Frank Crouwel is Co-founder and Managing Director of NW Systems Group, a successful IP video company based in Merseyside which offers a range of solutions for security, the purchase of network webcams, remote management by video and live video streaming. In this Q&A interview, he reflects on the lessons learned from building a successful enterprise with his two business partners.
When you set up Network Webcams back in 2004 what led you to believe that it was the right way forward?
All three founders of the business were from IP video backgrounds and all of us believed that the future was in IP video even if it made up as little as 5% of surveillance camera sales in the UK back then. NW Systems’ co-founders Kevin Bowyer and Robert Kilgour were both involved with Evolve which was one of the first IP-based video monitoring stations. They both also worked at Camvista which was the first UK video streaming company at the time. While I led a company called Charles Grant which made camera housings and brackets for the likes of Axis Communications and Panasonic. Axis began a concerted marketing effort to stimulate the UK market to move from CCTV to IP video back then. We could see the tide was gradually turning as IT integrators began entering the surveillance system installation market and connecting small cameras systems onto corporate networks. We also started up at the time when the internet revolution was extending into all markets – we took advantage of that change in buyer behaviour.
Did you bet the business on growth of IP camera sales at a time when IP (as opposed to CCTV) cameras made up less than 10% of sales? If so, why?
The market was big enough, from 2004, for us to focus on it and still grow at a very healthy rate. This was partly because there were no serious online IP camera stores at this time and also we had a rare mix of networking and security system installation skills. We could offer IP video system installation and network integration services from day one. The two streams of business gave us some resiliency as well.
What year-on-year growth did you see in those first few good years and how did you generate this growth?
We run a five-year business plan and from 2004 to 2007 we made a habit of overshooting our own sales and profit targets – fairly closely tracking the growth of IP video market growth as a whole. For example in year 2 we achieved 100% growth; 80% in year 3 and then 40% per year through to 2008 so that by then we had a £1.2m turnover business. Many of the installations in those days were in the education sector. Investment flowed from the government of the day’s Building Schools for the Future (BSF) programme.
This unprecedented £55bn investment programme funded the construction of more than 70 new schools, and the extension and reconstruction of many more. It also triggered a colossal investment in ICT equipment across UK state schools. This sustained investment meant that the education market became an early adopter of new technology including IP video.
Where else did you find growth opportunities in your first four years of trading?
All the offerings that we developed were based on asking ourselves the fundamental question – what can we do with IP video technology? What applications and services can we develop? Which markets can we serve? How are we going to sell volumes of these new products? The world of internet selling was opening up at the time so we harnessed that from day one with our online store Network Webcams for example.
It was this thinking which led us to launch two new offerings in 2005. Our RemoteManager service monitors and records video of activity on construction sites to help builders, architects, developers and other stakeholders to oversee activity on the sites around the clock and promote their advanced work practices through time-lapse videos recordings of the entire projects.
In the same year we also launched our live video streaming service Streamdays. Streamdays offers owners of leisure and hospitality facilities live streaming capability to help them attract more visitors and stimulate online bookings, sales and engagement. These businesses were naturally growing as broadband provision spread nationwide and awareness of our services grew in relevant sectors.
How have you improved/refined and grown the RemoteManager and Streamdays services over the years?
We have made Streamdays much easier to use. Users are looking for a service which is Plug and Play so we have worked hard to deliver this. In 2012 we moved to Streamdays 2 which improved the quality of the video the service captures from 1 to 3 frames per second (FPS) all the way up to a maximum of 25 to 30 FPS today using multi-megapixel cameras. The service has benefitted from improvements to compression technology (notably with H.264), the rise of HD and wider availability of high-speed broadband.
What has been your biggest business mistake so far and what have you learnt from it?
We set up a Video Surveillance as a Service (VSaaS) offering way back in 2009. SecurityStation was the UK’s market leading VSaaS offering for three years but we were too early into this market.
Because we built it on the principle of being open platform it had to be possible for any IP camera to be able to link to our SecurityStation infrastructure. This requirement created a massive overhead to ensure we could link with any IP camera to collect the video recordings accurately and reliably. SaaS was gaining ground in many areas of the IT world but by 2009 it became clear that we could not continue investing so heavily in keeping this service right up-to-date with all the latest cameras coming on the market and firmware upgrades of existing ones.
The perceived wisdom today is that you need more than 20,000 cameras using your cloud-based service, paying monthly rental fees, for the numbers to really work. Although we saw consistent growth we were nowhere near that number today and decided to stop the service.
