Category: Guest Column

Things are looking up for a drone takeover

We’ve all seen them in the news: A drone lands on the White House lawn. Drone racing is the next sport of the modern age. Dutch police train eagles to attack surveillance drones. A drone is used to drop illegal drugs into an Ohio prison yard. Amazon plans to use drones to deliver packages. Google announces the use of suborbital drones to broadcast wifi to remote areas of the planet …

Unmanned aerial vehicles once were a small recreational niche but now are becoming the headlines of major stories in security, technology, sports and overall controversy. So what has caused such an accelerated market growth in these small, yet powerful devices?

Advancements in technology. The features and technology used in drones are rapidly developing, exceeding even the smartphone industry. It seems that every year, new devices hit the market with improved components and at a lower sticker price. Some drones now utilize 4K video recordings and have the ability to set GPS coordinates to accurately record precise footage and measurements. eHang, a Chinese company, is even testing an automated drone large enough to carry humans (for an entry price of $200,000 to $300,000). Much of this advancement in technology is driven by the consumers whom demand bigger and better products year after year.

Investments are booming. Despite an overwhelming increase in Federal Aviation Administration regulations regarding the usage of UAVs, investments in drone conglomerates have grown exponentially over the past year. According to CB Insights, in 2015 drone startup companies raised more than $450 million, an increase of more than 300 percent versus 2014 data. A January report by BI Intelligence highlights more dramatic figures to consider:

• Projected revenues from drone sales could top $12 billion in 2021.

• Shipments of consumer drones will more than quadruple over the next five years.

• Safety technologies such as geo-fencing and collision avoidance will relax FAA regulations and enable large numbers of drones to take to the sky.

• Sports markets have been stimulated by large investments for competitive drone-racing leagues.

Applications on the rise. Drones continue to fill the skies as demand continues to parallel the amount of manufacturers in the market. As technologies continue to develop, more industries are seeing plausible applications for drone usage. The commercial markets of agriculture, land management, energy, construction, and oil and gas all have found lucrative ways to utilize drones in their respective fortes. Large defense-focused manufacturers also are emerging as government and security entities begin to enter the market.

Expect to see drones trending through more facets of our economy as the year continues. As technology and applications continue to expand, the FAA and government agencies will continue to be pressured to regulate both the commercial and recreational usage of UAVs.

For the recreational enthusiasts: Use common sense when flying these devices for personal use.  Keep your drones under 400 feet in altitude, steer clear of airports, pedestrians and vehicles, and always keep your device in visual sight while operating.

Hans Broman, a sales and marketing strategist at iPoint in Fort Collins, can be reached at hbroman@ipoint-tech.com.

Three rules of data backup for business

You come into work on Monday morning to see smoke coming from your office building. Terror immediately enters your heart as you wonder whether your suite has made it. Then you take stock of the assets you might lose. What will you need to have to get things back up and running after a catastrophe such as a fire or theft?

For most businesses, their stored digital information is the most valuable asset. This data is important not just for day-to-day operations, but also in the case of the sale of business. A purchaser will expect all data associated with the business to be intact and backed up.

The standard rule for data backup is called the 3-2-1 rule. Here’s how that looks in practice:

Have at least three copies of your data. This seems a bit silly because what’s the statistical probability of two copies of your data being lost at the same time? The statistical probability of the synchronistic failure of two data sets is 1 in 10,000. The probability of synchronistic failure of three data sets moves that chance to 1 in 1 million. That’s big jump in the chances of you keeping your data safe. In addition to these statistical reasons, three copies of the data help avoid a situation in which all of the data is stored in the same physical location.

Store the copies on two different storage media. If you assume that internal data stored on a RAID array (more than one hard drive in a storage unit) will be safe, you may be disappointed. The chances of all drives in a RAID array failing around the same time is high because they are likely from the same batch of hard drives. Therefore, utilizing an external hard drive, tapes or even DVDs for backups is critical.

Keep one backup copy off site. This strategy is particularly important for catastrophic data recovery. In the event of a fire at an office, there needs to be a copy of the data at another physical location. The restore times for getting that data back over the internet is not as fast as restoring from a local hard drive, but this will unlikely be an issue if the entire building needs to be rebuilt after a fire.

