Bold Group Brass Explain Industry Expectations for 2021
President Alison Forsythe and Senior Vice Presidents Steve Keefer and Thom Meyer join SSI for an in-depth examination of the year ahead.
Three executives from the Bold Group, a leading provider of mission-critical alarm monitoring and financial management technology, recently joined SSI for a comprehensive dialogue to illuminate their expectations for the security industry during the year ahead.
The conversation included Alison Forsythe, president; Steve Keefer, senior vice president of strategy; and Thom Meyer, senior vice president of stages, which is the company’s flagship automation platform.
Read on to learn their unique perspectives on a wide range of topics across the security ecosystem, including pandemic impacts, marketplace trends and challenges, disruptive technologies and much more.
How do you anticipate the COVID-19 pandemic impacting the electronic security industry — best- and worst-case scenarios — overall in 2021?
Steve Keefer: 2020 laid a foundation to continue to navigate the pandemic response in 2021. It helped jumpstart the security industry to think and act differently and be ready for the unexpected. This pandemic has challenged the old way of thinking and forced us to work differently. We believe WFH [work from home] is here to stay; however, it’s not a need anymore, it’s a norm. How we continue to evolve and navigate the implications of 2020 will be refined in 2021, not forgotten. The security industry must face the fact that we won’t go back to the old ways of doing things and instead embrace change and evolve faster than we ever have before.
In a worst-case scenario, with the pandemic forcing people to stay at home, the demand for traditional, professionally installed monitored systems will drop. Some of the newer, larger companies from outside the industry will come in and dominate the newly expanded residential market with multiple, DIY self-installed options. With this, revenue from professionally monitored systems will decrease significantly, putting increased pressure on the smaller and medium-sized players to maintain their overall revenue while incurring increased costs. For commercial systems, the remote workforce will lower overall demand for in-office systems and professional monitoring, thus the industry continues to take an overall hit in loss of business opportunity. Without demand, many companies will not be able to stay afloat or compete.
In the best case, it will be the industry’s version of “a rising tide lifts all boats.” Newer, larger, non-traditional entrants into this market with advertising power will raise awareness and increase revenue opportunities, driving increased demand that allows larger companies to invest in the technology and infrastructure needed to scale operations. There could be additional consolidation of companies to allow for more power and scalability to compete with the non-traditional entrants.
With their strength in already knowing the security space, this could help propel them and drive a large increase in business for third-party monitoring companies. If small businesses can be nimble and forward-thinking, they will be successful by modifying their business to focus on outsourcing and allowing other larger organizations to manage monitoring, removing it from their business and focusing on sales and service to grow their business.
Most likely, the conservative businesses, or those that don’t embrace change will be slow to return. Those that do embrace change and see this as an opportunity could have a very strong, impactful year.
Let’s address some specific areas and what you expect to be the biggest changes, challenges and opportunities as they relate to both residential and commercial markets. Starting with technology …
Thom Meyer: Security companies had to change quickly and there wasn’t a choice. Moving ahead more change will be required. There will be a dichotomy between the companies that decide they can monitor remotely. Can you monitor successfully if you have employees working from home when the dogs are barking, and the kids are coming around and you are supposed to be paying attention to whatever the dispatch problem is? Or do you have to have an operation in-house? This will be an issue that, if not already addressed, will need to be addressed quickly.
Technology is the backbone in supporting the necessary changes that will need to take place in the industry into 2021. From navigating video conferencing, to necessary changes in existing security software, to speed to market for solutions like AI, robotics, drones and thermal screening, technology is now a requirement around us. Simply speaking, we should expect to see more Cloud-based platforms and Cloud-based computing in areas where there has been resistance in the past.
There will most likely be M&A activity with larger traditional security companies acquiring smaller ones. Smaller companies may elect to do third-party monitoring and change their business model entirely. Many small to medium companies will be unable to make the capital investment necessary to compete in a new world of health, security, and cyber awareness. They will, therefore, either leave the business, be acquired or adapt and switch to Cloud-based activities and third-party monitoring options.
Technology companies, such as SimpliSafe, Amazon and Google will continue to develop new products and present a new model directly to the consumer in a way to “own the home” in any way they can, dominating the residential and personal emergency response business. They are coming in with a customer-centric model and their interfaces and approach are different than the heads-down model that has been used by security companies in the past.
