“The Bear” on Business

(continued from yesterday’s post)

It was October 1997. We had been at this KDG-thing for more than a month now. We were tasked with developing a business plan around the notion of SS7 and IP being interconnected. Huh? 

Remember, the year was 1997. I had only used the Internet for the first time in 1995. The expression “Internet Protocol” was rarely used by anyone–certainly no one I knew other than Jim. I was still trying to figure out how the Internet worked (okay–maybe that was a bit of an exaggeration in that I did a fair amount of implementing Internet networks as part of running major projects for UUNET.)

SS7 is an arcane protocol, created by Bell labs many years ago. It refers to how traditional telecom networks set up phone calls. When you dial someone’s phone number, the SS7 network kicks into high gear. It translates the phone number to a specific destination, checks to see if capacity is available in the phone network to complete the call and triggers the ringing of the phone on the other end. If someone answers the phone–and ONLY if someone answers–SS7 establishes a link between the two phones and then moves onto doing the same thing for the next phone call.  

What on earth does this have to do with IP? Oh, and by the way, what does “IP” stand for again? That’s right, Internet Protocol. 

Now I started to toss and turn at night. I was the leader of the team. Despite my strugglings, I knew more about this than anyone else on the team. At a minimum, I was convinced the rest of the team–including Jim and Kevin–expected me to know about this stuff. 

So I did the only thing someone in this position could reasonably be expected to do. I called Ron Beaumont and asked for my job back at Worldcom. Unfortunately, he said “no”, so I moved to Plan B.

Plan B was to confide in Kevin Dundon. He knew as much about this stuff as me–maybe more. KD would explain to me what Jim was talking about. Dundon might poke fun at me but at least I’d sleep better at night. If I was lucky, he would keep our secret between us.

So that is what I did…  (more to follow)

I left Worldcom in the summer of 1997 to join Kiewitt Diversified Group (KDG). At the time I agreed to join, only Jim Crowe, Kevin O’Hara and Doug Bradbury were part of the team. I knew Kevin well, but my relationship with Jim was fairly formal. In those days, Jim wasn’t the easiest guy to have a casual conversation with.

From the day I joined, Jim talked about a notion he had. “We want to build a business around interconnecting SS7 and IP networks,” he declared in September of 1997. I’d listen but didn’t comment. I suspect I nodded my head affirmatively, though I had little idea what he was talking about. I figured sooner or later he would shed a bit more light on the concept.

A few weeks passed. I heard him say it several more times. “Circuit switches will become obsolete.” “Voice will become free.” “All of this will result when the SS7 and IP worlds come together.” During these weeks, several more people joined us. Kevin Dundon. John Scarano. Matt Geraghty. Andrew Morley, Jon Yount. All guys who have been part of telecom for many years. All were guys I worked closely with at MFS and Ameritch.

After a while, I realized none of these guys asked questions either. In fact, no one talked about it at all–not even when Jim was back in Omaha. I noticed that they also nodded affirmatively every time Jim brought up the topic.

This went on for about two months. We were expected to write a business plan, with me playing the lead role in pulling it together. The notion behind the business plan was the interconnection of SS7 and IP. Maybe if I listened a bit more carefully, a light bulb would come on in my head. Maybe I shouldn’t have left Worldcom–the stock was up at least 10% since I resigned.

It became harder and harder to get a good night’s sleep… (to be continued)

This drawing is from November 10, 1997. The next version of this was given a name. A couple of months thereafter, a new name was given. This name became a household word–okay, only if your household included someone from the telecom industry. Do you know the initial name? Do you know the name that is now used? The answer will be provided in two days.

A close friend of mine commented on Mr. Scarano’s picture in the Rocky Mountain News article last week. He said John looked eerily similar to Princess Bala from the movie Antz. I scolded this good friend — for I think that John is deserving of more respect. I also think it is a tiny exaggeration to think the picture below looks like John.

Bear with me. Below is yet a fourth write-up from one of Envysion’s Account Executives. This also followed an introductory meeting with a different prospective customer. I edited out the names and changed some details to “protect the innocent.” This one also happened recently. Managed Video Surveillance-hmmmm…sound interesting?

Very good demo on 01-22. [The cutomer] was anxious to see the capabilities of our solution. We had previous discussions about how Envysion Video services could benefit both their corporate locations and the franchisees.

This brand has approximately 600 corporate and 5,000 franchisee locations.  They are currently using [___] for the corporate locations. The franchisees have been securing their own video surveillance providers which present challenges because of their requirement for integration with approved POS systems and PCI compliance. The person I met with is responsible for technology evaluation and certification for corporate and selecting preferred technology vendors for the franchisee organizations. They currently have four approved POS vendors and require technology solutions to be compatible with their POS systems. They have a VSAT network for all of their corporate locations. Franchisees secure their own broadband suppliers consisting of DSL, cable and VSAT when terrestrial services are not available.

