Alarm Industry Legal Expert Jeff Gorelick Shares 2012 Predictions for Security Business
What does 2012 hold in store for your business and the industry? Find out with the many insights offered in SSI‘s annual Industry Forecast, which is featured in our January issue. This year, more than 25 of the industry’s most prominent research firms, trade associations, business and finance specialists, systems integrators, manufacturers, consultants, and alarm companies rendered a deep and sweeping portrait of the impending security landscape. The participants addressed the most significant changes, challenges and opportunities they anticipate taking place during the next 12 months in seven critical areas. They are: security technology; security markets; security industry; business and operations; politics and legislation; risks and threats; and ongoing challenges. With the boundaries of print being too constrained to present all of the fascinating and valuable assessments, each of the respondents’ complete, edited interviews are being offered exclusively online. Happy New Year!
Gorelick Advisors Law Practice
Jeff Gorelick: Operating companies have an increasing awareness of the return on investment in electronic security. Our clients servicing large industrial and warehouse facilities have had greater success selling integrated remote video monitoring together with internally monitored algorithmically based video software. It results in the reduction in shrinkage of small high value items and the ability to avoid unsubstantiated workers comp claims. The continued advancement of these commercial technologies provides a good opportunity for expansion as capital budgets return to normal levels.
Security Business and Operations
Gorelick: Larger companies that provide more robust menus of integration equipment and services will have an increasing marketing advantage over the smaller provider with a more limited set of offerings. Smaller companies will find themselves competing in primary and secondary markets for the business that the larger companies cannot do as profitability or having to develop partnering strategies to offer the products and services demanded. In the past year we have seen several of our local and regional companies close down their central monitoring stations. They had previously competed effectively on the basis of “local monitoring.” The capital investment required to offer the customer the scope of services would cut margins. As a result they have moved their business to high quality and sophisticated contract central stations.
Gorelick: The overlap of physical security and data protection brings competitors from the IT world into direct competition with tradition systems integration and electronic security companies. Whether it is Intel, Cisco or others this new competition will over the next few years call upon electronic security companies to increase their ability to compete in data security and compliance issues.
Politics and Legislation
Gorelick: After years of fighting alarm ordinance battles city by city, I believe the industry has turned the corner in creating a balance between customer needs and police resources. The Security Industry Alarm Coalition has shown flexibility in dealing with police organizations and demands of cities with shrinking budgets. New verification techniques, more foolproof panels and greater customer education will continue to help us avoid the pressures to further diminish police response.
Risks and Threats
Gorelick: The smaller dealer who always believed his/her company was their nest egg and who continue to do business as usual selling limited product offerings are likely to find decreasing multiples. The public demand for more sophisticated and integrated services will create greater stickiness for companies who service the demand and a greater level of attrition for those who do not. These smaller companies are likely to lose market share or even shrink materially if they are not responsive to the changing market.
Gorelick: The development of standards remains a slow process hampering the growth of new and desired products in both the fire and security areas.
Gorelick: I think 2012 will be an excellent year as enhanced technologies encourage customers to upgrade their systems and services. I predict a greater amount of M&A this year as strong companies use low interest rates to acquire weaker competitors.
Gorelick: It is an election year and the posturing of the political parties will once again disable government functioning. Markets hate uncertainty and this may have some offsetting effect on capital investment.
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