The changing technology landscape
 
The changing technology landscape

Feb 1, 2000 12:00 PM
James G. Spencer

The commercial security market among Fortune 1000-sized companies is no longer hardware- or process-driven. It is software-, communications- and knowledge-driven.

Traditionally, most security systems have been process-control based. Most current systems still are. The systems are programmed to take an event (card read or sensor), analyze it and take a pre-determined action (open door, sound alarm, activate and aim camera), and as an added benefit to record what happened. Such a system is still well suited to stand-alone fire, HVAC and other building-related systems. Here, the focus is on events and response, not on knowledge value.

However, sophisticated security managers of Fortune 1000 companies in the new century require the value of knowledge.

They want the equivalent of a modern Navy ship - all systems and crew converge to provide the officers with the knowledge necessary to take action to accomplish the mission.

Unfortunately, today's security officers' typical ship is more like a collection of rowboats, sail boats and powerboats (even an occasional kayak or surf board), lashed together in any number of ways.

The crew (suppliers) do not like each other, are inconsistent, do not speak the same language and feel no continuous involvement in the overall mission.

Today's security officers do not want to read or scan through thousands of pages of reports listing events and responses in order to investigate actual or suspected breaches. They do not want to view hours of cassettes, often located remotely, to identify or track suspects. They do not want to travel to remote locations to gather data.

What they do want is instant access to all data, including live video, presented in a meaningful manner that will vary depending on the knowledge they are seeking. They also want converged security, building and IT systems and the ability to take actions based on their analysis of the data or knowledge. They do not want to deal with multiple inconsistent suppliers whose sense of involvement ends with shipments or installation.

True, all the technology is not in place. For example, bandwidth and storage media issues currently inhibit remote live digital CCTV. But the problems are temporary, and existing open systems architecture will enable the new broadband technology to be implemented when available.

Good news: All systems providers are talking about open systems. Bad news: Most have no idea of what open systems are and are mistakenly motivated to remain proprietary. The market will eliminate the proprietary suppliers or at least exclude them from the Fortune 1000 in the very near future.

The dealer's technology dilemma Dealers have a real dilemma in marketing the vast array of new technologies successfully to the Fortune 1000. Those achieving greater-than-average sales and profit margins in 1999 have probably already made the transition from hardware and wire installation. They probably have a sophisticated staff who can understand and communicate intelligently with IT professionals on software- and communications-based technologies. They probably have documented and consistent installation standards and professional project managers and systems to manage a growing number of subcontractors. These are the basics demanded by the Fortune 1000. If you do not have them in place, you will not be effective in marketing to your customers.

Unfortunately, this expertise is often spread across many suppliers. The negative result goes beyond costly inconsistency and inefficiencies. It also is reflected in providing less value to customers, which increasingly will undermine success in marketing to the Fortune 1000.

Dealers need to focus on supporting fewer software providers. They must become consistent and professional experts on the smaller numbers of technology suppliers.

Focus on technology the customer will buy Let's make an initial assumption that most security systems basically perform the same security functions. If one supplier does something new and successful, the others will follow. There are no magic features, only marketing claims which are not the reasons customers buy. Thus, the real test is: Which systems are the Fortune 1000 most likely to buy and where can you be most successful over time? Be aware of lifecycle and support costs to you in maintaining highly satisfied customers. This last point is usually ignored, but doing so is costly.

Most Fortune 1000 companies have developed internal standards relating to computer operating systems, data bases and communications in order to reduce their support costs over time. Trying to sell against these standards would be a frustrating fool's mission. So why try?

If your Fortune 1000 customers do not support Unix, then don't try. If they support one Unix but not another, then don't even try the other. Few corporations support Lynx as a standard yet. It has potential, but is risky for the time being.

The best bets for the foreseeable future are Microsoft NT and BackOffice-certified systems. The other criteria should be supporting OBDC-compliant databases (some customers support only one, so it is important that your supplier support many) and TCPIP protocol.

In fact, all your security systems should be based on the same operating system to save you money in training and certifying your staff.

Here are some other factors to recognize at ground zero:

* If you want to market to the Fortune 1000, you have to be really, really good.

* You have very limited resources.

* You can only be really, really good on one or perhaps two suppliers offering to the Fortune 1000.

* You cannot add resources to become really good on an existing supplier or to add a new one unless you free up existing resources now supporting legacy suppliers.

Shedding what you will no longer support This is a hard decision, but if you want to market to the Fortune 1000 you have to make it. To avoid it or delay it would be fatal in this market. There is no place to hide. You need to focus all your resources. It is a case when deciding what not to do is even more important than deciding what to do.

While the decision is hard, the steps are simple:

* Identify which suppliers and systems you do not want to sell to new customers. The reasons could be a falling-out with the manufacturer, old technology, bad support or simply an offering that has too many problems. Contrary to popular opinion, these are not cash cows, they are resource and business inhibitors to future success.