Envysion’s CTO addressed the customer’s questions regarding PCI compliance, POS integration and bandwidth utilization. [The customer] seemed to be enamored with our reporting capabilities and ease of administration. He also values the Software as a Service (SasS) proposition. He expressed a desire is to have a video solution certified with their approved POS systems. He also requested we send them an EnVR to their lab at HQ for testing.

The customer asked very good questions about the operational aspects of our systems and readily grasped the ease of use and access and management of the system. Save to the Core and bandwidth optimization seem to be well received.

Next Steps - Pricing was requested for 4, 8 and 16 camera configurations and a test logon which was provided on 1-23. We are shipping a EnVR this week. We are also scheduling a follow-up with the expanded organization and doing a demo for one of their major franchisees

Below is a third write-up from one of Envysion’s Account Executives. It followed a different introductory meeting with a prospective customer. I edited out the names and changed some details to “protect the innocent.” All three happened within the past week. Powerful trend perhaps?

The meeting was with the person in charge of delivering a suite of products that allow the franchisees to leverage useful technology to manage their bottom line. He supplies an enrollment pipeline of endorsed technology vendors.

The customer is a 3,500 US location chain headquartered in the Midwest with 100% franchised operations

POS systems are a mix of Panasonic, Aloha, standard cash register and “cigar boxes.”

The only technology that is mandated moving forward is [a particular point of sale system] and the franchisee must use the gift card partner. The reason they decided on standardized is to be able to centrally-manage all product movement data.

PCI is a must

The customer “guessed” that 40% of franchisees currently have high speed broadband

Being able to supply “soup to nuts” offering that combines Envysion’s service with a managed services provider would be a big plus

Franchise video platform project and RFP will be released late spring 2008.  Customer will consider it a success if 1,000 – 2,000 franchisee locations participate in the program. Franchisee hot buttons:

• Video surveillance with POS integration
• Integration with other BSS, IE alarm/central station integration
• Remote video accessibility
• Above store real time reporting capability
• One stop shopping for security and broadband type of systems

Below is a second write-up from one of Envysion’s Account Executives. It followed a different introductory meeting with a prospective customer. I edited out the names and changed some details to “protect the innocent”. See any patterns?

The demonstration originally scheduled for 2:00PM CST was rescheduled to 10:00AM CST with 40 minutes notice due to last minute changes to the prospect’s scheduling. We were able to reorganize at the last minute to accommodate the prospect’s needs and complete the demonstration. Attendees were the VP of operations and the head of loss prevention.

Prospect Summary and Demo Highlights:

• This merchandizer is a 1,400 unit chain of clothing and accessories; all corporate owned. They currently have minimal CCTV in their store locations, but use extensive CCTV in their 6 distribution centers. All stores have DSL lines. All stores are utilizing a XBR data mining software for POS applications without video backup. They have 4 loss prevention field staff.
• They are planning on analyzing video in some locations to develop an internal ROI to sell to the executive management team. They are advocates of CCTV in the stores and it is high on their priority list, but they have to sell it higher on the corporate priority list. They are also looking at cross functional areas to get buy in from other departments, i.e. marketing.
• I have been an acquaintance of one of the guys for several years and have had numerous conversations with him in my past life. I was getting the impression from him that this demo was more of a courtesy to my persistence with him than a true interest in our offerings. As we progressed through the demo, the input we received for internal potential applications made it evident that we had their undivided attention and interest level.
• Customer Pains:
  • Cash refunds are this company’s number one contributor to internal theft. Company incurs loss of $300,000 per month. This equals 75% of their losses.
  • Company receives an unmanageable amount of exception daily.
  • Would like to be able to see video verification of coupon transactions; this would provide immediate benefit.
• Customer Wish List:
  • Video tied to a POS exception with a secondary trigger of motion, i.e. cash refund POS exception, but no customer or product present
  • Object tracking type video analytics, i.e. a video exception generated if motion shows a box being opened, but not if someone simply passes in front of the box as is with standard motion (ultimate wish is being tied into video analytics for object tracking in a way that does not currently exist in the market place)
  • “Favorite views” dashboard on the home page, IE click “favorites” and a specific set of cameras auto populate the viewing area.
  • Ability to view all video from centrally-managed area

Below is a write-up from one of Envysion’s Account Executives. It followed an introductory meeting with a prospective customer. I edited out the names and changed some details to “protect the innocent”. I thought this might be interesting to those of you interested in the emerging video surveillance managed services market.

