Solution Provider of Tomorrow
What do you call a business entity that is a technology and software developer, hardware manufacturer, value-added distributor but also works with other dealers, resellers and manufacturers representatives, all at the same time? Observint Technologies -- one of few companies, if not the only, in the world that fits the bill. a&s looks into the company’s history, development path and future directions in hopes of setting an example and best practice for others to reference from, especially in times of uncertainty and austerity.
The physical, electronic security industry has grown, evolved and reshuffled over the last decade thanks to rapid technological advances, ever-changing market dynamics and global financial troubles. Having the “right” technology and R&D team alone is no longer sufficient. A successful company in security also has to have the best possible talent and partners in sales and marketing, business and channel development, and technical support and services — not to mention a management team that has the vision and confidence to take calculated risks in uncertain times. Observint Technologies seems to be one that has struck the perfect balance within the organization itself and among its subsidiaries.
In August of 2006, The Carlyle Group, a global alternative asset manager with more than US$157 billion in assets, formed an investment group, now Observint Technologies (Observint), to pursue the acquisition and development of security-focused entities. Observint then acquired Supercircuits (SC), a direct provider of video and audio surveillance gear. The company’s most valuable asset was its extensive customer database, with more than 300,000 customers accumulated over the past 23 years. SC’s business model is unique and advantageous in offering a platform for collecting real time feedback from customers, allowing the company and its technology partners to quickly respond to customer needs and rapidly-changing technology. This extensive customer base enables SC to quickly introduce new technology to a broad market, including US law enforcement, government agencies and a very large, loyal dealer network. Last, but not least, was the experienced management team led by Brian Wood, who now serves as Chairman of the Board, CEO and President of Observint Technologies.
Prior to joining Observint, Wood was VP/GM of US Public Sector and Large Enterprise businesses at Dell.
“Along with other members of our leadership team who share a Dell background, I saw the opportunity to approach the security market in an innovative way,” Wood said. “Leveraging our collective learnings from Dell and past experiences, we saw the opportunity to deliver a better experience for both security technology providers and customers through differentiation.”
In 2009, right after the financial crisis, Observint acquired a second direct distribution company, Security Cameras Direct (SCD), to quickly scale the business and reduce overhead costs by leveraging Observint’s core functional strengths, namely marketing, operations/IT, order fulfillment and finance/accounting. SCD had also been very successful in serving a very different and distinct customer set, ranging from retail to education segments. The SCD customer base provided Observint with direct access to a much larger set of customers and dealer partners. The company left intact SCD’s customer-facing resources, namely sales and support, to preserve valuable customer relationships, maintain continued high levels of customer experience, and preserve distinct SCD’s cultures and unique value propositions. This shift toward a “shared services” model started paving the way for future, strategic acquisitions (Digiop and Infinias) and strategic partnerships (LG and 3S).
With the emergence and accelerating adoption of IP video technology, Observint realized the importance of investing in and/or partnering with IP technology companies, allowing its diverse portfolio to deliver both cutting-edge and differentiated security solutions. Observint partnered with Digiop in 2010 and started selling the Digiop-branded solution through its direct distribution companies.
“Leveraging our business model, we were able to quickly deploy the Digiop solution across a broad range of applications, and received immediate feedback from our customers. This very positive feedback provided us with confidence in our ability to sell to and support entry- to enterprise-level IP installations and led to the consideration and pursuit of Digiop as a potential acquisition opportunity,” Wood said.
In March 2011, the acquisition was finalized.
“We left the customer-facing sales and support functions intact, leveraging Observint’s ‘shared services’ to immediately accelerate Digiop’s go-to-market activities, consolidate and scale supply chain management efforts, stabilize fulfillment and improve logistics.”
Given Wood’s plans to continue to expand his business to support a broader range of technologies and/or technology partners, it was the right time to start to build public awareness of Observint, its unique business model and differentiated capabilities.
“Similar to our direct distribution companies, other distribution partners rely on operational, marketing, sales and technical support from the technology companies they represent — a requirement for long-term success. Many technology companies do not have the resources or the experience to provide a high level of support, even for a single distribution partner. We continued down a path to building scalable capabilities to support the addition of future technologies to the Observint portfolio through acquisition or partnership.”
In addition to driving for further differentiation through its capabilities, Observint sought to find differentiation through product/technology offerings to identify key product lines in video surveillance categories (in addition to Digiop/VMS), such as multimegapixel IP cameras, and to expand beyond traditional video surveillance, starting with access control.
“We have certain requirements for new portfolio technologies including a focus on IP-based technology, minimal overlap of capabilities between product lines and complete interoperability/compatibility with all other technologies in the Observint portfolio (where applicable). While we feel confident that we have addressed many of the key categories of interest for our diverse customer base, we continue to evaluate new technologies that allow us to leverage and grow our differentiated business model, that add product/technology differentiation, or allow us to bring unique solutions to certain vertical markets. We anticipate further growth of our portfolio,” Wood boasted.
Regardless of the strength of the global economy, the security space will continue to be a relatively large industry, and Wood feels that the companies that are able to differentiate and add the most value for their customers (from distributors to end users) will thrive. “Our plans are to continue to deliver innovative, differentiated technology, to deliver world-class, differentiated support for our portfolio technologies, and to deliver these differentiated technologies and capabilities through a broader network of distribution channels and partners.”
Clearly, there is no template for success in the security industry.
“This works to our advantage, as it provides us with an opportunity to stand apart from our competition. The ownership of direct distribution companies enables us to better understand the ever-changing demand for our products and provides real time, end-user feedback (from performance to usability) that has a direct influence on product development and support. This benefits all of the technologies we represent. For this to be successful, no distribution company (owned or partner) shall be advantaged or disadvantaged to another, including access to products, price and support. This benefits both the customer whom can choose their preferred distribution partner based on the value/customer experience that partner provides, and the distribution partner whom can pursue opportunities on a level playing field),” Wood stated.
Given Wood’s background, he sees the changes in the industry as much more evolutionary.
“Honestly, I am still surprised that the industry has not evolved faster given the benefits that next-generation technologies and business models have to offer end users, channel partners and manufacturers. That said, I see the pace of change accelerating and believe that the market has reached an inflection point, largely driven by innovation, competition and market acceptance of new, innovative and potentially disruptive business models. I see real and measurable advantages of moving to surveillance and access control solutions that are based on an IP infrastructure. This core belief has driven Observint to accelerate our investment in technology and strategic partnerships, as we continue to build our portfolio and capabilities to be a market leader in that next generation of security.”
Benefits to Distribution Partners
Benefits to Technology Partners
Access to robust marketing engines and an extensive network of distribution channels;
The ability to deliver high-volume order fulfillment, reverse logistics, and US-based technical support (Tiers 1 to 3);
The financial strength to invest in and manage inventory to support broad product distribution; and
Access to a nationwide sales network, including account managers, field sales consultants, sales engineers and manufacturers representatives.
- A single source for multiple brands and technologies from a capable and established US supplier;
- A portfolio of technologies engineered for high levels of interoperability;
- Direct access to US-based technical support (Tiers 1 to 3), product development/engineering resources, and training;
- A robust supply chain infrastructure (systems, inventory/supply, fulfillment, forward and reverse logistics);
- Comprehensive sales support, sales channel development and marketing program support; and
- A multichannel marketing engine, building awareness and demand.