Guardians of disruption drive technology forward
When one considers disruptive forces in the security industry, discussions surrounding the manned guard force sector are not usually top of mind. However, several organizations in this space have planted their flag in the disruption landscape lately with complementary technology offerings and other integrated monitoring, software and risk abatement solutions.
The latest ripple in this new hybrid ecosystem of manned guard personnel and software management and services occurred just last month when K1 Investment Management, an investment group that specializes in growth-oriented enterprise software companies, combined the portfolios of Trackforce and Valiant, thus creating a unique end-to-end workforce management solution for both enterprise-level security departments and security guard companies. The combined business, now known as Trackforce Valiant, serves more than 1,800 corporate security and security guard customers with a comprehensive platform of solutions, including human resource management, time and labor management, guard touring, mobile command operations, billing, payroll, financial reporting and business intelligence.
Dedicated to Disruption
The short-term vision has Trackforce Valiant continuing to focus efforts on its current customer commitments and developing new products and technology solutions. These customers include several large private security firms, major airports, universities and corporations around the world including G4S, Whelan Security, SecurAmerica, McKesson Corporation, and Inter-Con Security Systems among others. But the long-term vision according to Jeff DiDomenico, the Vice President of Business Development for the company, is more dynamic.
DiDomenico, who joined Valiant in 1999 as Director of Sales and led the company to secure over 50% of the nation’s top 30 private security firms, sees his company playing a major role in this disruptive environment.
“The industry as it is taking shape today is really a combination of three very rare market drivers,” says DiDomenico, pointing to the recent 3.5% unemployment numbers, coupled with six to eight years of the largest regulatory action taken in the hourly workforce arena including minimum wage hikes, the Affordable Care Act, FMLA, and sexual harassment rulings. “Add to that the third market stimulus which are the lowest interest rates in history. I think it's really important that you start there because whatever happens from this point really does affect the strategies and the direction by which this industry is moving, and certainly when you bring it down to ground level it greatly affects how the owner-operator manages that workforce. These three conditions have made a marketplace that is very different from its historic place. “
While his company is certainly dedicated to developing and providing cutting-edge solutions, the reality is many investors ventured into the manned guard industry in the mid-2000s as the economy took a tumble and private equity was looking for a safe port in the storm. Investors were looking for cheap money options that presented opportunities for repeatable arbitrage rollup dollars and free-cash-flow dollars in an industry that was basically recession-proof.
“My argument is that there have been 900,000 guards (in the industry) in the 20 years I've been here, and I think if you look at what parallels in the retail space, we're closer to the disruption and the convergent side as it relates to the technology space in the guarding sector than we’ve ever been. I would say the tripwires are obvious if you just look to retail as a parallel to this industry where you had extremely low hourly workers, high turnover and low skillsets. The result was more than 90-plus million square feet of retail space being vacated just in the third quarter of 2018 by the bankruptcies of the Toys R Us, the Sears, the Penneys and as a result of the consolidation of the Amazon effect,” explains DiDomenico.
Mega-employers like Walmart and McDonald’s have taken note and addressed the current employee labor issues in a couple of distinct ways. Both were shamed into raising their minimum wage above the federal average, but unfortunately, the typical worker went from an average of 34 to 36 hours a week to around 29 to 30 hours. Walmart has also turned to automated robotic devices in some stores to clean, pick orders and monitor for slip and fall incidents, while McDonald’s has increased its use of in-store kiosks to take customer orders.
“With the implementation of the McDonald’s kiosks and other factors like forced wage increases, you don't really have to look that far out to wonder how this could affect the guarding industry. The example I give is what does Mr. Guard Owner do now? You've got the top five worldwide (guard) companies representing over 55% to 60% of the total headcount domestically in North America. That's five companies. This sort of resembles the oligopoly of the car industry in the '70s. Not much different,” laments DiDomenico. “And what happens? Certainly, there isn’t much room for disruption since that normally happens where companies are fleet of foot, where entrepreneurial and ease of movement in management and R&D ignite that disruptive attitude. It's historically been the second-tier players like ESPN and Apple that challenged the status quo and reset the bar.”
How to Make Technology Work for the Owner
The Trackforce Valiant approach, according to DiDomenico, is to help the guard business owner create an environment where they can now look at their workforce as partners in the process. They can give them access to critical data related to company policy and procedure, HR mandates and reminders, with the goal of providing the guards a portal into their work experience.
“When both the employer and the guards are on the same page regarding what times they were off, which shifts they are scheduled to work, what their post orders look like, the company can better maintain the compliance aspect of their employees and take labor costs off of their own back-office functions by pushing them into the field so the guard now can bid for a shift, see his pay stub, his 1095 and more. That's phase one of automation,” DiDomenico says.
