Interview with Tom Grissen, CEO, Daon Inc.

Feature Company

Interview with Tom Grissen, CEO, Daon Inc.
January 2007

Tom, since the last time we spoke Daon has grown considerably, adding head count and a new office in Sydney. To what do you attribute this growth?

Peter, our growth is attributable to our industry leading biometric identity management platform and the reputation our company has built in delivering ahead of schedule, to specification and on-budget. End customers and systems integrators select Daon due to the quality of our staff and the flexibility to respond to new requirements that constantly emerge, whether that be; new concepts of operations, new device technology, new algorithms and biometrics or new applications. Our partners are leading system integrators that are very knowledgeable experts who solve problems on their customers' behalf. And, so it is important for Daon to provide products and solutions that help these partners solve their customers' challenges. Finally, it important to recognise that we are an emerging market where deciding what not to do is almost as important as deciding what to do. At Daon, we have remained focused on what we do best -- we have built a good brand by focusing on our core competencies and it has allowed us to avoid some of the false starts and confusion that often exists in an emerging market.

Will the Sydney office be the focal point for the Pacific Rim opportunities?

Australia joins other governments that are building their national biometric identity management system around Daon technology. Our strategy was to serve all regions of the world and Australia, New Zealand, Japan and other Pacific Rim countries are a key part of that strategy. We work hard to make time zones transparent to our customers so we work the hours that they work. As our presence grows, such as in Australia, we open local offices as part of our commitment to the customer.

I think that's so important to have a localised office to handle those customers -- it is really good that you have taken that step.

Yes, we are a global company, but we believe in acting locally when it comes to serving our customers. It's that willingness to place appropriate and highly qualified resources where they are needed that has earned us an outstanding reputation for customer service. Our growth has been directly influenced by the quality of our credentials and customer references. When it comes to large-scale biometrics deployments, customers insist that product and service providers have extensive experience and credible references. Daon brings both elements to every project and we make certain that we have local resources accessible to the customer. This insures outstanding performance. Candidates that we hire from the local region always check our references with the customer, another reason to do a great job and make sure customers are delighted with our performance, if make our life much easier.

Speaking of performance, how would you rate your company's performance in 2006 -- and besides the reference, which, I agree, is the most important thing that you could have, what other influences might be affecting your performance?

Our performance in 2006 has been superb! The first 6 months of the year we were extremely involved in proposals, as well as working our existing customers on new opportunities. The second half of the year brought the final conclusions of some of these contracts as they entered the award stage. We operate as a key partner to the prime systems integrators and were proud when they won. We end 2006 having achieved exactly what was set out in our strategy-- which were high critically important contracts in the US, Middle East, Australia, the Pacific Rim and now in the European Union. I couldn't be happier or more proud of what our people have accomplished this year. We end the year with a product portfolio that is increasingly relevant to customers endeavouring to implement enterprise identity management platforms that leverage biometrics coupled with a strong reputation, excellent references and a great product offering.

Could we follow up a little bit with that, Tom? I know we have spoken in the past about some of the high profile programs that you are involved with, like Registered Traveller and TWIC. Could you give us a quick update on those particular programs and Daon's role?

Sure, phase 3 of TWIC is completed -- phase 4 is being procured right now by the TSA so just in respect to that process I cannot comment much on it other than to say that we are competing for that business. Registered Traveller I can speak to more extensively. Registered Traveller is at a very historic phase in the program. As of Nov. 28th, Daon's biometric identity management platform is the central infrastructure serving the US national Registered Traveller program. This is one of the leading credentialing platforms in the world. It is multi-biometric, interoperable, standards based and of a national scale. An unlimited number of service providers can become certified to enrol and issue credentials to travelers; allowing any traveller to go through any participating airport and authenticate their identity using biometric based credentials.

That is very exciting for the company!

It is! The travellers have had a very positive response to it -- the airports have been very open to it -- and it represents another layer of security and also a great convenience for efficiently going through the security line.

Tom, you also mentioned a little bit about some of your international projects in Australia, Ireland, Qatar, I think you mentioned the European Union as well. Can you tell us a little bit about those projects and the importance of that type of international work for Daon?