Along with all of these rules is automation. Human beings are flawed. We forget things. Any backup solution should be a “set it and forget it” solution. In addition, the backup application needs to have the ability to send notifications of a failure of a backup. Gone are the days of taking a hard drive home with you to protect your data. The cloud allows for security and redundancy of off-site data backup.

With the loss of hardware, an insurance claim can get you back up and running. Think about backup before you have to. In the world of business, data is hardest to replace. Protect it.

Shaun Oshman is founder and chief executive of iSupportU in Boulder. He can be reached at 303-630-9974 or shaun@isupportu.biz.

Secure your data; you never know who’s looking

By now, it should be abundantly clear that our data is not secure.  Over the past 15 years, we’ve seen an exponential increase in organized, methodical cyber-related attacks to steal confidential data, assume identities, drain bank accounts and plunder consumer and corporate networks. This worldwide hacking community can hold your data hostage (ransomware), ruin user’s credit in the blink of an eye, and cause immeasurable amounts of grief to those who have been hacked.  Reuters estimated that in 2014, cybercrime cost the global economy $450 billion.

Data hacks including the Office of Personnel Management, the Pentagon, University of Virginia, the IRS, Experian and Lastpass, a company whose entire focus and mission was to provide security via software, are both disturbing and embarrassing. Every single breach occurred because a hacker gained unauthorized access into a “secure” network. Once inside, hackers had access to a trove of data for an undetermined amount of time.

From an enterprise level, is it possible to strengthen security? Yes, absolutely. Software security management systems can clearly benefit from a low-level hardware-encryption IT-managed product that strengthens the overall solution. From a consumer and entrepreneurial perspective, we need access to a simple yet secure and affordable data encryption solution, because you never know who’s looking.

It’s important that we secure data on our computing devices. Important items like a Social Security number, a will, estate documents, sales agreements, contracts, medical documents or anything you deem confidential.

If you use a computer as a storage device, you’re vulnerable to hackers – even when not connected to the Internet. If you think otherwise, you’re kidding yourself. After all the reminders, it should now be a given to record password(s). Once you’ve forgotten your password, it’s just about impossible to recover data, or to decrypt encrypted data.

Some years back, a person’s computer was stolen. Financial investments, legal proceedings, confidential communications and other valuable data were onboard. That person’s identity was also stolen, resulting in bank accounts being emptied, foreclosures and a huge credit hit. Years later, many of these issues remain unresolved.

Sad stories such as this abound, so don’t let this happen to you.

There are 3 options available to secure data:

Software encryption. Many users use a software-encryption product. Great! Keep in mind that your password will be stored not only on your hard drive but also in your computer’s operating system, making your device subject to attack.

Hardware encryption. The best way to encrypt data is to employ a physical encryption and key-management device which does not store data. Once the device is removed from the computer, encrypted data cannot be decrypted.

By far the largest option worldwide is the Hope and Pray concept. We all know that the Hope and Pray option is a bad decision, but we continue to enforce that decision every day. It’s best to reconsider the first two options to secure your data.

Take a few minutes to learn how to encrypt your data. If you’d like to understand available options, send an email; we’re happy to help. Securing confidential data is a great idea and protects what you’ve worked so hard to accumulate.

The real takeaway: Don’t expect others to protect or secure your data; it’s very clear that it’s not likely. Take it upon yourself to encrypt what is important to you.

After all, the end result is your peace of mind, and that should be a very good thing.

Robert Fleming is founder and president of Erie-based BlackSquare Technologies, makers of real-time hardware encryption and key-management devices called Enigma. BlackSquare won the Business category at the 2015 IQ Awards, presented by BizWest. Contact Fleming at info@blacksquaretechnologies.com.

The forecast is clear: The cloud is here and growing

The world of computing is going through a paradigm shift. We are moving from housing information on local computers or servers and now using the cloud to access our data and run applications.

A similar shift occurred in the world of electricity. In the early days of electricity, factories had their own generators to produce dependable power. Over time, the electric grid and the power plants connected to them became stable enough to supply all of the electricity to the factory. This was a far more efficient way to utilize this resource.

Technically, cloud computing is any service offering where the application and data is stored off site on a remote server. It results in an efficient use of computing resources because many users can utilize the same resource. These services are described as Software as a Service (SaaS) and have a monthly or annual fee based on the number of users, amount of data or extensions.

