The end of April saw Milestone Systems producing another set of good results, once again building on the results of the previous year. At the same time, the company announced that Lars Thinggaard, the company’s long-serving president and chief executive officer is resigning – on a high note, as it turned out. At the same time, Milestone also made changes to its business structure in the EMEA region.
Hi-Tech Security Solutions was given the opportunity to speak to Milestone’s Kenneth H. Petersen (chief sales and marketing officer) and Anders Johansson (director EMEA distribution and emerging markets) about the company’s performance, future ideas and its regional plans.
Kenneth H. Petersen
Hi-Tech Security Solutions: Which areas of the business have shown the best performance in the past financial year?
Petersen: With an annual growth rate of 14% over the last five years, Milestone Systems’ net revenue Increased to DKK 1.03 billion (about R 2.77 billion) in 2019. The operating income (EBIT) was DKK 124 million compared with DKK 194 million the previous year, a planned consequence of increased investments in innovation and development. The positive revenue development primarily derived from an increase in license and Care sales. Moreover, we continued to increase sales in all markets.
Two major factors impact our positive result: Our continued focus on long-term sustainable growth, which has resulted in profitability every year, since our company was established 22 years ago. And perhaps more importantly, our people. Focusing on long-term sustainable growth requires the best people, who can identify the right opportunities for our company. If you don’t have the right people, even the strongest business strategy may fail.
In the past five years, Milestone has nearly doubled the number of employees to more than 900 people. The past year increased investments have been made in research and development capacity, expanded engineering teams in Copenhagen and Sofia and the establishment of a new engineering hub in Barcelona.
Hi-Tech Security Solutions: What has the reaction and uptake been of services like Marketplace and Care? What will the impact on Marketplace be in light of the goals of OSSA?
Petersen: Milestone Marketplace was launched in 2019 and is our open business platform which connects buyers and sellers to co-create innovative solutions. In 2020 we will launch version 2.0 of the Milestone Marketplace, that enables customers to find resellers and integrators who deliver video solutions. We have seen a very positive uptake of Marketplace with 200 product pages, 130 company pages and more than 400 000 page views in 2019. The response from our partners is that Marketplace provides a great channel for expanding the marketing of their software into new markets.
Milestone Care is a complete service and support program that takes care of your product throughout its lifetime. To give our partner community a helping hand in this difficult time, we’ve also launched a new Care campaign. This includes upgrade offers, extra support and lucrative offers for Care coverage to extend a helping hand in these challenging times. Both Care and Marketplace have been very well received as it helps our partners improve their offering and grow their business faster.
In addition, we will continue to work with the Open Security & Safety Alliance (OSSA), where we are a founding member. During 2020 the alliance plans to launch its offering designed to provide standards and specifications for common components including operating systems, IoT infrastructure, collective approach to data security and privacy.
Hi-Tech Security Solutions: Will we see more cloud-based innovation coming from Milestone and Arcules?
Petersen: Increasing demand for cloud-based video management solutions motivated Milestone to embark on its journey to the cloud in 2019. We view the cloud as a new, or additional way of deploying a VMS. Video Surveillance-as-a-Service (VSaaS) allows users to remotely store, manage, record, play and monitor surveillance footage entirely on the cloud or on secure servers. It allows users to leverage the VSaaS advantages while still benefiting from XProtect’s rich feature set.
I do believe there will be a market for VSaaS across the region, although deployment may vary depending on the market’s infrastructure and regulations. We still see cloud-based VMS solutions as complementary to on-premise XProtect. That means cloud propositions will be added on top of the traditional on-premise solutions. The open platform will remain Milestone’s core offering and will now be available in a new deployment mode. Arcules VSaaS integrated with XProtect Corporate on-premise VMS delivers a hybrid solution for organisations looking to benefit from both deployment options. It combines the flexible scalability of VSaaS and the functionality of on-premise VMS.
In 2020, we plan to introduce several hybrid cloud-based solutions to the market together with partners. These will cater for both the customer’s technical needs, such as available infrastructure and commercial needs, like performance, scalability needs and capital investment.
Hi-Tech Security Solutions: How is Milestone working to secure its products and its users – from storage to end-device – in light of the growing number of cyber threats?
Petersen: Ensuring security and integrity of all XProtect installations remains a top priority for Milestone. In 2019, we increased our development resources by 45% to further expand our capacity to deliver new innovative products and services. Our focus was on video processing power, metadata and analytics and cybersecurity. As you would expect, security is a core area in our product development. Following our cybersecurity principles, our approach is to minimise customers’ exposure to risk by ensuring that our software and hardware is secure by design, secure by default and secure by deployment. Our primary goal is therefore to deliver an XProtect that is resilient to all threats and is certification-ready in every market.
