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Q&A: SAFLink Launches Channel Program

Biometric firm that once targeted government now looks to partners to address SMBs.

SAFLink Corp. makes a line of biometric and smart card authentication products that, since 1991, it has sold primarily to federal government agencies via its direct sales team. Now the Bellevue, Wash.-based company is launching a reseller program that it hopes will help the company grow by giving it access to small- and mid-sized business customers looking to ease security management woes via biometric devices. Michael Domingo, co-editor of RCPmag.com, spoke with Suzanne Young, director of channel programs at SAFLink, about the new channel opportunity.

You just created a channel partner program. Can you give us a picture of the sales force before the creation of the program?
We sold our products exclusively to the federal government, so we didn't have a commercial sales team whatsoever. We spent the last 17 years providing biometric and security products into the various agencies. We saw traction coming into the commercial market and realized that this would be a great opportunity for the SMB market.

Fortunately, we are seeing a lot of requests from various resellers who want to sell our produts and that's where the brainstorm occurred. We decided to sell our products through the reseller channel. They have the relationship with those SMB customers and we thought that that would be a good fit for both of us.

Suzanne Young
Suzanne Young, director of channel programs at SAFLink

You mentioned commercial traction, but it doesn't seem like there's been lots of traction there. Can you explain what you mean?
We've recently seen regulations come forward, such as HIPAA for healthcare and Graham-Leach-Bliley for financial areas. These regulations are forcing commercial businesses to look at their password policies. These acts are now requiring that businesses have a stronger security practice. It's really a great lead-in to biometrics and that's where we're seeing a lot of our initial requests from, the financial and healthcare markets. Along those lines, other businesses are starting to see the healthcare and finance industries using these new technologies; some of the regular, everyday businesses are looking to use the highest technologies that they can find out there, that can differentiate them.

Biometric solutions are typically expensive, because you need to buy each user a device of some sort. How do you sell that to the SMB market?
We have a great story here. Some of the biometric solutions out there are extremely expensive and they're just not practical for the SMB market. That's where we're differentiated. Our software and hardware plugs right into Active Directory. There's very little work to do and costs, therefore, are reduced. For a one-seat, perpetual license, it's $40 with the SAFLink solution. Hardware is starting to come down in price. Our lowest-priced reader is a USB fingerprint reader that runs about $48. You can get a lot higher-cost reader, like our optical scanner, which run about $275.

SAFLink Corporation

Headquarters: Bellevue, Washington

Web Site: www.saflink.com

Phone: 425-278-1100

Glenn Argenbright, President and CEO

Established: 1991

Microsoft Competencies: ISV/Software Solutions

Annual Revenue: $6.4 million for 2004

Number of Employees: 130

Top Verticals: Financial services, healthcare, manufacturing, government

Achievements: Microsoft Certified Partner; participated in development of ANSI 358, a.k.a. the BioAPI

Clients Include: U.S. Department of Defense, U.S. Department of Homeland Security, Purdue Employees Federal Credit Union, First National Bank Group, Mount Carmel Health System (Ohio), North Florida Medical Centers, Molded Fiber Glass

Those are retail prices, though, right? Channel prices are slightly different.
That's where we come in with the channel program. Our resellers can see some margins anywhere between 20 to 40 percent. In addition, there's also other support and services that they can provide to customers. We do have a support program that we sell to them and they can, in turn, provide additional services to their customers and see some more revenue on that side as well.

Before we get to that, let's get the 30,000-foot view of the company's channel program. Can you explain the levels, and are there any associated fees and training?
We've got three different levels. We have a silver level, which is our entry level and we expect most partners to fit into this slot initially as they try us out. All of the levels require training and that is something that we excel in.

We require that our resellers go through a pretty rigorous training schedule. We have support training that we give them so that they can support their customers. We also have a sales/engineering training that they go through. And lastly, we work with their sales team and make sure the sales teams have the information they need to go out there in the field. All of our resellers must go through the training.

And we also provide technical support to them. That's pretty important. We can provide support to them as they go out in the field and help them with some of their larger deals.

That pretty much applies to all the tiers.

At the higher tiers, the gold and platinum, that's where we're going to offer a little bit more marketing support, do a little bit more lead generation for higher-end partners that have a higher commitment. That's where we're going to give a little bit more resources to them.

What are the goals within the reseller program? That is, what do you expect it to add to the company?
Having more feet on the street will get us exposed to the marketplace. That's our goal: to have the resellers who have relationships with their SMB customers out there offering SAFLink solutions.

We're hoping to bring on a couple hundred resellers and, if each of those resellers is selling a hundred seats, that brings us to about 200,000 seats. You start doing the math and pretty soon we can be a $20 million company just by having a couple hundred resellers. So, from a finance perspective, it makes sense. And, from a customer perspective, it makes sense to work with resellers that they're already familiar with. Resellers have the relationship and the trust.

What kind of company would make a good fit for your program?
We're definitely looking for the Microsoft partner that has an Active Directory installed base. Really, that's about it. We do want companies that provide first-level support, have that direct relationship with their customer, and who's technically savvy.

Can you tell us about Denali Advanced Integration, the first company to join your reseller program?
Denali has stayed primarily in the healthcare field. They have some very large customers that have an Active Directory installed base. Some examples are Swedish Hospital, and some of the medical centers, such as Providence, Harbor View and University of Washington.

Because of the regulations coming into this space with HIPAA, Denali sees a fantastic opportunity to help those customers clear those regulations by using biometrics for their log-in. We've started a great relationship with them; they're working tightly with us. They're bringing us into their conferences that they're holding in the healthcare space.

Besides healthcare and financial services, in what other areas will your products and biometrics in general have traction?
Those two areas are leading the space only because of the regulations, but what we're seeing is other areas are wanting to get this emerging technology. They see the cost benefit of getting rid of passwords, and they're coming along as well. It's really applying to all verticals. We can't say it's more appropriate for one or another. We're seeing needs across the board.

Can you point us to any particular vertical or service?
One example, say you have a call center that has hundreds of employees and there's high turnover, typical of higher volume call centers. Just the password administration for managing a lot of employees is expensive. You can realize a cost savings with a biometric type of environment, as well.

Something that we didn't touch on is our work in the federal government, and we're pretty heaviliy involved with the TSA and Homeland Security and some partnerships with Microsoft to those agencies. We're going to see that those government initiatives are going to lead the way in bringing biometrics to the world and exposing folks to biometric capabilities.

Will your channel partners now have a way to sell to the government or are you still selling directly?
We sell directly to the larger agencies - CIA, FBI, the White House, TSA, Homeland Security - and that's because of our experience in those agencies. We've had years and years of relationships built. We don't expect that our resellers will have those kinds of relationships, so we hope to lead the way in the federal space and make it easier for our resellers to sell in the commercial space.

If your resellers are looking for a leg up in the government space, they're not going to do that through the channel program?
There is a way they can do it. Just by mentioning the fact that they support and sell the SAFLink product is going to bring recognition. We absolutely encourage them. We do see a lot of opportunity in state governments as well, and we think there will be opportunity for resellers who go after that market.

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