Ron Konezny, President & CEO, Digi International

In an interview with Invest:, Ron Konezny, president and CEO of Digi International emphasizes the importance of having solid Internet Of Things (IoT) solutions for businesses while highlighting the Twin Cities as a strategic market for business growth largely in part for its well-educated talent base and tested entrepreneurial spirit. Service and expertise are among the key factors in a helping business navigate their IoT solutions, he told Invest:.

What have been some key milestones for Digi International over the past year?

Digi International is celebrating its 40th anniversary this year. The company was established in 1985 and went public in 1989, and it’s really unique for a technology company to stay independent that long, especially after going public. This speaks to Digi’s resilience and adaptability. Our journey started in leveraging our roots as a reliable, secure and scalable global provider of IoT to become a solution provider. This means providing software and services that help our customers connect their remote assets quickly and easily. We expect recurring revenue, which is the ultimate measure of the progress of this journey, to reach 30% of our total revenue this year. 

What current trends in the local tech sector are you following closely?

We are a global company. We do business in almost every country around the world. Minnesota is a microcosm of what we do for many companies. The Twin Cities is diverse for its size. It has companies in almost every industry sector, as well as a good number of Fortune 500 companies given the region’s size and scale. It is a wonderful area to deliver solutions but also drive new ideas. There are companies providing microgrids, as well as sanitation, healthcare and medical devices; as such, there are numerous ways that we can assist businesses locally that reflect what we do on a global scale. Minnesota has always been intellectually curious and innovative. Companies based in the Twin Cities want to hear about new ideas, and may pursue them at different paces than other geographies would, but it’s a great place to call home because of the companies that want to improve and learn more. 

For companies evaluating expansion in the region, what factors separate the Minnesota-St. Paul region from other comparable markets?

The region features a highly educated population. The community really values education. The community also values the outdoors, which helps with the work-life balance equation. Not only can people do great things from a business perspective, they can also enjoy the local geography. This combination makes the region attractive and creates a stable environment for companies to consider. There is also a solid entrepreneurial spirit in the region, which is known as the “Silicon Tundra,” as we do have a technology industry that is thriving. 

What separates Digi International from its competitors?

We survey the market annually and key questions to our customers and people using alternative solutions such as to rank the attributes they look for in an IOT provider. The perennial winner in those surveys is reliability. When monitoring remote assets companies need those solutions to be reliable; otherwise, there is no value or return on investment on that solution. The next attribute is service. IoT solutions are complex. There is a combination of software and hardware that sits in remote areas, connected most often by wireless networks, satellites, cellular, or other technologies. The data is typically held in a cloud environment; then you have to collect and visualize the data, and at times combine it with other data sets. There are key building blocks to an IoT solution, so if any of those factors were to go wrong, the entire solution will fall down. Additionally, service is becoming more rare and hard to find. As such, we are focused on servicing our customers in more than just providing the technology, but also the advice and expertise as our customers go on the IoT journey. Service is the ultimate differentiator. Service is defined as the customer experience; that means from the first interaction with Digi to when customers pay an invoice, we want the customer service experience to stand out. 

What factors are driving changes in the customer experience and expectations from an IOT provider?

The pace of change continues to accelerate. It can be dizzying for companies to keep track of what the relevant solutions are, what needs to take priority, and what can wait. This is where Digi’s expertise drives the most value for clients. We are continuously analyzing and testing these changes to better understand when and how to leverage them. Artificial Intelligence is of course the latest technology buzz, and it is much more people oriented right now, just like the internet and wireless phones once were. Digi is going to usher in the age of AI that is built for machines. For example, when we monitor an elevator anywhere in the world, we actually want a tiny language model. As such, tapping into a database that is learning and tracking elevator performance globally will make those elevators more reliable, perform at a higher level, and require fewer service calls and repairs. These are the types of things that Digi will be working towards for its customers in order to help them meet their goals. 

What other tools are expected to drive change in the IoT space?

Just in wireless, the transition to 5G is well on its way. There is a less known evolution of networks that are more machine driven. There’s also the ongoing growth around cybersecurity. The number of attacks that are happening to critical infrastructure is staggering. As such, designing security into the products makes our solutions incredibly resilient. We help our customers through these change management processes to make sure that their solutions are highly secure. There is also exciting growth and innovation around how to record, report and visualize data and take action as evidenced by machine learning and predictive maintenance. Understanding when machines need to be serviced and giving those machines a voice is what we are helping our clients through in order to prevent costly downtime and ensure that their products are standing out in the marketplace. 

What are among the key current challenges in the IoT space?

When IoT was first started there was this philosophy of “set it and forget it.” Businesses would set up IoT to track data passively. Those days are long gone. Remote assets need to be actively managed as well as the accompanying IoT solutions. You can’t just set it and forget it. There are too many changes such as security or technology, regulatory and policy, and even within business opportunities and challenges. Educating customers in actively managing their IoT solutions in real time has been one of Digi’s biggest opportunities and biggest challenges. Companies need to monitor the hundreds, or thousands, of devices that are remotely connected, which need to be monitored the way you would your personal computer and phone. And you need to be able to remotely update their firmware to safeguard against emerging threats. That is where Digi can provide customers with the security confidence that we are monitoring those IOT solutions. We make sure to scan for vulnerabilities, looking out for any recent changes, not just bugs, but also security gaps, to make sure that our clients have the most secured solutions possible. 

What are some of the highlighted areas of growth in the IoT space?

The world is producing billions, if not trillions, of devices each year. Every one of those devices has the capability to be connected and managed. As the cost of IoT has come down, there are more and more things worth monitoring. There is a lot of activity out there to be monitored. 

We also have a diverse product line. For example, we do a lot of work in the healthcare sector securely connecting machines such as defibrillators, dialysis machines, and ventilators to the internet, which is extremely valuable. Companies relying on these machines track their performance to make sure they work at their best. Also, there is a boom currently happening in data center development for traditional cloud computing as well as AI. We play a crucial role helping the IT people access, monitor and control those assets remotely. 

What are the goals for the company in the near future?

Last year, we set our objectives for the next five years. We are looking to double the amount of annualized recurring revenue and increase the profitability of the company from $100 million to $200 million, which means close to 15% growth annually on an organic basis. We are excited about this journey and believe we can get there faster if we pursue some acquisitions. Most importantly, although these are financial measures, they are indicative of the success we have in providing solutions to our customers, which is our main goal.