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Dakota Security

The "haves and have-nots of security integration companies"

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Wednesday, May 8, 2013

PSA TEC is in full swing. The action started on Sunday night, but I arrived late on Monday. Yesterday I spent the day (Tuesday) talking to PSA Security integrators and members and attending four different educational sessions.

I attended the State of the Industry panel, moderated by PSA Security CEO Bill Bozeman and featuring a large group of integrators and industry experts; a discussion on Big Data, Business Resiliency and Physical Security moderated by Chris Peckham of Kratos; a session on security finance moderated by Bozeman; and a session on how to adopt managed services, moderated by Sharon Shaw, of Integrators Support.

These folks covered a lot of ground. I’ll be writing more in-depth stories on some of the topics covered, but below are some highlights from the day.

Haves and have-nots

Bozeman started the first session of the day quoting Imperial Capital’s Jeff Kessler, who in a recent report wrote that increasingly the world of systems integration is dominated by the "haves" and the "have-nots." The "have" have an RMR base, are making a good margin on jobs, and are profitable. The have-nots have not moved into managed services and are surviving on installation revenue. Bozeman agreed with Kessler, recommended all read his report, and spent a great deal of time in this session and others talking about how all PSA Security integrators can join the "haves."

Know your verticals
Phil Aronson of Aronson Security Group, Ron Oetjen of Intelligent Access, and Eric Yunag of Dakota Security all said “deep focus” on your vertical markets is key. Yunag, whose Dakota Security is growing rapidly, said that his company made a strategic misstep 7 or 8 years ago when it decided to expand outside of the financial vertical. Banks are something that Dakota had grown to know very very well. The mistake the company made was not the fact that it expanded outside of that vertical, but it did so without the focus and understanding of other verticals.

The message from integrators on the panel was this: Focusing on different verticals is good, but get to know them. And don't delve into too many. How many verticals should an independent integrator focus on? Three, most agreed.

Mad about channel conflict? Look within
Another topic that came up was the problem of channel conflict and manufacturers going direct to end users. Jim Henry of Kratos, said it’s important for systems integrators to remember that manufacturers who go direct to end users fail. However, he noted, “it’s important that and end user sees you as a value, not a middleman making a margin.” Yunag added that if an end user is going direct in your coverage area “that’s your failure as a systems integrator.” You need to know what’s happening in your region, and if this kind of stuff happens take a look at your own organization.

Government Opportunity
Don Erickson, CEO of SIA, was banging the drum about the opportunity for integrators who want to do business with the federal government. Despite sequestration and budget problems, money is in the pipeline for K-12 projects, ports, transportation. “Consider the GSA Schedule program, it’s a very effective contract vehicle for doing business with the federal government.”

How to build an effective business?
During the State of the Industry, Ron Oetjen of Intelligent Access Systems broke it down this way: hire the right people and focus on your strategic plan.  Later, during a finance educational session that got pretty granular about how to make your business attractive to buyers, Kratos’ Jim Henry said that the businesses that he’s attracted to are the ones that are not for sale, the ones with a “clear vision and a mission.”

Boston bombing and video surveillance
In the aftermath of the Newtown gun massacre and the Boston Marathon bombing, Yunag said that now is a “significant watershed for our industry and the services we provide … in the next five to ten years, the way video surveillance is used will change,” he predicted.  The general public has seen, particularly with Boston, how video surveillance can be useful. Jim Henry said that the incident clearly demonstrated how video can be used for “actionable intelligence and business intelligence.” Further, he said, it's important to note that the ability to find the suspect was not because the camera in question was a certain quality or manufacturer,  but because it was a “well positioned camera installed by a professional.” This horrific event showed the world how video can be used, Yunag said, and it's incumbent on integrators now to have those conversations with law enforcement and others about how they can best take advantage of video and other physical security offerings to help prevent and detect situations like these.

There are many more highlights that I’ll report on later, now I need to get to the conference.