Often, it’s thought that the cloud is new. Not the case. We’ve been engaging in the “cloud” since the advent of the Internet. The main change is that more services are running on servers not hosted in the business office.

What does this mean for the average business? That depends. As more services have moved to the cloud, it’s become more important always to be able to access the Internet no matter what. If an Internet connection goes down to an office, it is at a standstill. Therefore, it’s important to consider having a backup Internet Service Provider (ISP). This also means a business needs a stronger network infrastructure to ensure the highest stability.

Here are some common technology tools in business and their current states in relation to the “cloud”:

Email: At this point, if your business is not on the cloud for email, do it. The cost of hosting email in-house is massive. Between hardware, licensing and ongoing support, the total cost of ownership of in-house mail servers is astronomical compared to hosting on the cloud. The cloud also offers real-time updates to features without a disruptive update of the hosting system.

Business applications: With this one, it depends. When a business application such as Quickbooks is hosted on a local network, the speeds are better and backups are easy to manage. Remote access to the application becomes more complex as it’s necessary to create some kind of VPN access to the local network. Most business applications such as Customer Relationship Management systems already have created offerings that can be accessed through a web browser. If you’ve got the option, then go for it. It allows far greater flexibility for remote workers and lower licensing costs.

File shares: Every business has files to create and share between a team or to clients. If your business utilizes mostly Office files such as Word docs or Excel spreadsheets, then the cloud is a great option for increased collaboration features and mobility. For engineering and design firms, this is not as practical. The backbone of the Internet is not yet fast enough to have solid performance for the creation and manipulation of large files from programs such as Photoshop. A local file share is going to be the best answer for large data sets or archives of a company’s data. Consider a Network Attached Storage device.

Phones: In the past, in order to have features such as call trees or voicemail to email, a business needed to invest in an in-house phone system. At this point, the best answer for telephone service is monthly cloud-based phone systems. Most of these systems are compatible with basic VOIP phones made by companies such as Cisco, Polycom and Yealink. In addition, the services rarely have contracts, so that leaves plenty of flexibility for the business to move to another service that has better pricing, greater features or faster tech support. If it’s time to replace your phone system, get on the cloud.

As with anything IT-related, consult with a local IT professional about your specific situation. There may be compliance requirements in your industry to be considered in relation to these systems. If you can, get on the cloud.

Shaun Oshman is founder and chief executive of iSupportU in Boulder. He can be reached at 303-630-9974 or shaun@isupportu.biz.

Mobile-friendly websites more important than you think

Last April, Google released a major change in its search engine that will dramatically impact the online traffic for mobile-friendly websites. In fact, it is pushing responsive websites to the top of search results, while moving nonresponsive websites further down.

You may have been living under a rock if you haven’t heard about the hype over recent mobile website trends.

Responsive (mobile-friendly) websites are a great way to improve your online traffic, considering that more than 50 percent of searches today are performed from mobile devices.  However, the benefits of a website built for all devices can have other dramatic impacts on more than just the online experience:

Gain more traffic: Simply put, responsive websites will receive more online traffic than those that are not. You have to consider this path if you are to remain competitive with your online competitors. Google called its algorithm change in April “Mobilegeddon” for good reason.

Convert more sales: With more traffic comes more sales. By having an improved user experience, people will spend more time on your website and enjoy interacting within it. This is especially crucial for eCommerce businesses where the shopping environment must be quick, organized and efficient.

Look professional: Your website is often the first impression a user will have of your business.  You want your audience to be engaged and impressed by your brand, and a website built for mobile devices can do just that. It is difficult to gauge how many missed opportunities could come from a negative website experience.

Tablet and smartphone sales are exploding and have been surpassing PC purchases since 2012.  The mobile market is not going away, and neither is Google and the other search engines. Be sure that you stay ahead of the trend and remain competitive in your industry by optimizing your website to suit the needs of your consumers.

Hans Broman, a sales and marketing strategist at iPoint in Fort Collins, can be reached at hbroman@ipoint-tech.com. 

