SDM 100 Celebrates 20 Years
When the first SDM 100 Report was published in May, 1991, then senior editor, Laura Stepanek, wrote, “There is a time when every maturing industry must come out of its shell.” By 1991, security was a thriving industry in both residential and, especially, non-residential markets; but it would benefit even more in the coming decades from the attention focused on it from the financial markets.
At that time, SDM identified the immediate issues affecting growth of the industry as consolidation activity, exposure to international markets, assault on false alarms, application of “ultra-sophisticated” technology, and the cultivation of young people to join the ranks of security professionals.
The first annual SDM 100 companies were split into two groups â€” 64 companies that earned more than 50 percent of their business in commercial, industrial, and institutional security customers; and 36 companies that earned more than 50 percent of their business from residential customers. But the division was not effective because so many of the largest security dealers at that time were general providers who served equally both markets. So by the following year, in 1992, the SDM 100 became one unified ranking.
“Unlike many industries where the majority of companies are publicly owned, most of the top firms in the alarm industry are private. It is these people who contributed mightily to this listing by sharing private information such as annual revenue and number of accounts. This, coupled with the extensive knowledge of industry observers, is what made the SDM 100 possible,” Stepanek wrote in the first report.
SDM 100 companies initially were ranked by their total annual revenue and this continued through the 2006 report. Then, for the first time in 2007, SDM began ranking the dealers by their recurring monthly revenue (RMR), the revenue associated with the long-term agreement between an alarm company and its subscriber. This was done because RMR is the language of alarm company executives and is more meaningful in comparative analysis among industry peers.
For the past 20 years the SDM 100 has acted as annual barometer of the health of the installing and monitoring segment of the security industry â€” compiling RMR growth, sales activity, employee growth, and more.
To commemorate the 20th annual edition of the SDM 100, we called on some of the longest-ranking companies â€” who have made the report possible â€” and asked what the SDM 100 has meant to them.
For some, the ranking signifies a call to duty. According to Dave Simon, senior manager of public affairs at Broadview Security (first ranked on the SDM 100 in 1991 as Brink’s Home Security), Irving, Texas, “The SDM 100 lets us know we are recognized as an industry leader and with leadership comes responsibility.
“A part of that is helping to set examples on good ways to run business, like getting certified by the IQ board, and receiving the Installation Quality Award and the Police Dispatch Quality Award. We’ve also gotten the JD Power Award multiple years in a row,” Simon relates. “We’re out there, we’re visible, and we set a good example. This is why we’re well and why are at the top of the group. We do focus on raising industry standards and continuing to get better as a company.”
To companies like Security Equipment Inc., Omaha, Neb., ranking among the 100 top companies in the industry is not only a source of pride, but also encouragement. “We were extremely excited about making the list for the first time in 1994 and have worked very hard to maintain a position on it with aspirations to continue to move upwards,” says executive vice president, Tom Hruby. “Knowing where you rank among your peer companies is a strong incentive to continue to grow, as well as a way to measure our company trends against the leaders in the industry.”
Kevin Stone, COO at Doyle Security Systems Inc. (ranked since 1996), Rochester, N.Y., shares a similar sentiment. “The ranking helps to keep us focused and motivated towards improving our standing. If we are fortunate enough to improve our rank, it tells us we are performing well when compared to the very best companies in our industry,” Stone says. “The national recognition that the SDM 100 provides for us motivates our team.”
Hruby also tells how Security Equipment Inc.’s permanence in the SDM 100 has helped the company build a solid profile. “It has proven to be an important recruiting tool for prospective employees as they know that we are relevant in the marketplace and have a solid history behind us, which bodes well for the future of our company,” Hruby says. “We do stress the significance of being on the list from year to year. In our marketing efforts we use this information to explain to our customers that we have resources that some of our competitors do not have and that especially in these trying economic times we will still be there tomorrow for them. Our clients seem impressed that we can maintain our ranking.”
Custom Alarm of Rochester, Minn., first appeared in the SDM 100 in 1998. “It’s had a definite impact in showing how substantial we are in the industry. We work with a number of Fortune 500 companies and this is especially important in dealing with some of those larger companies,” says CEO and founder, Leigh Johnson. “When the ranking comes out in May, the first thing we do is look up, Where are we ranked? How did we move on the list from the previous year? Where am I compared to other people that I respect in the industry?”
Tony Byerly, president and COO of Stanley Convergent Security Solutions, Naperville, Ill., speaks of inheriting a 17-year old legacy of SDM 100 rankings. “Stanley CSS has a rich history of being associated with the SDM 100. Our company history goes back to the very first SDM 100 in 1991 with our Honeywell Security Monitoring acquisition (HSM). In the last three years, under the name of Stanley CSS, we are proud to be one of the elite top tier companies in the SDM 100,” Byerly says.
“We find great value in the ranking as it is the only one of its kind in the industry. The SDM 100 gives us the ability to share the global scope of our operations with customers and prospects through our marketing and sales efforts as well as in recruiting and retaining employees,” Byerly describes.
Bob Bonifas, president and CEO of Alarm Detection Systems Inc. in Aurora, Ill., ranked since 1991, says being included in the SDM 100 for so many years “gives you prestige. It lets manufacturers know where you stand in the pecking order. And people want your endorsements and products.”
Many companies see the SDM 100 as an affirmation of their successes, stressing that having an independent source collect and publish data offers an objective look into the industry.
“It’s hard to get enough companies to apply for an award, and you do get the amount of companies you need to capture the broad depth and scope of the industry,” says Dave Simon of Broadview.
“We have 225 employees and everybody knows where we are in the ranking. It would be hard for employees to understand where you stand in the industry otherwise, but SDM is an outside body stating the facts about the industry,” Bonifas adds.
American Alarm and Communications Inc., Arlington, Mass., has been ranked since 1991 and, according to CFO, Louis Sampson, has used the SDM 100 as “important external validation of our business model and our position in the industry. We make mention of the SDM ranking in many ways because it is a third-party analysis that is very credible among potential and existing customers.”
Custom Alarm’s Leigh Johnson considers the usefulness of this public report on a largely private industry. “Most of the people who handle financing have no idea how alarm companies operate. And the SDM 100 could be a significant tool in giving them that glimpse into our industry when they need to put together financing packages,” he describes.
And to the public, the SDM 100 achieves its objective of validating the installing and monitoring leaders of the security industry in both residential and non-residential markets.
“In today’s business environment, our customers are recognizing that good security is good business as they leverage security technologies to improve operations and profitability. When they market the added value of security to their stakeholders, the SDM 100 serves an important resource and reference tool for them,” says John Koch, president of ADT.
Koch should know this subject well. ADT has been ranked as the SDM 100’s No. 1 company for 20 years.