A tremendously positive, yet very lengthy meeting with [decision maker] from [major brand name] during the lunch hour(s) today. We got started a bit late (almost 1 pm), but we went until nearly 3:45 to make up for it! The only better thing that could have happened is if we walked out with a purchase order in hand for several thousand locations

In summary -

• They are taking a fresh look at Global Asset Protection Program from the entire lifecycle (suppliers, shipping, distribution, store level) - anything that could impact growth
• Very interested in our Software as a Service (”SaaS”) approach. Quote: “Knew that the video surveillance solution would go towards software only.”
• Customer recognizes that technology has leapfrogged since they implemented a basic loss protection solution some time back.
• Customer is extremely interested in gaining a system with the exception-based reporting we talked about - they have an XBR system today, yet still have to manually pull associated video to do any prosecutions or disciplinary actions. Many of the systems today have overlay Point of Sale (”POS”). Loved our concept with the following comments or issues:
  • Tight control on stuff getting “out” - may require dedicated server/network infrastructure
  • Secure and easy-to-use administrative features are a huge plus for Envysion
  • Save-to-core is a big draw
  • No one in company is doing demographics, new product/market success, but always talked about as “if we only had the right product”

This was a great starter meeting and there will be more over the next months. It will take some time before the path is fully understood, so this is a longer play for Envysion. Still, we are perfectly poised.

Last week, I reprinted a post from Joe Panetteri from his MSPmentor blog.  Joe published a follow-up post on January, 22nd, which I reprinted below. 

Back in December, I blogged a bit about video surveillance as a managed service, and the rise of Managed Video Service Providers. Readers sent me plenty of emails and questions about both posts. But it wasn’t until last week, when I spoke with Envysion CEO Matt Steinfort, that I began to realize some of the new video opportunities awaiting managed service providers.

At first glance, most people think video surveillance is nothing more than traffic cameras mounted at intersections or video cameras monitoring retail cash registers. That’s only part of the story. The real opportunity for managed service providers is to marry video surveillance with business intelligence, point of sale, customer relationship management and other applications.

Here’s one powerful concept: A video surveillance managed service married to point of sale cash registers and credit card systems. In this scenario, your customers (for instance, a retail chain) could check the POS system for specific transactions. The video system, in turn, would automatically display a video clip associated with the POS transaction. This would allow merchants to spot fraudulent or questionable transactions, cashier errors, etc. This approach would also allow merchants to monitor customer lines, the quality of customer service during specific employee shifts, and so forth.

The video system could also be designed to monitor specific events. For instance, every time the door to a retail store opens, the video system would automatically create a record of the event. Rather than searching through hours of endless video, retailers could quickly review specific events based on time of day and other parameters.

Sure, much of this technology is common in high-end retailer chains that have deep IT budgets. But now, managed service providers and aggressive startups are bringing this video surveillance technology to the masses.

Which brings me back to my conversation with Steinfort from Envysion. Granted, he’s in the business of selling video applications. But in this case, he really doesn’t have to do any selling. When he demonstrated Envysion’s product to me over the Web last week, I immediately understood the true power — and potential — of managed video surveillance.

No, I’m not endorsing Envysion’s product (I haven’t spoken to the company’s customers nor have I tested Envysion on my own). However, it’s safe to say Steinfort has found a hot market niche for MSPs. And this is more than a retail solution. Higher education, state and local government, financial services, and plenty of other verticals are embracing video surveillance.

A case in point: Hundreds of cities across the globe are rolling out public WiFi networks. This municipal broadband movement, documented by MuniWireless.com, has hit a few bumps because cities needed to cost-justify WiFi, mesh, fiber and other network investments. In many cases, video surveillance has emerged as the killer application that allows municipalities to move forward with wireless broadband projects.

 Joe, I hope you have a chance to try our product. I think you will agree it is truly a commercial-grade software-as-a-service application that is changing the meaning of video surveillance.  I’d welcome feedback from you on the service/product. 

(Continuation of Fingernails post)

“Your rear view mirror is broken,” says your alarmed passenger.

“No worries,” you cleverly reply. “I want to see where I am going, not where I’ve been.”

Most financial reviews focus on the question of “how were actuals compared to budget?” I’m sure we’d all agree that is an appropriate question. The problem is that actual results are usually 30-45 days stale. As an example, I’ll sit in a board meeting in mid-November discussing how we did in September (the most recent month in which actuals were available).

This might not be a problem if you are the Cap’n Crunch product manager for Quaker Oats. I, however, live in the rapidly-changing Internet/telecom industry. Wasting time on how we performed two months ago is akin to getting directions to the Pepsi Center when I am heading to Frasca. It is where I have been, not where I am going.

If that is the best you can do, you are driving at night with your headlights off. It is just a matter of time before your crash.

BTW, most companies I’ve seen suffer from this dynamic. It is a reality that it takes 10-20 days to close last month’s books and assess results. Therefore, the focus during financial discussions is either on last month or on two months ago, depending on when the discussion is taking place. Most time is spent on discussing what happened in the rear view mirror, not on where the company is headed.

Disciplined operational finance capabilities are required to change this dynamic. I consider this well worth the effort–I credit it to be a major factor in the success of the companies I am involved with. I will elaborate on this in subsequent posts.