RMR: Nothing Comes Easy

Oct. 19, 2012
It's the simple ideas that add up big when working to garner more monthly recurring revenue in the alarm industry

Central 1 Security Inc., based in Brookfield, Wis., is run by two industry veterans, Chris Utter, a partner in the company and Chris Tolliver, operations manager. They’ve seen the days of strong hardware margins dwindle, but haven’t waited for opportunities. Instead, they’ve plunged headfirst into developing new avenues of recurring monthly revenue (RMR), delving into places that perhaps traditional alarm companies have shied away from.

One of the ways they garner additional revenue is through remote video monitoring and smartphone surveillance connectivity. They still offer traditional central station monitoring but have also now offered the Alarm.com interactive monitoring platform, as well as fully integrated security and fire systems.

Tolliver said that RMR is the most important aspect of the business. “It keeps us going, day in and day out,” he said. “We know how to monitor burglar and fire alarms, but kept asking ourselves: ‘what else is there?’

Poised with this question, they came up with some answers that have customers wanting more.

Central 1 Security has been focusing on the cloud storage aspect of video, pitching it to small- and medium-sized businesses and also, working with a number of municipalities in and around central Wisconsin and surrounding Midwestern states.

“We focus on those markets with the cloud because the customer has the flexibility they need and doesn’t need a DVR, NVR, etc. Hard drives and mother boards are fairly expensive, and cloud storage is extremely scalable and has no hard drives to fail, so it prepares them for the future. Even with existing analog camera customers we can offer the IP network and the cloud. It’s a minimal amount of hardware—basically an encoder that connects to the analog camera and compiles and transfers the data to the cloud. It’s a lot easier to install than a DVR or an NVR and less programming set up. And all the programming with the encoder is Web-based. You can even do motion detection and masking through the encoders,” Tolliver said.  

And while they know their roots are as a traditional alarm company, that’s not where they feel their future is. “We’re not so much a traditional alarm company anymore,” Tolliver continued. “We’ve gotten more into the IT edge of things and that’s what’s helped us with RMR. When we bring in products, we will have our sales staff and techs experiment with them and talk as a group; that gives us different points of view. We do experiments and we do briefing scenarios with problem-resolution and by that we are able to make economic decisions and decide whether we can go to market easily. This cloud thing is really very simple. The hardest part is changing the thought process from being a traditional alarm company to embracing the technology.”

Central 1 Security adds value in other ways as well. They have an interactive Website where customers can access their account, CCTV systems and cameras, giving customers various levels of managed access.

“The response to its cloud offering and managed services has been good, our closing ratio on sales so far in this new market is actually higher than our traditional sales numbers, “ Utter said. Tolliver added, “We’re also getting higher RMR numbers with most in the $40 to $150 per month range per customer for storage. Instead of installing a system and being ‘once and done,’ with the cloud-based model we can charge about ¼ of the initial traditional DVR installation fee due to the lower cost of the cloud equipment. The customer likes this because they are familiar with this model for services and they don’t have a large initial capital expenditure. They can more easily budget on the front part of the installation and that’s important for smaller businesses. And with the Web interface, they are with us all the time, on the main page of our site, we advertise new services. Now, we are driving our profitability through technology.”

Access to cameras and activities

That’s just one part of the RMR services the company is deploying. Others include: software that tracks and monitors dynamic IP addresses; monthly physical security maintenance contracts; electronic service contracts on cameras; remote system monitoring for health of cameras as well as company activity; data streams such as regular reports and openings and closings; and cloud-provided emails on activity sent directly to police cruisers or municipalities.

“That’s how we constantly stay in touch with our customers. They know their systems work and are up to date and they are willing to pay for these services,” Tolliver said.

That’s not the end of the story for Central 1 Security. The company will continue to tweak and perfect its cloud capabilities. “We are also looking at how we can more fully leverage the clouds for our access control subscribers. We are working with some access control manufacturers to see whose software functions work well with our offerings. We believe we can also use the dynamic IP monitoring system for the access control market. We need to, and are currently developing a cloud-based access control plan.”