Interview with Kenneth Hune Petersen about Milestone Marketplace
On Track in Turbulent Times: Milestone Systems Surpasses DKK 1 Billion Revenue
In our March issue we discussed with Kenneth Hune Petersen, Milestone’s Chief Sales and Marketing Officer, about Milestone Marketplace, their approach to video analytics and AI applications beyond security and the EMEA markets. The follow-up interview was planned for MIPS in Dubai which was cancelled due to the evolving COVID-19 outbreak. Nevertheless, we could speak to Kenneth about the long-term sustainable growth results in another record year Milestone Systems announced just recently. We asked him about the results and the market outlook when much of the world is in lockdown.
Which areas of the business have shown the best performance in the past financial year?
Kenneth Hune Petersen: With an annual growth rate of 14 percent over the last five years, Milestone Systems’ net revenue increased to DKK 1.03 billion (around 138 million Euros) 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 its 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.
How do you see COVID-19 and the economic impact of the pandemic affecting sales and services in the short term?
Kenneth Hune Petersen: To mitigate risk as a software company and as part of our long-term contingency planning, we have already built up cash reserves that ensure business continuity in the advent of an unforeseen situation such as the coronavirus.
However, we have been able to maintain and preserve our business activities. In 2020, we have seen a strong start to the year, and we are also seeing strong activity on our Care program, which represents recurring revenue through our contracts. To give our partner community an extra helping hand in these difficult times, we’ve launched extra upgrade offers, support, and lucrative offers for Care coverage to extend. 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.
How do you keep growing when unexpected change confronts your business?
Kenneth Hune 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 people 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.
The 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. From the remote monitoring of sites, public places and warehouses, replacing the need for large on-site teams who could be put at risk via human-to-human contact. To video technology that can be deployed in the protection of healthcare staff.
Even before corona, we realized that it’s a new ball game and in the future the way business will grow is different. Circumstances are going to change much more quickly, to quote Gerd Leonhard from MIPS 2020 in Dallas, “We are living in a raging tornado of change fueled by digitization.” 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 power of open gives you the choices you need to keep your business growing and the flexibility to take advantage of them.
Openness and flexibility are two of Milestone’s core values, and they will be essential for growing businesses. In the future economy, companies will build their business on innovation and the flexibility to pivot as business conditions change. 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.
What can integrators and installers expect from phase 2 of the Milestone Marketplace?
Kenneth Hune Petersen: The main purpose of the Milestone Marketplace is to connect buyers and sellers to co-create innovative solutions in the Milestone Open Platform Community by showcasing software and hardware that can solve real challenges with video management solutions. The business platform solves the need to be transparent about what is readily available and to connect the buyer with the seller to create engagement and opportunity for sales conversations. Version 2.0, which will be launched in 2020, will enable customers to find resellers and integrators who deliver video solutions. So far, 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 and grow their business faster.
In the development priorities for 2020 in your Annual report, you state: “The second offering in 2020 will be a Platform as a Service (PaaS) that brings the XProtect solution to the Amazon Web Services (AWS) platform. This allows for less deployment friction, easy scalability and the secure and reliable benefits of AWS.” How is this less deployment friction and an easily scalable approach?
Kenneth Hune Petersen: We are reducing friction with the bring your own license (BYOL) model, this allows us to combine business models rather than disrupting our current channel business model. The installation process is automated, the compute and storage calculations are now elastic, and the deployment can happen in less than 20 minutes. When we think ahead, we are thinking about approaches that will be good for our entire community, not just a single manufacturer. We visualize this as a bridge, with On-prem on one side and Cloud on the other and traffic on the bridge travels in both directions. Our goal is to make sure that all our partners can cross the bridge.