Devcon's past mistakes, future promise at Imperial Capital's SIC

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Wednesday, December 19, 2012

It was a very full day at the Imperial Capital Security Investor Conference on December 13. Starting before 8 a.m. with John Mack’s “State of Security Finance/M&A Markets” and wrapping up at 5:30 with a very cool panel discussion on BYOD—a great discussion topic, which should be a cause for concern for integrators, manufacturers, and end users alike. We’ll have more on this topic at TechSec in Florida, Feb. 5&6, 2013. Check out this link.  

During the course of the day I heard some cybersecurity experts prognosticating about some frightening stuff and also  listened to presentations from 13 companies (there were 60 presenting throughout the day.) The sessions I saw ranging from systems integrators like Dakota Security to manufacturers like alarm.com and interesting start-ups like Quylar and Applied DNA Sciences.

The format is efficient. Session are 20 minutes and because the presentations are designed for investors, they are refreshingly free of long diatribes about how much more maniacly obsessed XYZ company is with customer service than ABC company.

Early in the day, at the Devcon presentation, Devcon’s chairman of the board, Christopher Munday, spoke frankly about the company’s challenges in the past couple of years—including an ill-fated branch expansion.

He confirmed that the company is actively seeking a buyer and has hired Imperial Capital to "review strategic alternatives." Munday shared several operating and financial metrics to support his assertion that the company is on strong footing.

In 2010 and 2011, Devcon hired many former Brink’s Home Security dealers and quickly opened up 50 branch offices around the country.

That move was a mistake, Munday said. “In 2010 and 2011 we tried to fast-track the company. That did not work,” he said.

Today, Devcon has gone back to its “core business.” Munday said it has spent the past eight months realigning costs and reassessing its regional structure.

Based in Hollywood, Fla., the company now has 11 branches, eight of which are in Florida. It has 136,000 customer sites, 547 employees and $4.3 million in RMR.

While Devcon and Utah-based Pinnacle Security are both owned by Golden Gate Capital, the two are “separate companies with separate debt facilities,” he said.

Devcon’s business mix is 46 percent residential, 35 percent commercial and 19 percent homeowner associations. Its attrition rate varies by division, but is 11 percent across the business.

While Pinnacle does door-to-door sales, Devcon’s residential sales require an average of “1.7 to 2.3 visits—it’s a slower, controlled sale,” Munday said. Those residential accounts typically have a $200 to $225 upfront investment from the customer.

Devcon has two central stations, one in Staten Island, N.Y., and one in Hollywood, Fla. While its branch offices do some commercial work, the bulk of its commercial business comes from two New York City-based businesses: Mutual Central Alarm Services, which does large commercial deals and has many high-end retail customers, and Stat-Land, which services mostly commercial customers in and around Staten Island.

Recent changes have not affected Devcon consumers, Munday said.

The past few years have included investments in “enhanced business intelligence systems.” Those technology investments and software systems could “support tremendous growth nationwide, should [a new owner] choose to do that,” he said.

“After the uncertainty, there is positive momentum at Devcon,” Munday said.

Dakota Security opens seventh office

‘Modern-day Gold Rush’ spells opportunity for integrator
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04/25/2012

RAPID CITY, S.D.—Dakota Security, a PSA Security owner, on April 18 opened its seventh office here. It will serve as a logistical base of operations for Dakota to take advantage of security opportunities arising from the booming local economy, Eric Yunag, CEO of Dakota Security, told Security Systems News.

What’s PEG?

Why PSA integrators will come back to PEG
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05/26/2011

WESTMINSTER, Colo.—Dakota Security president Eric Yunag showed up a day early for the PSA-TEC conference here last week so he could meet with seven other systems integrators for a quarterly meeting of a ‘PEG’.

Business warms up

Dakota Security chief encourages social media use to take advantage of new business opportunities
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04/28/2011

SIOUX FALLS, S.D.—Business is looking up in 2011, but it’s not business as usual, says Dakota Security president Eric Yunag.
Yunag said he’s seeing more business opportunities in the first quarter of 2011 than he’s seen in the past three to five years, but it’s not coming from the same old places.

Dakota Security hires Brad Miller as regional VP

SSN Staff  - 
10/21/2010

TEMPE, Ariz.—Dakota Security Systems on Oct. 15 announced Brad Miller had been hired as the regional vice president for its Arizona regional office, here.