The key lesson learnt – and also learnt by businesses much larger than NW Systems – is not to go too early into a market where market demand and ability to scale rapidly is uncertain.
What are the secrets of your success over the last 10 years?
One of the key secrets of success is being customer-driven in your thinking. We’ve based all our successful offerings, and the products we offer at Network Webcams, on what our customers and prospects are asking us for. It also helps to get close to specific sectors and understand the pressures, and therefore demands, of those markets. Our target markets for systems installation work are Construction, Education, Manufacturing/Industrial as well as Transport and Logistics. Focus on certain sectors is key. It is also important not to be restricted by surveillance briefs.
By talking to more stakeholders in the business you can deliver video systems which meet the needs of health & safety managers, quality controllers, line managers, logistics managers and more besides.
It is also very important to be able to speak the same language as both the IT and network manager and be cognisant of their concerns around Quality of Service and bandwidth management for example.
While success has flowed from understanding customer needs better, we have also been careful not to stretch the brand too far. We only sell cameras to Europe, North Africa and the Middle East today via Network Webcams.
What other lessons did you learn to ensure strong growth right through the downturn?
Be patient: it is important to recognise that IP video systems are no longer only owned and run by the security department of a firm. Multiple stakeholders are involved in the decision so budget decision-making can be problematic. Wherever possible, get all the stakeholders talking to each other and help them work through budget discussions. Be prepared to talk to IT and network managers, security managers, marketing directors, health & safety managers, quality controllers and distribution managers, as well as board directors. Also be conscious that because there are many more stakeholders in the projects we are involved in today, decision-making can be held up by ‘siloed’ thinking and internal politics.
All of these types of people may be involved in the decision to buy an IP video system today because all may derive different operational benefits. There may even be a need to demarcate different parts of the system to achieve different goals for different managers. This is increasingly a fact of life. It means more dialogue is needed at the specification stage but it also generally means more hardware is being installed in the longer term. Patience is key to success today.
Adjust rapidly to market trends: To support continued growth of Network Webcams we began offering more cost-effective camera options, as budget pressures meant increased demand for lower cost alternatives.
Be transparent: Another area we worked hard on was making it even easier to do business with us. We developed simpler ways of describing the solutions we were recommending and increased the accuracy of our descriptions of the functionality and anticipated performance levels of recommended systems. For us expectation management is all about greater transparency in your dealings with the customer. We also focused on speeding up delivery times; as well as response to sales and customer enquiries post-sale. Speed is of the essence in our business.
Be customer-driven: We also improved the product procurement processes; strengthened our helpdesk team; and continued investment in technical training to keep our staff bang up-to-date with the latest knowledge and offerings. Tight cost management meant we lost money in only one of the 10 years we have operated.
Start small & prove value: A further area of focus was to provide early proof of concept to potential clients by recommending a small-scale installation initially so they can see clear and real business benefits, before committing to a wider roll out. Our experience shows that once the customer sees benefits the decision to make further investment comes much quicker.
This approach also positions us as trusted advisers rather than salesmen. In this way customers are much more likely to come to us for impartial advice, which might well lead to further work. We’ve have found this advice in more and more demand as the range of complexity of products has increased in recent years.
How do you stay at the cutting-edge of development in IP video?
We stay close to key partners and remain an active Axis Application Development Partner for example, so that we gain early access to information and new technology developments. That said, although we are well aware of new technology trends we will not build this into our solution unless there is real demand from customers.
A good example is in-camera video analytics. Many firms are now offering clever analytics software for upload into IP cameras. But in our experience much of this does not work well and demands too much management and IT resource to configure and optimise it.
Our view is that the industry ought to focus on doing a few things well and build out from there. Video Motion Detection (VMD) is still far from great in many cameras. Sony and Mobotix have recently made strides in edge-based VMD. You need to make sure you don’t try to run before you can walk unless you are serving the very largest and most sophisticated global enterprises or those operating with unlimited budgets.
The market for end-users with limited budgets and a tight rein on security expenditure is a much larger one than those with deep pockets. We prefer to tailor or solutions to the vast majority of businesses.
Our experience in the market now makes it possible to make accurate judgements of whether new technologies will become mainstream and whether vendors have a long-term commitment to the UK market. We only work with technologies and firms that have clearly demonstrated that commitment in their relations with partners, aftersales support for their products, and R&D spend in the future.
Did you predict the level of change you have seen in the video surveillance market in the last 10 years?
