The January edition of SECURITY SALES & INTEGRATION includes our annual industry forecast as a cornerstone of our special 2013 Industry Forecast Issue. For the piece, I interviewed 20 of the industry’s most knowledgeable market analysts, business experts, systems integrators, manufacturer 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: Chuck Wilson, Executive Director, National Systems Contractors Association (NSCA).
What do you expect will be the biggest changes, challenges and/or opportunities as they relate to security technology, markets, and the industry itself?
Chuck Wilson: Certainly the cloud, bring your own device, or BYOD, and software as a service, or SaaS, are leading the list of most disruptive technology changes for 2013. It’s not necessarily the technology changes that concern me, it’s the way that these technologies impact how we offer our services and manage the accounts. The delivery of technology will be done via a different type of transaction than what we are accustomed to. The markets are changing quickly. The best opportunities lie in pushing technology into markets that were often overlooked by the integrators. This, combined with offering more Web-enabled solutions within existing strong markets will drive growth in 2013. Don’t look for significant growth from new construction except in very selective regions of the country. I expect the overall security industry to be challenged by nontraditional competition entering this space from the IT sector. As our systems and solutions become more of an IT/IP application, the existing network provider might look to offer a total package including many traditional security endpoint devices.
Are there any political, legislative or standards issues to take note of?
Wilson: I envision 2013 being a big year for political and legislative impact. We are just now finding out about new tax implications and the true cost of the government mandates for employee health-care coverage. This will shape how you provide benefits and it will influence the competitive landscape. Some believe this strongly favors the small integrator or dealer that operates with fewer full-time employees. Prevailing wage requirements will appear unexpectedly on projects where it’s not obvious that federal funds are being used. Additional licensing and permits will be required and more code inspections will be likely in an effort to increase government revenue.
What type of year are you anticipating overall for 2013?
Wilson: I expect to see a better year in 2013 than in any year since 2008. I say that because we see backlog finally starting to increase again. Orders are outpacing existing capacity again which is great news for many. That will lead to hiring, which can be good and bad. I caution our members to hire the right people and then train them to the company philosophies, culture and customer expectations. The new construction starts will only represent around 3% of the average growth. Organic growth will need to be a key strategy. That involves aggressively seeking new opportunities in existing accounts and strategically expanding core competencies into a very few and very select new markets. Niche and focus are more important than ever. The most successful integrators have found the right size for their organization and the right niche markets where they are more competitive and experienced than anyone else. Carefully selecting jobs based on this will be critical to every integrators success in 2013. Companies that are proactive, have innovative solutions, avoid the low bid mentality, and hire and train the right people should have a great year ... if they focus on what they do better than any other local competitor. The challenge for 2013 is combining that expertise with the knowledge and proper guidance for managing these new regulations and small business mandates. Our focus is helping in these areas as this has become such a major part of running a profitable company.
What are some nagging or pressing security industry issues you expect to remain unresolved?
Wilson: Developing then communicating the right strategy, primarily how to make money rather than how not to lose money, for each vertical market and solution is paramount. Integrators will absolutely need to know which project types and systems they make money on - and where they are losing money. An RMR pricing and sales strategy has to be put in place. Developing the right compensation plan for this should be a top New Year’s resolution if what you have isn’t producing positive results. Business metrics and benchmarking are woefully lacking in the security space. Our partners at PSA Security Network are doing a great job and we are doing more with manufacturers and distributors to share the best practices.
What are some things that might surprise or catch people off-guard in the security industry? Any ideas/thoughts about how they can be best prepared to handle?
Wilson: Bad contract language is at the top of this list. As the security space becomes more IT influenced, the requirements on contracts will take on the same level of expectation. We need to prepare for this. Insurance requirements are especially critical if you're doing design-build work. Hiring new people and assuming they have good people skills can be either a good or bad surprise. We underestimate the importance of this and the expectations of our clients are increasing rapidly on implementation and training their system operators. Be prepared to get a call where the end user rejects your proposal, yet goes on to say that they have purchased the equipment and now asks for a price for the installation-only portion of what you originally proposed. We are seeing some conflicts and confusion in the channel and much of it stems from multiple distribution methods for the same or similar product lines. Be prepared to defend your pricing structure and your value proposition. More than ever, prices are exposed and end users can see what dealer cost is if they try hard enough. Improve your value proposition, don’t lower your prices.