He continues that phase two is then supplying the guard company owner with a source and a vehicle for actionable intelligence that will enable them to better service their clients in a proactive manner like going beyond simple tracking functions that show when a guard punches in and out, but moving that to a geo-fencing option tied into advanced encryption and biometrics to ensure the proper personnel are on duty and stationed at their appropriate posts.“Phase three would be taking the convergence of standard guard function and technology then integrating in video data and analytic data and alert data, social media data then pushing that into the field,” says DiDomenico, citing the company LiveSafe, an enterprise-class risk reporting and safety communications platform that provides early warning insights with the goal of preventing safety and security incidents, as a prime example of a partner in this disruption for the guard industry. “I think they are one of the closest solutions on the market that demonstrates what great technology disruptors do.”
He points out that LiveSafe starts at a reasonable price-point and a low entry point of technology featuring their mobile solutions and mass notification software for schools and specifically universities. “They didn't try to be all things to all people. What they've done is they've allowed for crowd-sharing to happen. They've allowed and looked at the student body as an element by which data could be collected to provide actionable intelligence for more immediate and sustained strategies around how you deploy the guards to events. I think that really has been a wonderful foray for this company to introduce mobile technology in an analytic sense. I think the next phase, though, is going to be more disruptive and more powerful which is how can we drive that technology to our guarding companies' customers. I think that's where you're going to see a tremendous amount of innovation.”
The Next Level of Disruption
For DiDomenico, the obvious next step in the evolution of the guard-force service model revolves around the convergence of video surveillance, analytics, and real-time monitoring. Several of the large global manned guard service companies already outsource their video monitoring to SOCs located in foreign countries because of the cost-savings in both staff and technology. But how can smaller to mid-cap guard companies compete and grow their potential video monitoring or grow RMR by using a more economical business model, asks DiDomenico?
Lacking the budget or the infrastructure of larger competitors, he suggests these smaller companies steal a page out of the NetJets model and adapt it to their video monitoring model. NetJets Inc. is an American company that sells part ownership or shares of private business jets. Founded in 1964 as Executive Jet Aviation, it was the first private business jet charter and aircraft management company in the world and now has over 7,000 owners, operates more than 300,000 flights per year between 3,200 airports in 150 countries and averages more than 150,000,000 miles each year.
The concept is simple. NetJets sells fractions of specific aircraft, chosen from several available types at the time of purchase. Owners then have guaranteed access (50–400 hours annually, depending on share size) to that aircraft with as little as four hours’ notice. If the owner's aircraft is unavailable for some reason, another aircraft of the same type, or a larger aircraft, will be provided. Fractional owners pay a monthly maintenance fee and an "occupied" hourly operating fee. The latter is charged only when an owner or guest is on board, not when the aircraft is flying to a pickup point or flying to another location after completing a flight.
“I think there's a ripe environment for the guard industry to use the NetJets model. I'm a guarding company and I cannot afford to make a million-dollar investment in building a GSOC or building a video monitoring center. Why can't I just latch on and use it as a service? So, we are on the hunt right now for those companies that want to expand their footprint and white label their operations and provide those services,” DiDomenico explains. “Small and medium-sized companies that have great relationships with security directors and want to keep that personal touch with those companies, have a great opportunity to continue to build on and expand these relationships that will eventually differentiate them from bigger competitors. Imagine being able to white label a video monitoring service called, say, the Acme Guarding Solution, and then leveraging that same cloud experience with a standard pricing model. Now you're able to pass unique service and cost-savings to your customers. Instead of having 110 employees, maybe this model allows you to function with just 90. Now your gross profit margin improves as a result of the quality of technology you can deliver and at a reduced overhead.”
He adds that as technology continues to get pushed to the edge, those who currently ignore and fail to embrace disruption in the guard industry will have no choice but to adapt or die.
“It's already happening. The victors will be those brave enough to be out on the cutting edge. The cadence is becoming faster and faster as technology gets less expensive, labor gets scarcer and more expensive and the more mainstream technology becomes and the more the ROI continues to evolve. We are approaching that jump the shark tipping point,” he says.
About the Author:
Steve Lasky is the Editorial Director of SecurityInfoWatch Security Media, which includes print publications Security Technology Executive, Security Business, Locksmith Ledger Int’l, and the world’s most trafficked security web portal SecurityInfoWatch.com. He is a 33-year veteran of the security industry and a 27-year member of ASIS. You can contact him at [email protected].
