SSI’s 2014 Industry Forecast: Kratos’ Jim Henry
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.
What will be the top technology developments in 2014?
Jim Henry: Technology of electronic physical security systems is changing at the fastest pace since our industry was formed, and it promises to move even faster in the next five years driven by the explosion of smart mobile devices embraced by consumers, businesses and public agencies. Rapid, radical changes always create opportunities for those that anticipate and prepare for it. It is a challenge to keep up even for those that are not caught by surprise. For those caught napping or reluctant to prepare for the changes, with training, certifications and new personnel, the challenges may become so immense they can’t be overcome forcing some tough, reactive business decisions from a position of weakness.
What will be the top market developments in 2014?
Henry: Federal government budget cuts and sequestration have created new challenges for federal, state, local and transit agencies that will hopefully clear once Congress approves a budget. Clarity and stability there will create new challenges and opportunities with the release of pent-up demand. If that occurs along with a recovering economy in 2014 those that maintained readiness by deployment of resources where there has been business rather than deep cuts will benefit the most.
What are some political, legislative and standards-related issues to watch out for in 2014?
Henry: Enacting legislative standards and regulatory compliance has the potential of driving exponential growth in the security industry but, historically, the process has been slower than watching paint dry on a humid day. That may change with the increased use of mobile devices at home and in security systems and the increased cyber threat on security systems and business operations. The challenge with this opportunity is not building Noah’s Ark too many years before compliance drivers are enacted and not being caught flat-footed when they are finally put in place, assuming real teeth to force compliance.
What is your overall outlook for 2014?
Henry: I anticipate a year of modest growth overall but with some big winners and losers based on how well they have prepared for and continue to adapt to rapid technological and market changes. Installing dealers will have the toughest time if they don’t develop value-added integration skills and continue to rely on equipment margins for a large component of their profit. The security industry will continue to evolve and grow for the foreseeable future. Having said that, more and more it will be “survival of the fittest.” Gone are the days where mediocre or even “good” service and performance will be enough to thrive. Excellence and focus is the new norm for companies with any future.
What are some pressing industry issues that may remain unresolved?
Henry: All stakeholders in the security industry suffer from the increasing trend of having the design/implementation/support of electronic security systems treated like a construction project where general contractors are given selection authority in addition to construction management. It will take a coordinated effort by all security industry stakeholders to educate end users of the perils of abdicating too much control to construction trades. The short-term lure of capital savings is always followed by operational costs and consequences that dwarf the initial savings.
You can be assured of three things in the security industry: death, taxes and change. In the past change has come slow enough that stakeholders had several chances to adapt without losing significant market share or opportunity. That will not be the case in the next few years.
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