players, specifically the cablecos and telecoms, whose advertising clout could prove a boon to the entire industry. This development, together with a gradually recovering economy and a profusion of home management services that boost RMR and curb attrition, might be enough to nudge that stubborn penetration rate in an upward direction. I’ll be keeping a close eye on market reports to see if Alter’s prediction bears itself out. 

Another point of emphasis in both speeches, particularly Alter’s: The industry has come full circle. “It’s new in some ways, and it’s old in others,” Alter told attendees. While the technology and the means of reaching customers have undergone dramatic transformations recently, some of the original principles of salesmanship remain as essential as ever, Alter noted. He mentioned Vivint’s door-knocking summer sales model as an example of this, as well as the DIY monitoring systems, which Alter originally thought would appeal more to hobbyists than general customers.

Another two-part prescription Alter provided to dealers: Expand the number of people in your business and train them well. It’s a tested formula for building an account base, if not always an easy one to enact. This piece of advice again harkens back to the recurring theme of the keynote—the theme of keeping pace with the evolution of the industry while preserving certain core requirements that have always been conducive to growth.  

In a funny anecdote, Alter drove home the point that many of the same sales practices that work best now were the same sales practices that worked best when he started his business in 1975, a time when he had to scour phonebooks for sales leads.  

There’s much more to say about my experience at the Dynamark Convention. But since this space is reserved for a blog rather than a dissertation, I’ll have to save these thoughts for my next post. Tomorrow I'll discuss my inaugural central station visit at Dynamark's Hagerstown, Md.-based facility, along with some other goings-on at the convention. 

AT&T’s 2012 announcement that it would phase out 2G service left most in the alarm industry, well, unfazed. With wireless technology, such changes come with the territory. Moreover, it’s not the alarm industry but the mobile phone industry that dictates network “sunsets.” As Lou Fiore, Chairman of the Alarm Industry Communications Commission, put it in a recent conversation: “As long as you go cellular, there is no endgame here.”

A few months after the initial announcement, AT&T attached a deadline (Jan 1, 2017) to its 2G sunset. Since that time, the AICC has established a regular line of communication with AT&T, which sends a representative to attend the organization’s quarterly meetings.

AT&T informed AICC that, while interim changes would take place in advance of the 2G sunset, the changes would not affect the alarm industry. AICC members, Fiore said, were “skeptical.”

“We tried to impress upon [AT&T] the fact that our control sets hang on the wall, and if you change the operating parameters of that network, it may not work anymore,” Fiore said. “You can’t ask the homeowner to move the unit around to see if it works.”

Fiore, who is in the process of gathering information regarding possible outages for units tied to AT&T’s 2G network, said that in given locations, customers might still get 2G coverage but that there’s a chance it “won’t be as deep as it was before.”

Fortunately, there are some steps alarm companies can take to mitigate outages. Companies can switch to AT&T's 3G or 4G network by choosing matching hardware from a cellular alarm communicator, or to one of AT&T's competitors (the 3G and 4G networks of Verizon and Sprint are an option, Fiore said). Certain companies may be able to go with a wired network, but this is highly contingent upon business model, Fiore noted.

Still three years from the deadline, AT&T’s 2G sunset promises to be a story with several more chapters. I’ll be watching closely to see what kind of ripple effects it has on the industry.

In another illustration of the industry’s evolution, Baton Rouge La.-based Skyhawk Security, which offers remote video monitoring, IP camera systems and access control systems for commercial customers (most in Louisiana, but some as distant as California), acquired local IT firm Big Networks. With the purchase of the firm’s assets and intellectual property, the Skyhawk Group (the name of the merged company) will have an in-house IT unit to supplement its security offerings.

The move establishes an interesting hybridized security company in the Louisiana capital. Brett Lofton, one of three managing members with Skyhawk, said the acquisition, in addition to bringing in an “in-house IT decision maker,” also presents some major cross-selling opportunities, particularly with respect to some of the clients the company inherited through the Big Networks buy.

Lofton said some of these accounts could potentially be a boon to Skyhawk’s security business. “We’ll certainly be cross-selling and trying to get in front of them to talk about [our security offerings],” Lofton noted, adding that this applies especially to companies with guards—customers who could find the security services palatable. Commercial customers may find value in the prospect of replacing or supplementing nightshifts with video monitoring, Lofton said.

Skyhawk also plans to explore cross-selling its hosted access control service, which Lofton believes is gaining traction. It will be interesting to follow what kind of role video monitoring and access control play in the company’s primary near-term plan: organic growth—much of which could be fueled by business in its own backyard. Stay tuned for more on Skyhawk’s plans and near-term goals in Louisiana and beyond.