Remember lessons of dot-com era in tech M&As

Brent Peterson

Brent Peterson

Joanne Baginski

Joanne Baginski

From both a volume and a value perspective, 2014 was a strong year for technology mergers and acquisitions. Similarly, 2015 is off to a healthy start. The impact of the recent buying spree on transaction timelines, valuations and purchasing companies’ stock prices has many experts and executives wondering, “Are we repeating mistakes made in the dot-com era?”

On the buyer’s side, 2014 saw a variety of increases. Strategic buyers, including both public and private companies, closed 13 percent more deals in 2014 than in 2013. Private investment buyers, typically private equity groups, closed 22 percent more deals.

On the seller’s side, technology companies in all sub-industries have been acquired as a result of this recent increased activity. Software companies remain the M&A target leader in the number of deals and their value. However, transactions involving Internet companies, including e-commerce, mobile and social networks, and the Internet of Things are rapidly accelerating. Even the hardware industry, which saw a slight decrease in deal value, is seeing an increase in transaction volume. There were also more deals involving IT service companies, and the value of these deals has increased dramatically.

Origins of the M&A tech boom

Several factors are responsible for the increase in industry M&A activity. Mobile devices, online payment processing, cloud-based storage, exponentially increasing consumer data and serious digital security concerns are the result of more technology-based products and services provided by more technology companies than ever.

Technology buyers have been stockpiling cash. The great recessions caused many companies to focus more on profitability than growth and grow the cash on their balance sheets. The result? They are prepared to spend when the right strategic acquisition opportunity comes along.

The shortage of talent, particularly among software engineers and developers, has caused some companies to pursue a strategy of talent-focused acquisitions. These “acqui-hires” often are a factor in cross-border acquisitions – foreign companies seeking U.S. talent or American companies seeking talent in emerging markets.

As the traditional technology, media and telecom industries undergo transformational changes, new cross-channel businesses are rapidly emerging. These new businesses often seek acquisitions as a method to diversify or grow in size and scope.

With the speed of change in the industry, competition is fierce. Many strategic buyers are looking to stifle or absorb competitors with rival technology, as can be seen by the consolidation in travel website companies, as a good example of this M&A trend.

Strategic issues for M&A success

Beyond knowing what is causing the growth in technology transaction activity, what can buyers and sellers do to ensure their transactions are as strategic and strong as possible?

Customer retention. It is critical, especially in this industry, for buyers and sellers to know how easy or difficult it will be for a new owner to maintain the target’s customer base. Some dealmakers suggest a retention strategy goal as high as 95 percent. One challenge to this, however, is whether any government (domestic or foreign) or military organizations are a target’s customers. These kinds of contracts often require additional permits, review and/or approval, and may present a problem to a new owner with such permission. Similarly, a significant percentage of international customers also can present challenges to customer retention.

Recurring revenue streams: Closely related to the customer-retention issue is projectable revenue streams. Technology companies that offer subscription-based or rapid repurchasing revenue streams are significantly more attractive than those that offer one-off purchases or open-ended license fees. Similarly, whether a technology product or service is offered via the cloud can have significant impacts on revenue and, therefore, acquisition value.

Ease of business integration: Some companies are using acquisitions to strategically transform their business models. Examples of this include technology hardware manufacturers moving into the software space or a licensing software company acquiring a cloud-based software provider. While this strategy can work, there are often significant cultural integration issues. In addition, as device technology use increases, basic compatibility is a foundational element to a successful cross-business acquisition.

Accounting and finance: Although the new revenue-recognition standard does not apply until 2017 and may be delayed further for another year, many public technology companies (in software and semiconductors, for example) will be significantly impacted. Compensation and bonus plans, taxes on revenue, and controls and processes are just some of the areas that will be affected and will impact future valuation multiples and purchase price. The capitalization of costs is another important area for technology companies pursuing M&A strategies. Changes to EBITDA (earnings before interest, taxes, depreciation and amortization) as a result of software development cost capitalization can have dramatic impacts on both valuation multiples and business value.

State and local taxes: The rate of technology change has created a major challenge for state and local governments in maintaining tax regulations that make sense. The compliance of the seller in such a complex and antiquated environment is difficult but extremely important. Buyers are weary of acquiring companies that are unaware of possible risks and how state and local tax rules apply to them. Companies that have proactive strategies in state and local taxes are likely to have a better chance of successfully completing a transaction, lower escrow percentages of purchase price, and shorter escrow periods.