* Accelerate the departure so you can retrain and refocus your limited resources. Simply inform your installed customers that you can no longer support those products professionally. Offer them an attractive upgrade to a new system that you will support if you want to retain the relationship. A trade-in program (possibly with financial participation of the new supplier) might be a creative approach.

If the customer prefers to stay with the legacy system, then exit; complete all obligations and assist in the transition. You may even bring in other dealers willing to support the products (tie up their resources, not yours). They may even pay you a fee. In any event, you want to be positioned to be able to return later.

* Practice stealth. Don't tell the old supplier you are leaving. Let the relationship rust out as you make the transition.

Now that you have begun to free up resources, it is time to get back to selecting the supplier(s) that the Fortune 1000 customer is most apt to buy.

The focus here is not primarily on technology; that cut was made in identifying suppliers who meet the most corporate standards. Rather, the cut is primarily on business criteria for both the customers and for you.

Business evaluation model for system supplier Business viability. Select and focus your resources on larger-growth suppliers. Few of the Fortune 1000 will risk their security to new or small developers. For the Fortune 1000, limit your supplier candidates to companies with current sales of $30 million or more. To determine if they are real growth companies, do not only look at gross sales increases. Rather, assume that 50 percent of each year's sales are add-ons. Measure the percent of yearly growth of the other 50 per cent which represents sales of new systems to new customers. You will be surprised how this analysis will alter your perception of who is moving forward and who is coasting on past glories or suffering past problems.

Open systems. Further limit your selection to true open-system software suppliers. Open systems are simply those able to converge with other suppliers' systems and devices (both upstream and downstream of their servers). For example, does an access control provide API's to allow others to converge another supplier's panels to their access control software and database? Do they also provide API's for others to converge their systems to the access system and database seamlessly?

If not, then they do not have open systems and hence are less acceptable to the Fortune 1000.

Your hidden support cost. Evaluate how the supplier can reduce your problems and costs. The simplest test is to determine how many versions of software they ship. The ideal is that they only ship one version of configurable software to both their smallest customers and their largest, most complex customers. Each shippable version is another version to quality-assure, test and support for both the supplier and the dealer. Each version multiplies the potential costly problems. The analysis may provide surprising results on your real lifecycle cost-of-support.

Support services. Does the supplier expect you to provide all services (box providers) or do they provide professional services that you can sell for a profit? The further these service offerings go beyond simple future software upgrade plans, the more advantageous that supplier can be toward your profitability and your success with the Fortune 1000. These customers want a continuing sense of project ownership through professional services beyond shipment and installation from both the dealer and the developer.

Market culture. The final selection is channel-and culture-driven. Undoubtedly, you have already eliminated suppliers who either sell to anybody or will compete with you in the market. If not, then shame on you. Undoubtedly, you will want a supplier that has a proven policy of limited distribution, but do not expect exclusivity as the Fortune 1000 will demand more than one source. A real differentiator will be how much they demand of you in terms of training, demo units, hotline capabilities, self-sufficiency and constant customer satisfaction as well as achievement of commitment. Those that demand the most are probably best for you if the other chemistries and cultures match your own. (If you expect a free ride and they are willing to give you one, then watch for razor blades as you slide down the banister of life.) The Fortune 1000 will demand that you be professionally self-sufficient beyond yesterday's expectations. The days of transporting are over, so work with demanding suppliers who will support your efforts. Also, make demands of them. The customer wants a team that demands a lot from its teammates.

The days when dealers could state boldly that they can support whichever system the Fortune 1000 customer selects are over. The technology is now too complex - and available talent too scarce - to support multiple suppliers.

As George Booth of eBay stated in November's Dealer Channel, he expects his dealers to be omnipotent, not only regarding their products, but also in how they support and even anticipate his needs.

Which is not to say that a dealer should only support one supplier. There are multiple precedents to show this is not good business. However, it is doubtful a dealer can support more than two suppliers of large, convertible, systems to the Fortune 1000. These two, at most, may not be the same as the ones you supported in 1999, and while you support two, you should put primary focus on only one for new sales. The other becomes Plan B for existing customers and a backup offering if the primary disappoints you or if it is preferred by your customer. A third, for non-Fortune 1000 customers, might seem attractive, but could be costly. Better that the other two have the flexibility to meet the needs of smaller customers with the same software.

Position your technology for the 21st century If you have chosen to market to the Fortune 1000 in the 21st century, then it is critical to evaluate the technologies and suppliers you represent.

Are they the ones that meet the increasing knowledge convergence needed by the customers? On which one(s) are you capable of becoming omnipotent in supporting the customer? What will be your lifecycle support costs?

We have provided a fairly simple business evaluation model to guide you in answering these vital questions in determining the fortune of your business in this segment.

In the next Dealer Channel, we will cover the changes in the business, channel and value landscapes and what dealers need to do to meet these changes in marketing to the Fortune 1000.

But it all starts with positioning your technology and your expertise for the future, which is already here.

 
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