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: Pam Petrow, CEO & President Vector Security, Inc.
What do you expect will be the biggest changes, challenges and/or opportunities as they relate to security technology and business for suppliers, integrators and monitoring providers?
Pam Petrow: Technology continues to rapidly change in our industry, which presents a challenge for the manufacturers as well as the installing companies. Not only do we need to be able to have access to and provide solutions that embrace the technology available, but we also must remain committed to developing our personnel to competently handle initial installations and ongoing support. From a manufacturing perspective, this is a challenge as new entrants approach the space from a more consumer-driven direction. Without legacy product, these new entrants can be more nimble and quick to market. From an installing company perspective, we have to develop operating models that reflect a shorter time between customer hardware/software upgrades. To our existing staff, technology creates a wonderful opportunity to learn new skills. It also makes our industry more attractive to a younger workforce that has been raised on technology and seeks to use these skills in their career.
On the business front, opportunity exists in the manufacturing sector for those companies that figure out how to provide a radio unit that can be upgraded without a truck roll. As products have a shorter lifecycle, the ability to efficiently upgrade units will become imperative to the installing company. Manufacturers also face the ongoing challenge of staying ahead of new entrants in the space and creating products that meet the expectations of consumers. For dealers and integrators, the immediate operational focus is upgrading customers with 2G service. This opportunity allows us to interact with our customers and to introduce new services. The challenge is balancing this customer outreach and conversion with new sales growth and allocating resources appropriately. There will be additional challenge in staying ahead of the carriers in the markets that will lose service prior to the final sunset date. A second area of focus is on the skillset of tenured sales and technical personnel. We need to make sure we are providing the necessary training so they are proficient and comfortable with the products and services we are offering and understand the importance of their roles in meeting customer expectations. From a monitoring perspective, as younger consumers enter the market as new head of households, they may need to be convinced of the value of monitoring services since they consider themselves connected 24/7. Monitoring companies are going to need to clearly define why their services are needed and how they complement and enhance self-monitored mobile applications.
What do you envision as far the industry at large is concerned in 2013?
Petrow: Many owners have the perception that nobody can do what we do as an industry and I don’t believe this to be true. Getting the industry to acknowledge that change is occurring, new entrants are a serious threat and changing consumer expectations will impact their business model will be a challenge. We need to continually evaluate and strengthen our value proposition to the consumer in ways that differentiate the alarm companies from new entrants to the market that provide a broader spectrum of services. Also, the efforts of traditional carriers to deregulate could impact the industry. The alarm industry to a large degree has no control over the communication paths that it uses and as such is dependent on these outside providers. As the business models change for carriers and they adapt to remain competitive, our reliance on their legacy infrastructure could put alarm companies that are not proactively addressing this technology change at risk. Several new competitors in the alarm space are taking the position that they are not bound by licensing that regulates the traditional installers. If this is found to be a valid position, legitimate traditional installers will be operating at a disadvantage as their businesses will need to meet requirements needed to be licensed and to comply with industry standards. Standards that are written without consideration to new and future entrants to the market will create a competitive disadvantage for traditional alarm installers.
What type of year is Vector Security anticipating for 2013?
Petrow: We are forecasting 8%-10% growth in revenue for 2013. We believe consolidation of companies will continue as technology creates an atmosphere that requires higher levels of capital to remain competitive with product offerings and service capabilities.
What are some pressing security issues and surprises we might see in 2013?
Petrow: The industry tends to be complacent with a small number of individuals committing time and resources to evaluating new standards, responding to legislative issues and promoting the importance and value of professionally installed and monitored security. This apathy results in the thoughts of a few driving the direction of an entire industry. I think we have to continue to try to recruit individuals to be active in the associations and on standards committees and ask larger companies to commit resources to these important endeavors. We need to continually be aware of the stressed budgets of local and county governments. We have seen several areas where nonresponse has been proposed as a result of budgetary impacts. We need to stay active with our local responding agencies and help them find ways to address false dispatches and more efficiently receive information from alarm companies. The use of ASAP is one method that can help address this resource issue and provide the added benefit of faster response to our customers.
Other Security Blog Posts
Under Surveillance | December 5, 2013
Canton Police Department Deputy Chief Scott Hilden discusses electronic security helps law enforcement accomplish its public safety mission in this exclusive Q&A.
Under Surveillance | November 18, 2013
Three members of the Custom Electronic Design & Installation Association (CEDIA) Board of Directors address recurring revenue, competition, technology and more in the latest Under Surveillance blog.
Under Surveillance | November 15, 2013
For years Honeywell has hosted annual conferences for each of its three largest authorized dealer programs. The individual format changed this year with Connect 2013, which brought together installing security contractors from the First Alert Professional (FAP), Commercial Security Systems (CSS) and Honeywell Integrated Security (HIS) networks.
Laying Down the Law | November 14, 2013
Ken Kirschenbaum shares the best way for alarm dealers to terminate difficult subscribers.
Under Surveillance | November 12, 2013
Pivot3’s new CEO, Ron Nash, discusses his plans for the company, the challenges of marketing surveillance storage and VDI products, plus he shares a few industry predictions in this Q&A.