Global Security and The Minicomputer
(An Evolving Case Study)

by Dan Dunkel - President, New Era Associates

Published in Today's Systems Integrator

Last week I had the pleasure of presenting the topic “The Future of Security Convergence” to a sales meeting for the management of Diebold Global Security Solutions. This group is the second largest revenue engine in the $2.8 billion firm, based in Canton, Ohio and founded over a century ago. Global Security generates approximately $700 million in annual sales revenues and is aggressively targeting the $1 billion mark. The group combines a wide range of high tech solutions and service expertise to markets including government, retail and financial.

I realized that Diebold’s security operation is approximately the same size ($700 million in revenue) that Prime Computer was when I started my high tech selling career over 22 years ago. At that time, we were one of the smaller minicomputer companies in a market dominated by multi-billion dollar giants like IBM, Digital Equipment, WANG and Data General. The minicomputer market was in transition, from proprietary operating systems with 90 percent margins toward UNIX, an open operating system famously labeled “snake oil” by Digital Equipment founder, Ken Olsen. It is little wonder that DEC and their channel partners all went away, as did the entire minicomputer market.

I wish that Prime Computer had a visionary leader at the time to kick the sales and support organization in the pants. The writing was on the wall but the group chose to look the other way, and management did not hold them accountable. Instead, one at a time, huge companies and an entire industry went belly up. It was, in a word, unbelievable.

As the market for security convergence continues to gain momentum and IP and digital solutions go global, the writing is once again visible. Technology history will indeed repeat itself, and large companies will refuse to change and go away. People will look back and remember them fondly…and a lot sooner then you think. The reason is that global IP networks and computing standards were not commonplace back then as they are today. We are in Internet times now; have your kid download a movie for you and stop thinking bandwidth is a bottleneck to the future. I heard that same objection in 1984.

Thankfully for Diebold Global Security, they have a visionary leader unafraid to clearly communicate a security convergence vision to his organization. Dennis Moriarty is the senior vice president driving Diebold’s growth in the security market. He recognizes an industry in transition and is being proactive. Dennis hired a director level technologist with IP background for support in delivering his message, and to assist the corporate training and marketing teams in understanding their critical “education” roles. Equally important, the sales troops are listening. Dennis presented two very good points:

“The security industry acquisition strategy is now based on skill sets rather than scale.”
“The key is to understand that emerging new competitors are also potential partners.”

Remember this about potential partnering, these IT companies are leading edge and attractive to your traditional security competitors also. They prospect everybody and partner with a limited few. The 80/20 rule is alive and well in terms of security convergence partnerships in 2007. The issue is “timely execution”, as Cisco and IBM won’t wait until 2008 and are executing on the convergence partnerships today.

I would argue that many of the key attributes most physical security vendors feel they bring to a partnership with a large IT vendor are not as important as they think. Sort of patents on groundbreaking technology new to mankind…what these IT vendors (or their channel partners) want in a partner is knowledge. Remember Gordon Gekko in the movie Wall Street when he meets Bud Fox for the first time, “It’s my birthday Buddy, tell me something I don’t know.” (Blue Star Airlines) These IT giants want to know you understand partnering and can execute a convergence strategy. They want to “quickly” share knowledge, create solutions and EDUCATE their sales channels so they can increase revenues—faster then the other IT guys. Your value is to “execute a convergence strategy.” You need some IT resources and sales talent on board so the IT vendor is comfortable that you understand the issues. “IP 101” is no fun for them.

With a little training IT sales folks can understand the basic value of a digital surveillance camera and analytical software and how to position it to leverage network, storage and integration sales. What you provide are the intricate details of installation, support and product specifications. You in turn need to understand and communicate the basic value of IP networks, operating system standards, storage platforms and interoperability value.

It’s not rocket science; it’s a resource commitment. The smart one’s Get IT people while others just talk about it.

Commitment is not cheap.