The January edition of SECURITY SALES & INTEGRATION includes our annual industry forecast as a cornerstone of our special 2014 Industry Forecast Issue. For the piece, I interviewed 25 of the industry’s most knowledgeable market analysts, business experts, security dealers, systems integrators, supplier representatives and trade association directors. Some of their perspectives can be found in the magazine article, with the balance of their assessments appearing in separate Under Surveillance blog posts.
Featured in this installment: Tony Byerly, Executive Vice President, Electronic Security, Diebold Inc.
What major technology developments will we see in 2014?
Tony Byerly: At the same time technology is rapidly changing what’s possible, it’s also changing what we – as consumers – expect and prefer. Those expectations and preferences will continue to impact the security space, and they will transform how end users want to leverage and interact with security technology. In 2014, the industry will continue to evolve to respond to this collision of our consumer behaviors with our professional practices. As security and consumer technologies merge, end users will seek partners that can successfully bridge the gap. We’ll see this in the continued evolution of “as a service” offerings, use of the cloud, the proliferation of connected solutions and mobility. One of the most significant drivers of end users’ technology expectations will continue to be mobility. Security professionals will seek out solutions that enable them to take their environment with them and access their security operation anytime from anywhere, regardless of the device. As users become more mobile, they’ll also expect that their security platform will remain a constant – taking on a single look and feel and bringing together data from all systems, whether they’re accessing the platform from their desktop, tablet or mobile device. Finally, the demand for openness will also continue to impact how we deliver security solutions. The days of proprietary security are gone. The future is open solutions that can be easily integrated with existing technology. We’ll see more services laying over security technologies. And we’ll see more solutions being driven into the cloud. The biggest opportunities here will be with access and video.
What major market developments will we see in 2014?
Byerly: The reality is that there are changes, challenges and opportunities for every market. And the dynamics in every market ebb and flow. Traditionally, security providers tended to shift their focus from one market to another as those dynamics played out. They chased growth opportunities, regardless of whether a market was a good fit for their business and their capabilities. The most effective, successful companies – both inside and outside the security industry – will ride out the dynamics and base their focus on their ability to align with customers’ specific needs. This approach will require providers to really understand their expertise and capabilities, and to make a deep commitment to only the markets and customers that can most benefit from what they have to offer.
What are the most prominent business and operations challenges for the New Year?
Byerly: In the past, many security companies worked to expand into new markets, take on both residential and commercial customers, and essentially dilute the value of what they could provide to end users. In 2014, we’ll see a reverse of this trend. To be competitive within our new landscape, security providers will narrow their focus to better align capabilities with the needs of specific customers. This is a trend we’re seeing both within our industry and beyond security into the broader business community. Another major force within business and operations will be the absolute requirement for companies that want to be successful in this industry to invest in IT capabilities and infrastructure. If you can’t build or offer mobility, a slick Web portal or high-tech implementation capabilities, you just won’t be able to compete. This will have a significant impact on small to midsize companies that don’t have the resources to make such investments. The resources of a company and its ability to scale won’t just be a factor when it comes to technology. It will also impact consideration as end users seek to package – and integrate – elements of their security programs. Just being a monitoring company, for example, won’t be enough. The customer enterprise needs partners that can monitor, handle the alarm, dispatch, bring up the video, store the video, etc. Service providers without these competencies will require a whole new level of expertise and investment.
What do you envision for the security industry overall?
Byerly: As security providers work to better align their capabilities with the needs of specific customers, we’ll see many of them contemplating what they want to be. As a result, there will be more clarity about whether a provider is in the residential or commercial space. Focus will be key. As providers shift to more recurring monthly revenue, we’ll continue to see the entry of advanced hosted and managed services – many with highly sophisticated IT and technology capabilities. This will drive a model that looks more like software as a service [SaaS] than traditional security. All of these factors will lead to a stronger bond in customer relationships, as well as dramatic changes in the security providers that have the IT resources and capabilities to provide these advanced RMR services.
What type of year are you anticipating overall for manufacturers/suppliers, dealers/integrators and monitoring providers?
Byerly: The traditional security model will continue to be turned on its head, and activity within the industry will reflect that trend. If security providers don’t do more to extend the value stream, invest in technology and IT capabilities, they won’t survive in Security 2.0. Large security players will continue their evaluation and pursuit of smaller product and technology companies. With the sheer speed of advancements within the industry, it’s a challenge for large players to quickly build all of the new capabilities they need to remain competitive in-house. And end users aren’t going to have the appetite to wait out the corporate development process. Instead, some of these new products and capabilities will be built through acquisition. This approach is consistent with what we’ve seen outside of our industry with companies such as Google and Amazon. In addition to driving the activity of the industry’s key players, it will also continue to enable new competitors to enter the security space. What these new competitors lack in security expertise can be quickly developed via acquisition.
What are some pressing security industry issues you expect to remain unresolved?
Byerly: There remains a disconnect between the skillsets of the traditional security director and the IT-centric, technology-focused security professionals that are becoming more in-demand with customers today. As we continue to build momentum toward Security 2.0, we need to create a hybrid that will better position the enterprise to leverage the strengths of these groups and take full advantage of all of the benefits today’s security solutions have to offer. As our customers continue to assess their security organizations and teams, some security providers will also continue to struggle to keep up with the rapid evolution of technology. This will especially drive midsize providers to make hard decisions about whether they’re able and willing to make the investment in IT-centric capabilities and personnel.
What is something that might surprise people in 2014?
Byerly: The industry is beginning to recognize the growth of cloud-based and hosted services, as well as understand the impact these options can have on the security operation. It’s critical that service providers understand how new technologies will impact the current environment and proactively take steps to ensure interoperability with other systems. Providers that can bridge this gap can add value to their streams and, ultimately, increase the revenue potential of their RMR.