This article originally appeared in the November 2023 issue of Security Business magazine. When sharing, don’t forget to mention Security Business magazine on LinkedIn and @SecBusinessMag on Twitter.
Having the title of “President of Global Growth” at a company so renowned for its ability to rapidly expand in this industry might be intimidating for many. For Convergint’s Mike Mathes, it is just another day at the office in a career that has spanned an impressive 21-plus years with the company.
Mathes rose through the ranks at the company to take this high-expectations role a year ago, and the new position has given him insights into the rapid consolidation of the security integration market, as well as how to guide a company through a tumultuous but exciting and profitable period in its history.
Security Business caught up with Mathes at GSX in September in this exclusive Integrator Connection Q&A discussion.
At one point, we read about a new Convergint acquisition every month; nowadays, we are seeing that from companies like Pavion and Pye-Barker. What does the security integration business landscape look like from your perspective, and will there be any independent integrators left in a decade?
Mathes: I think there will still be plenty of independent integrators. Somebody will always want to start a business and build it up. It is probably no different than you think about restaurants – there are massive chains and mid-size chains, but there are all kinds of smaller, boutique restaurants and things like that.
But I also think that there's a perception that Convergint is just an acquisition machine. While we acquire a lot of companies, 60% of our growth has been organic. We were fortunate enough to spend the first decade of our existence with almost no acquisitions, so we grew a nice foundation and a strong culture, which allowed us then to go and find culturally aligned, great businesses that other people had built and fit very well with Convergint.
I would say we resemble a bedspread, where you put just the edging around it, vs. a quilt, which is a patchwork of different patterns that have been put together. Convergint brings a much more aligned cultural approach to serving our customers because of that. We haven't been driven with the absolute need to do nothing but acquire; we know how to grow organically.
Well, the acquisitions have slowed down a little bit for Convergint…are you still out there actively looking?
Don't get me wrong, we're actively looking, it is just not the only strategy we rely on for growth.
Convergint has been expanding globally via a couple of interesting acquisitions. Do you have every continent covered at this point?
Back in 2013, was the first time we stepped outside of North America with the acquisition of ICD Security Solutions in APAC. Since then, the demand from our customers for us to continue to be able to provide support to them around the globe has continued to grow. We made acquisitions in Europe and have a good, strong presence in Europe and Latin America.
I think today we're in 32 different countries or so. Do we plan to continue to expand into more countries? I'd say certainly. As the opportunity presents itself, we would like to have a presence in other countries as well and continue to grow the business. I think a lot of people see the Middle East as being a very big growth opportunity. It is a little bit of a challenging environment from the perspective of understanding their regulations.
I would imagine it is not easy to expand into another country.
It's not. Different rules, regulations, laws, culture, and all those things come into play. It requires an organization very open to understanding those different cultures and being open to embracing how they do business as well.
Overseeing growth for Convergint, what does that mean to you? Does it mean adding colleagues? Does it mean moving into new verticals?
From my perspective, our focus is primarily on organic growth. We have looked at how to add new vertical capabilities. And the focus in the vertical markets is bringing unique solutions and methodology, which has caused us to see significant growth within those spaces. I think a continued effort in the vertical market space is something that truly will help us to truly grow in double digits going forward.
Another area is in global accounts. Large global companies want a consistent delivery approach across so many locations. How to better support them is something we focus on all the time. Building our global accounts team to support [those customers] is another thing that's near and dear to my heart.
And then finally, there's a lot going on in what we call digital transformation. While it is probably a little bit of a buzzword, digital transformation is talking about AI, the movement to the cloud, and managed services. We have an entire group focused on all of these leading-edge services and new technologies.
Have these digital transformation technologies changed the company’s go-to-business model? Would you call Convergint a managed service provider these days, or do you have two different sides of the house, so to speak?
There are certainly not two sides of the house. We have a shockingly large number of managed services that our CTCs (our various offices) currently engage in, but there is an opportunity for us to bring a more defined and disciplined approach to managed services. I think customers are asking for it. The transition to the cloud is something that's going to help support that.
Are manufacturers coming through for you in that regard?
If [a technology] not cloud native, it is pretty tough to do much with it. I'm sure you are here at the show, and everybody is talking about cloud and AI, but some do a better job than others.
Is there a logical leap from those managed systems into cybersecurity services as well?
I think cyber has to be a part of it. As soon as you start talking about a cloud-based solution, if you are not providing some kind of cyber monitoring for the client, you're missing out on an important service. They need to have that.
Do you partner with specific companies that provide network monitoring services and relabel it?
We do a little bit of that, but we have a number of operation centers around the globe right now, and we have to work to build out a more scalable and homogenous solution. As we move into more of a cloud-based environment, that look and feel needs to be consistent from client to client.
How far away do you think that is?
Our industry is going to move like many others – there will be the early adopters, the guys in the middle, and the laggers. We still see highly regulated environments installing new on-prem solutions, and [switching to a cloud-based system] is going to take a while. It is probably no different than the switch from analog to IP video. There are still people out there with analog. I think for us, the question is, when is there enough mass to justify bringing a managed services solution to the marketplace? I think that we're on the cusp of that right now.
How many companies are already doing that?
I don't know that there are a whole lot of people doing it, and that's the issue. If you asked me for a list of managed services companies for access and video control, the list is very short. This is something that we have to build ourselves and bring to our customers, which, quite frankly, is probably a better solution than contracting it out or using a third party.
Going back to verticals, which ones are growing fastest?
The utility space is very active. And that goes beyond just electrical distribution and generation, but also to water and other kinds of critical infrastructure clients. But there's nothing wrong with the old standbys, right? There are a lot of schools and municipalities out there, and they all have needs.
As manufacturers continue to evolve and develop more effective solutions – whether they rely on AI or other new technologies – we want to be there to bring those new solutions to our customers in any verticals.
In the end, would you agree there is plenty of room – despite pressures on margins – to expand and grow as an integrator?
Absolutely. There is always pressure on margins. Just ask yourself when was the last time you wanted to pay more for something than it was worth? So that's human nature. But I think we are very fortunate to be in an industry that continues to evolve and grow. The demand continues to grow each year, and it gives plenty of opportunity for us to continue to grow and build our business. I think the future looks great right now.