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Issue link: https://securitysales.epubxp.com/i/85538
Industry Pulse HOT SEAT AN INDUSTRY ADJUSTS AS IT EVOLVES As the alarm industry undergoes a rapidly shifting landscape, its stakeholders contend with altering business models, new technologies and services, and other changes to their traditional ways of doing business. Industry veteran Stanley Oppenheim, president of New York City-based Affi liated Central and DGA Security Systems, joins the conversation to discuss the current state of the industry. to play a much more expanded role for the customer. STANLEY OPPENHEIM President Affi liated Central, DGA Security Systems What is the biggest technical issue facing alarm dealers today? We are in a time of change, a time of evolution. We're transitioning from POTS-line transmission technology over the PSTN [Public Switched Telephone Network] to where alarms will be transmitted via the Internet and/or GSM radio. Where it is going to be a problem for the alarm dealer is the transition period to make the switch so that all customers are being monitored via the Internet and/or with GSM. It is going to be a somewhat painful transition that is going to get us to a good place. Alarm dealers should not be afraid or concerned about where the alarm industry is headed; it is going to be great for the industry. We are going from a narrow pipe — a 3,000Hz phone line — to the broadband pipe of the Internet and GSM, which will provide the ability for multitudes of sophisticated services being off ered. It opens the door for the alarm company What are some key driving forces behind home automation and other recurring revenue services? Some of it is from traditional sources and a lot of it is from others that are entering the industry right now. We're seeing nontraditional security systems companies that see the advantage in providing security system services, such as the cable companies and other utilities. T ey view the additional security systems and other services as a method fi rst and foremost to create stickiness with the customer. It is not just about a revenue play, but fi rst and foremost a play to add stickiness to the customer. Anything they can do to prevent churn is very lucrative to them. T ey feel by adding services to their core off erings it becomes much more lucrative than they might make on the actual transaction of adding the security systems to their customer off ering. T ey already have the customer, and if they can hold that customer longer, that is very, very important to them. T ey don't even necessarily have to make money on the alarm off ering to make the whole thing worthwhile … if they create stickiness. 16 / SECURITYSALES.COM / OCTOBER 2012 Do you have an overriding concern about the alarm industry in general? It troubles me when I see alarm dealers who don't recognize the value and the miracle of recurring revenue. T ey sell the systems they install, and perhaps get revenue for monitoring, but don't understand service revenue. T ey don't get revenue from managed services nor understand the recurring revenue business, which builds equity in their business, builds security in their business. T ey don't lease their systems, they don't have service contracts with their systems, and perhaps are only satisfi ed with monitoring. It could be so much more and they don't truly maximize the power of recurring revenue in a properly run company. When I see lots of dealers in that mode it does trouble me. T ey are devaluing their business. T eir business could be so much more valuable. T ey need to make certain they have good contracts and they could be building their business at a much more rapid rate. It is what makes the alarm industry great. FIND IT ON THE WEB For more from our conversation, visit securitysales.com/hotseat.