While the increased volume and value of technology M&A transactions is expected to continue through 2015 and beyond, all deals will not prove profitable. Focusing on the above issues will ensure the deals your technology company is involved in are as strategic and successful as possible.

Consulting partner and certified public accountant Joanne Baginski leads the transaction services group at EKS&H LLLP and can be reached at 303-740-9400 or jbaginski@eksh.com. Audit partner and CPA Brent Peterson leads the high-tech client industry group and can be reached at 303-740-9400 or bpeterson@eksh.com.

Stay current in fight against credit-card fraud

By Jeff Ditges

There has been some discussion in your paper (“Credit cards hacked? Who pays ‘em back?”, Nov. 28-Dec.11) and other media outlets about who should foot the bill for reimbursing consumers for credit card fraud – financial institutions or retailers. There’s also been a fair amount of ink on the growing call for Congress to step in with cyber-security legislation.

The truth is that this hot-potato issue is about to shift because of changes coming in the payment-industry security standards. These changes will affect small businesses dramatically and make many of these discussions moot.

To fully understand what’s about to take place, you have to first appreciate the circumstances we’re in now. These massive card security breaches – such as the 70 million customer cards hacked in the Target attack – are happening because the majority of U.S. cards still rely on magnetic-stripe technology that is more than four decades old and inherently insecure.

In fact, we are the only major economy in the world that does not currently use integrated-circuit cards (also known as EMV, IC cards and PIN and Chip). These are credit cards that have a circuit chip embedded in them and require a personal identification number for transactions. EMV cards are smarter because, unlike magnetic-stripe cards, they can check a PIN entered by a user without revealing it to the equipment reading the card. Many hacks involve infiltrating the card reader.

In Europe, 80 percent of their credit cards use this newer technology, and it has resulted in impressive reductions in credit-card fraud. In the United Kingdom alone, credit card fraud – for card-present transactions – dropped 75 percent after EMV was introduced.

The United States is in the card-processing dark ages, so the best cybercriminals in the world are concentrating their efforts on the credit-card payment systems here because they are so much easier to compromise. For them, it’s like playing in the Super Bowl and the opposing team is the junior football league. So for now, it’s no longer a question of if you will be hacked, but when.

Even though we know that it’s essential to change over to the new EMV cards, the United States has been sluggish to do so because it’s expensive. EMV cards cost much more to produce than magnetic-stripe cards. And the EMV card readers and ATMs require pricey hardware upgrades.

Initially, the investments are a tough pill to swallow, but compared with the losses to fraud and hacking, they’re a bargain.

In the meantime, the credit-card brands, Visa and MasterCard, have been working with the Payment Card Industry Security Standards Council to voluntarily enact updated security standards to protect financial institutions, merchants and consumers alike. The Payment Card Industry Data Security Standards ensure that anyone who processes credit cards is meeting the industry’s best security practices. By voluntarily prescribing these specifications, the card brands no doubt hope to sidestep any government intervention of cyber legislation.

Really, self-policing is the best answer. These world-class hackers work with lightning speed and continually upgrade their tactics to outsmart every security measure. Congress doesn’t. Any bill it writes could be insufficient and outdated before the ink is dry.

But here’s the important part for retailers: These standards are about to become requirements.

For the small-business owner – and retailers, especially – this means you have to be compliant with these new standards by the June 30 deadline or you are liable for any losses consumers incur as the result of a security breach in your system.

If you’re hacked and you were not compliant beforehand, your business can face steep penalties, up to and including the loss of the ability to process credit cards. That would put many small retailers out of business in short order.

The first step in compliance is taking the Payment Card Industry Self-Assessment Questionnaire. There are several to choose from, based on the type of business you are. You can find a guide to choosing the right one for your business here at understandplus.com/SAQ_Guide.pdf. You can find answers to all your PCI DSS questions at pcisecuritystandards.org/merchants/.

So while retailers and financial institutions still are arguing over the liability for past hacks, after June 30, the burden of liability will fall on retailers – so be sure you understand the PCI DSS requirements and protect your business and your customers.

Jeff Ditges is president of Source Communications, a communication technology company in Broomfield that provides wiring and hardware for point-of-sale systems.