Should You Become A Web-Based ID Card Service Bureau?

The lid is blowing off the security business right now. And, to VARs and integrators selling security-related technologies, that statement is music to their ears. Just ask Jim Butkovic. As president of Integrated Precision Systems, Inc. (IPS) (Twinsburg, OH), his company has seen firsthand the recent clamor for new security systems. IPS provides all of the components for these systems including time clocks, access control readers, digital closed-circuit TV, and ID cards. It's the delivery of the latter product, though, that has enabled IPS to really take advantage of the recent surge in security interest.

Cater ID Card Solutions To Customer Size
VARs and integrators selling products related to ID card technologies usually offer card printers as part of their solutions. IPS is no exception. But with the economy the way it is, many companies are reluctant to shell out the thousands of dollars needed for a card printer. Thus, VARs offering a service bureau for ID card printing have found themselves in vogue. Again, IPS is no exception. However, Butkovic said that for companies with more than 500 employees per location, card printers are cost-justifiable. Of course, in these instances, IPS is more than willing to provide the customer with just a card printer or photo ID system. After all, it's a foot in the door. "Inevitably there are management or business philosophy changes at these larger customers," Butkovic professed. "The next thing you know, a year after the initial sale, you're getting a call from the customer asking if they can use the same ID card for something other than simple identification."

Where IPS has seen its share of service bureau work has been with companies that have between 150 and 500 employees. Unfortunately though, the ID card service bureau work IPS has done for these customers hasn't necessarily been a boon. In its first years of business, the company was printing only 50 cards a week after a customer's initial order. "Every customer wanted a different design or type of card which made this a laborious process for us," lamented Butkovic. In July of 2001 that all changed.

Slash Production Costs By Webifying Service Bureau Work
Butkovic needed a way to simplify his company's service bureau work so it wasn't so labor intensive and, therefore, would be more profitable. An ideal solution would enable customers to design their own ID cards and send them directly to an IPS card printer. In early 2001, Butkovic found such a solution in a software product by ImageWare Systems (San Diego) called EPIWEB. Essentially a vehicle for creating a Web-based service bureau, EPIWEB was rebranded by IPS as EnterpriseID. "Now, with EnterpriseID, a customer needs only a digital camera to create any type [e.g. proximity, magnetic stripe] of ID card," Butkovic explained. Customers sign on to the site (www.enterpriseid.com) by entering their unique passwords. Once there, they can create any card design they want and input all of the employee and company information. All of this information is stored on the EnterpriseID Web server and can be retrieved worldwide with the proper authorization. The EnterpriseID site is connected directly to IPS' "print farm" of ID card printers. Customer requests appear in a print queue at IPS headquarters, and the customer-designed card requested is automatically printed. The cards are then mailed to the customer.

"EnterpriseID has totally changed our company," Butkovic admitted. "The Web-based model of EnterpriseID enables it to be a fit for our smaller customers as well as large multi-location customers. In fact, we've had to add 10 new printers to our print farm and 3 extra employees: one customer service rep, a quality assurance/shipping specialist, and a Web operations and accounting technician."

Currently IPS has approximately 70 customers using EnterpriseID. The company now prints nearly 2,500 cards per day. Furthermore, Butkovic explained that every month IPS reprints an average of 2% of its customer database. This reprinting occurs due to lost badges, an employee's request for a new picture on a badge, or a company wanting to update the look of its ID cards. "Because of the simplicity and low cost of this service for our customers, it has created a recurring revenue stream for us," Butkovic commented.

Retail And Transportation Are The Markets To Watch
According to Butkovic, the retail and transportation markets are his prime targets for this Web-based type of ID card printing. In fact, the largest customer using EnterpriseID is Simon Malls, an Indianapolis-based retailer with 200 locations.

"In retail, there is a lot of staff turnover, which creates a constant need for ID cards," he said. Since companies using the EnterpriseID service don't have instant access to the cards, IPS provides them with a supply of temporary cards. Each of these cards has a serial number. If the employer is using the cards for time and attendance or access control systems, those systems can be programmed to accept the serial number of a temporary card only for the length of time it takes to receive the final card from IPS.

The transportation industry values EnterpriseID more from a security standpoint rather than as a cost-effective way to produce ID cards. "Many truck drivers now have to present a credential [i.e., ID card] when they deliver product," Butkovic explained. "However, just because a driver has an ID card doesn't mean that person is a valid employee of the company making the delivery. And nowadays, companies receiving deliveries don't want to take any chances." In response to this need, IPS can provide companies receiving deliveries Web access to delivery companies' ID card databases. Thus, the guard at a delivery gate could access the EnterpriseID site and scan the bar code on the truck driver's ID card or type in the driver's last name. The driver's name and photo verify that person is a valid employee of the trucking company. According to Butkovic, this is a very new Web-related security feature.

Extend Your Market Area By Selling Web-Based Services
"We can sell our Web-based product to customers all over the country," Butkovic stated. "In contrast, with our time and attendance or access control systems, we most often are selling these to customers right in our backyard [i.e. within a two-hour radius of IPS' offices]." IPS always has focused on telemarketing to sell its hardware products, and that focus has not changed for EnterpriseID.

The company's sales force has a three-component telemarketing strategy. First, they contact the customer to see if an appointment can be scheduled. If not, they ask if they can send the customer the IPS newsletter (which contains case studies and new product info) via e-mail. Finally, they ask for the customer's Web site. This final step enables IPS to go to the site and use the customer's graphics or logo to produce an ID card. The card is then shipped to the customer along with literature explaining all of the possible applications for using the ID card.

Butkovic acknowledged that sales related to EnterpriseID account for 30% of the company's sales. Of course, the bulk of IPS' revenue is due to selling and integrating all of the hardware and software systems (e.g. access control, time and attendance) that require the ID cards EnterpriseID creates. With the security market continuing to stay strong, it's likely this combination of hardware, software, and a Web-based service bureau will continue to be a solid business model for IPS.