Hi-Tech Security Solutions: How do you see COVID-19 and the economic impact of the pandemic affecting sales and services going forward?
Petersen: As governments, businesses and individuals across the globe navigate a new world in these challenging times of COVID-19, I remain inspired and humbled by the way we have been responding to the situation. We’ve seen people come together, corporations adapt to the largest work from home experiment in the world and communities step up to support vulnerable groups, as well as all the brave staff in the healthcare sectors who work tirelessly to treat and care for affected patients.
We also recognise that the situation surrounding COVID-19 outbreak is impacting the entire VMS industry. Beyond connecting people, video is establishing itself as an important tool to mitigate the ongoing COVID-19 pandemic. From the remote monitoring of sites, public places and warehouses, replacing the need for a large team of on-site personnel who could be put at risk via human-to-human contact. To video technology that can be deployed in the protection of our frontline responders in healthcare. There has been a rise in demand for video surveillance solutions not only for security purposes, but to optimise businesses and tackle societal challenges. Our team is, as always, focused on innovation and I believe that the solutions we develop together with our partners will continue to provide support in keeping cities all around the world safe.
Hi-Tech Security Solutions: Why has Milestone decided to split the MEA region into two sectors? What will your focus be in the southern African region?
Johansson: Our 2019 results show strong long-term, sustainable growth across the region and another record-breaking year for the company. Currently the circumstances surrounding the COVID-19 outbreak are obviously affecting people and societies. We are, however, dedicated to continuing our expansion in the African continent, supporting our partners and customers through these difficult times.
In a re-organisation of the EMEA team in January, we divided the Africa team into a North Africa and South Africa region. This allows us to make more focused efforts in both regions and follows our strategy from 2019 where EMEA is divided into Channel Sales and Emerging Markets. Channel Sales focuses on Milestone mature markets, Emerging Markets’ emphasis is on building up new territories. In an effort to strengthen our efforts in the South African region, the region was therefore moved into Emerging Markets. We are seeing strong growth potential in the region and are investing across the board.
Hi-Tech Security Solutions: Have you found the region to be more accepting of ‘open systems’ rather than proprietary solutions? Also, are you expecting more business from public or private organisations in the region?
Johansson: Openness and flexibility are two of Milestone’s core values and they will continue to be essential for growing businesses in the future economy. When things change fast, you need to keep your choices open so that you can pivot as you see new opportunities, that’s not so easy in a closed solution approach. The open platform approach offered by Milestone gives you the choices you need to keep your business growing and the flexibility to take advantage of them.
Specifically, for the African markets we find that the request for larger integrated solutions are increasing both within public and private organisations. And with Milestone’s Open platform approach it’s a perfect fit. One of the challenges we have seen is that end users are not aware of the solutions, so we are investing in many educational events to inform end users and our channel on the benefits of the Milestone Open platform.
Hi-Tech Security Solutions: Will you be expanding your presence (staff and offices) in the region?
Johansson: At the moment we are not planning more offices in the region, but we are expanding our presence both in head counts and marketing activities. With our two-tier business model we are also entering new countries in the region in a very close collaboration with distributors. Our plans are to expand the presence in Africa with an additional four employees, but the COVID-19 situation has paused the plans for now.
Hi-Tech Security Solutions: The question of skills is always top of mind; what will Milestone be doing to enhance the skills in your technologies in the region to ensure you can support the needs of new and existing customers?
Johansson: Knowledge is very important to Milestone. Because of this we certify our partners before they can sell our advanced products in a three-day training class. Our learning and performance also includes several on-line trainings that are free to our resellers.
We also offer both pre- and post-sales support in the region. If the installation is mission critical we can also offer 24/7 support through our Care services.
We recognise that the situation surrounding COVID-19 outbreak is impacting the entire VMS industry. To give our community a helping hand in this difficult time, a new Care campaign has therefore been launched. This includes upgrade offers, extra support and lucrative offers for Care coverage to extend a helping hand.
Although the ongoing disruption may have changed the way we work, our commitment to quality service remains the same. Our team is fully equipped and set up to support customers and partners remotely through various digital tools. While the current global situation makes it difficult for in person meetings, our team has been working on delivering informative content and company updates through digital channels.
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