Sure I'll be happy to! Our strategy has been to focus on programs around the world. Every region of the world is adopting stronger means to establish trust with any individual without fear that the individual or someone is faking their identity. This trend isn't limited to the United States. It is a global phenomenon and biometric technologies offer the most fundamental solutions to maintain that integrity of trust on a worldwide basis. So, we have learned a lot from what the US and other nations around the world are doing. We have learned a lot in Europe, the Middle East and the Pacific Rim and the lessons learned are very valuable to all of our customers as we share them. They are able to use these lessons learned as they make choices and interact with other regions of the world to address the situation. It was interesting at the Biometrics 2006 Conference in the UK -- the Under Secretary for Nationality, Citizenship & Immigration -- in her speech she said, "I am not here today to make a case for a joined up security management scheme, that case has already been made. What I am here to talk about is how we intend to deliver it." We have seen the discussions and debates move from exploring different technologies in a pilot mode to true national deployment and advancement of the program. So, as we have worked with different governments around the world we have seen some very creative applications of biometric technology from the classic border management systems, to credentialing systems for ports and national Ids and Visa systems, all of which we are heavily involved in. We have also seen applications where nations want to protect their territorial waters in the fisheries area to make sure that people who are in their waters are legally allowed to fish in those waters. So there is a much greater breadth of applications and business solutions that call on biometrics.

Well, Tom, I couldn't agree with you more! I was also present at that speech in London and it was great to hear talk about actual implementation, rather than talking about what might be done at some point in the future.

Yes and that issue represents such a big shift. During Daon's participation in the various pilots going on around the world, we were obviously patient, providing tons of support to our customers and making sure that the pilots succeeded and that the proper lessons were learned. As multiple nations go into national deployment, it certainly is an exciting time for us!

Tom, with your software platform being technology agnostic, how important is that flexibility for your customers, especially the international ones?

Peter, I would say that it's of paramount importance. It is very difficult for a customer to look in their crystal ball and know exactly what they are going to face; with the rapid advancement of research and development - new innovations constantly occurring. So what we do is help our customers take advantage of that new technology, new innovations, and new price points in the market so they are not locked into a system. If you look at some of these big biometric systems, most are designed to serve the government through two and a half presidential election cycles -- you are looking at systems that need to serve for ten years on a national priority. Customers find that Daon provides solutions which allow them the flexibility to not get locked into a specific technology, and to take advantage of new concepts of operations, new security threats and new advancements in technology. I'll give you an example -- one of our customers wanted to deploy a national credential and that was the top priority. We signed contracts with them and then the political priority changed. They were hosting a worldwide sporting event and the most important political issue became e-Gate rather than a national credentialing system, so within 40 days we re-deployed a system that served an e-Gate function rather than a national ID function and the crux of that is -- whether it is the United States or any nation around the world, new threats emerge and government officials must have the flexibility to respond to those emerging threats. If you look at the United States, we have a new Congress -- and new mandates may come out of that Congress --the ability to respond to those requirements in a fast and cost effective way is crucial. Daon does that extremely well for our customers.

That leads well into the next question, Tom. What new trends are you seeing in the biometric industry and how do those trends affect your business?

Standards and operability are the key trends we see today. As you know, we have had some of the world leaders, like Cathy Tilton, focused on that. Daon spends considerable energy advancing standards and operability. The Registered Traveller system, as an example, is standards based interoperable system - it allows an unlimited number of service providers to enrol travellers, as the market dynamics to come into play to give that value to the service provider but must conform to a national interoperable plan. The travellers, the airport, the TSA aren't locked into a single provider. Interoperability and standards are keys to the success of the program. The next trend that really stands out is the emergence of identity platforms. Rather than a stovepipe system or say a device hooked into a back end AFIS system, we are seeing identity platforms come forward. Our customers want to serve multiple business needs from a single system so the concept of "single system-multiple mission" is important. We have customers around the world who have a single system built around Daon technology serving e-Gate, e-passports, Visa, National ID systems, as opposed to constantly replicating and dealing with the associated complexities. So that is a big trend - the identity platforms versus devices to back end AFIS systems - and the third one that really stands out is the trend of solutions rather than technology. In the past, customers could get excited about a particular device, but today they want to see their business solutions operating and calling on biometrics, so it really becomes a focus on the application and the business solution rather than the basic technology. The 4th trend I would mention is that customers want to turn to service providers and companies who have past performance, extensive experience and credible references. I think that the days of exploring with companies that don't have past performance has ended and it is going to be extremely difficult for those companies without a track record to succeed.

Well, thank you very much for that. And finally, Tom, what do you see the coming year hold for Daon?

We will continue to expand on our flagship product DAON Engine. But, we are expanding our tools and components that are used to build applications, which is a whole new product offering called Daon Application Suite. So I expect our products to again make a major leap forward in 2007 both in their functionality and ease of use. And then I see the continued advancement of our staff, of growing around the world in the regions we have talked about, and helping our customers move from these successful pilots to national deployment, so I am very bullish about 2007! I am also really excited that the fact that system integrators and third parties around the world are turning to Daon technology to build their business solutions as they bring them forward to their customers. So 2007 looks like a great year for Daon!

Well Tom, as always it has been a pleasure speaking to you. Thank you for taking the time!

It has been my pleasure Peter.

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