The growth of the IP video market was both predictable and reliable. Although the transition to IP video from analogue-based CCTV in the UK has been slow it has also been steady and unrelenting. This type of growth makes it easier to set targets and accurately time our investments in training and recruitment. Like most businesses, we did not predict the speed of the economic slowdown in 2008 and in that year we made less profit than predicted but we still grew and delivered a solid profit margin.
Do you predict rapid consolidation and maturity from here, or continued gradual evolution from analogue/CCTV world to fully open and integrated surveillance systems?
I see this market as one that will continue to evolve. There are barriers to rapid adoption of new technology – not least prior investment in CCTV systems, some of which still work perfectly well today. What is also noticeable is the fragmentation in the VMS market in particular. I believe slowly but surely we will see smaller VMS players dropping out of the market as the importance of integrating with a wider array of devices, over and above the massive range of products in each device category (e.g. IP cameras), becomes more important. Large and well-resourced open systems-based VMS’ with strong partner strategies and presence in key parts of the world will grab larger shares of the overall market.
In addition, systems integrators which continue to invest in staying at the cutting-edge of security and IP video will continue to grow. Traditional security installers which cannot talk the same language as the IT manager will increasingly struggle to win new contracts. The ‘one-man band’ CCTV installers will find it increasingly tough in my view as their costs of keeping up with the new technology and standards, and the complexities of the sale, make it harder to turn a profit.
We also predict a need for deeper investment in Training and Development to stay ahead – and we have budgeted for this.
What is the next big video surveillance market technology leap and when will it come?
Right now we are seeing a major shift of processing power to the edge. As smaller and smaller chips deliver more processing power it becomes possible to complete more tasks in-camera. The camera vendors now know that increasing the quality of the image can only go so far, so the focus now is on making cameras more intelligent. VMS players are focusing on integrating with a wider range of devices, most notably access control systems right now, so that they can retain that central monitoring and management role. The push for open systems-based solutions to help interconnect different systems easily will be relentless. IP video systems will be integrated much more tightly with Building Management Systems (BMS) for example.
What are your plans for NW Security?
Our systems integration business NW Security continues to be a mainstay of the Group. Now that we have opened ourselves up to building IP video-based systems which help customers achieve operational improvements (as well as secure their assets), we have found the opportunities have increased markedly. We will be increasing our focus on serving UK industries and utilities through a combination of working closely with other industrial systems vendors and building up our own knowledge of the pressures in a range of environments.
I expect that we will be focusing more on solving specific business issues; helping customers to find operational efficiencies through the power of IP video, and connecting accurate visual records with other business process and automation systems. We will be doing more bespoke coding to make interoperability between these systems as seamless as possible.
The other trend that we will assist with is distribution of video through a wider array of smart mobile devices. As video is consumed increasingly on smartphones and tablets we will also have to police network load ‘creep’ as senior managers demand access to video regardless of whether they actually need it for their jobs – just because it is a fun new toy to show off on their smart device. We are already talking to IT directors and CEOs complaining of network usage creep because delivering video onto numerous mobile devices can bring networks to a standstill if not managed carefully.
Is geographical expansion planned? Where first and when?
We are already selling products throughout the whole of Europe, North Africa and the Middle East. We plan to do more installations in Greater London in the coming years and will be investing in more resources to serve this market.
What are you most proud of in your time? What was your largest achievement as founder of NW Systems Group or what was the biggest result for the company over the last 10 years?
I’m proud of the fact that we have remained on track, meeting or exceeding our growth targets while continually and consistently innovating and investing in our people for 10 years now. Having navigated the worst recession in my working life we have come out the other side much stronger for it. 2014 looks like it will be our best ever.
Do you have any management tips for entrepreneurs in IT or video surveillance thinking of striking out on their own today?
Set out your plan for growth and business development and then stick with it. Make sure you keep listening to customers and delivering the solutions they have requested. Invest as much as you can in training and developing your key resource – your people. Partner and collaborate to round out your offerings to meet specific customer/market needs.
What are the top 3 traits needed for setting up and running successful SMEs today?
- Resilience – never give up even after unexpected set backs
- Focus on being better than your nearest known competitor – don’t try to boil the ocean or move an entire market until you have the scale to achieve this
- Maintain integrity in your dealings with partners/customers/staff and other stakeholders. Don’t hood-wink, over-charge, tell lies or cover-up. Be generous, honest and transparent with all in business.
What do you do to relax?
I never take work home and enjoy sporting activities with both of my young children at the weekends. That way I come back on Monday morning refreshed and ready for the challenges of a new week.