Chris Payne, Director of Intelligent Response, Fire Safety and Security, Siemens Industry Inc. — The landscape has already changed, systems integrators no longer rely on dealers and suppliers for all of their product needs. The large integrators have their own product portfolios and are continuing to expand these portfolios. This trend will continue putting more and more pressure on the independent dealers/suppliers. The opportunity is for integrators to develop a product portfolio that addresses the needs of its focus markets better than any competitor. Savvy customers will continue to seek a one-stop shop for all of their security needs.

Eric Yunag, President & CEO, Dakota Security Systems — The continuation and acceleration of a trend is the increasing commoditization of electronic security products. The challenge is that products are increasingly available from a broader number of sources and the margins on those products continue to come down. The real opportunity is for integrators to reinvent themselves as service-oriented companies offering a broader array of higher margin services.

Security Industry

Bill Bozeman, CPP, President & CEO, PSA Security Network — The haves and have not’s in physical security integration will clash for positioning with the end user. Will the $100,000-$300,000 project go to the local integrator with ties to the community or will the end user choose the big national as a safer option regardless of performance considerations? I envision more cutthroat sales tactics and reduced cooperation between the big internationals and the local integration community.

The business dynamics between the larger players and the smaller local integrators has for the most part not worked to the benefit of the local, smaller integrator. The giants have chosen to team with the independents as an installer and not share the margin on equipment or RMR. Of course the risk is in the installation and deployment, and herein lies the problem for the smaller integrator teaming with the big guys.

Mitch Reitman, Principal, S.I.C. Consulting — Independent companies will have to stake out their niche and master it. As large companies like cable, Internet and consumer electronics enter the business, it is going to be critical that independents focus on their strengths and offer products and services that the outsiders do not. The biggest issue new entrants will face is developing a sound understanding of the security business in order to provide quality service. I believe we will see several large companies enter the security industry. Some will succeed, but most will abandon the effort in a few years. Unfortunately, they will take quite a few customers away from traditional companies in the process.

Stan Martin, Executive Director, Security Industry Alarm Coalition (SIAC) — The issue of municipal monitoring remains just under the surface and will require a great deal of hard work, and dollars, to stop. While the current target is fire monitoring, there is nothing that would prevent that from morphing into all monitoring. If you add to this the growing list of products that allow self-monitoring via smartphones, you have a potential tipping point on the monitoring side of our industry. Giving
the business plans that are all too prevalent in our industry, where installations frequently are subsidized by the first year or more of monitoring revenue, any dynamic shift in that revenue stream could be disastrous for many companies.

Risks and Threats

Dilip Sarangan, Team Leader Physical Security, Frost & Sullivan — IT companies are likely to dominate the security world in the next few years and the impact will surprise a lot of traditional security companies. In addition, if the proposed split of Tyco Int’l goes ahead, there will be a major change in the landscape and potential for ADT in residential and Tyco Safety in the commercial/government markets. Vendors are likely to face more competition in the industry and this will have a major impact on their business and revenue potential.

Eduard J. Emde, CPP, President, ASIS Int’l; Consultant, BMKISS Europe — Cyber risks, which presented so demonstratively in 2011, will in all likelihood have unexpected impact on organizations — both public and private — in 2012. More than ever before, it is crucial for manufacturers, service providers and users from across the security industry to openly dialogue and exchange challenges, needs, and requirements. Specific security products and services are called for not only to meet current security demands, but in anticipation of future requirements.

Sandy Jones, Principal, Sandra Jones & Co. — Verizon, Microsoft and other powerhouse businesses we are familiar with outside the security industry will become new competitors or enablers for growing within the security market. In the past, cable companies, utilities and phone companies attempted to succeed without an understanding of the security market buying decision, and with technology that lagged behind the concept. Today that is no longer the case. Technology is no longer the barrier but the enabler and buying decisions and motivations are shifting, which together make these powerhouse businesses viable new competitors or in some cases new partners.

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