The industry will have to adapt quickly to how they present the material differently because of a new expectation that has been set. These non-traditional companies will most likely either use or partner with existing companies to develop the solutions on their own. Existing security companies will have to work to adapt, partner and determine how to work with the larger tech companies versus fight against them, as they won’t have the capital to compete. Commercial companies will fare better, but will still be challenged to deliver products to a more sophisticated market.
What do you view as key factors driving top vertical markets?
Alison Forsythe: While we’ll likely see more opportunities in remote video and surveillance, traditional companies will have difficulty competing with the Googles and Amazons of the world, which have interest in the smart home, school, healthcare and electronic security markets.
Their marketing prowess, investment capability and ability to take an iterative approach to evolving their product offering are unmatched and will make it difficult for traditional security providers to compete. Consumer-related marketing and distribution models in the residential market will also put pressure on pricing and recurring monitoring fees.
So far, we haven’t seen these companies providing professional monitoring on their own (which may change) so companies who do monitoring will still be around. There may be some areas where they don’t want to play, such as high-end commercial fire systems or similar because they aren’t volume related. Security companies may still be able to compete, but they may need to find a niche to differentiate themselves a bit more.
A more focused approach on specific verticals will require a deep expertise in those spaces. It may be hard for a security professional to come in and simply lay their expertise on top of it. They will need to be within that vertical to really bring value to it.
The markets of great interest will be healthcare, education, and the consumer market. This is where the big guys will play and that’s where they want to be. There may be more growth in the education market — including colleges and universities — because of all the COVID issues and surveillance needs. This market has been challenging for a long time but could see increased growth.
How are business operations — such as training, talent, attrition, etc. — being disrupted in the current climate?
Keefer: In the coming year, it will be extremely difficult and expensive to recruit, hire and keep
talent, especially for IT professionals. If you’re an alarm company, it’s harder to compete with software and technology companies. For example, it will be more difficult for security focused companies to recruit software developers, who will be more attracted to the larger, well-known companies, where they’ll likely be a cog in a wheel. The challenge is in showing them the significant opportunity in working with a smaller security company, where they may have more ownership and growth/learning opportunity.
The movement to working remotely will also impact security companies, as larger companies can recruit talent to work from anywhere, increasing the demand for a limited supply of resources, making it difficult for security companies to compete as trends evolve.
What is your overall view of the competitive landscape of the security industry?
Keefer: One thing the security industry faces is lack of response from law enforcement based on different alarms and needs, as well as the fact that their resources are already stretched thin. This creates a breeding ground of opportunity for private response services, which used to only exist in high-end neighborhoods.
Having private security responders show up for burglar alarms instead of police may be a new model we will see in the next couple of years, and by 2024 the police may not even show up for burglar alarms at all. It will depend on how police departments change over time — will they continue to operate in the current capacity or, will they or become a department that’s dealing with mental health, or will they evolve and organize themselves differently?
The industry is resilient, but it’s going to be more difficult for companies to work the way they have in the past. It all depends on an organization’s management and their ability to be flexible, as well as their financial wherewithal to withstand the shifts in the industry. We anticipate a significant increase in both M&A and DIY activity — specifically, some of the larger companies will acquire smaller companies, creating consolidation in the market.
Standards, such as UL, will be pressed to adjust to new models of remote workers and Cloud-based solutions.
What type of year in 2021 are you anticipating for the different stakeholders across the security channel’s ecosystem? Let’s take them individually, starting with alarm dealers.
Meyer: Vaccine or no vaccine, 2021 will look a lot like 2020. There are still a lot of economic issues we need to deal with. We anticipate slow growth for traditional dealers — who will also face more attrition and lower revenues. With this slowdown, we also anticipate more company closures, unless they are able to invest the required capital for IT infrastructure, cybersecurity requirements, and the differing health requirements of a remote or local work force. We may see some monitoring companies expand by partnering to monitor for larger companies, and others will decide to stop monitoring altogether.
Alarm dealers will also be looking for new ways to reach their markets without door-to-door selling opportunity. We will see an increase in digital marketing, and other tactics to try to drive more business. Likewise, they may be looking at new products and services to provide to their current install base.
They will also face increased pressure from DIY systems, which will put revenue pressure on the security companies.
Systems integrators …
Forsythe: Integrators will look to bring in new technologies to expand their integrations and thus their revenue. New products and services will play a role, with the need for device monitoring and cyber security as they continue to be critical infrastructure components. With a potential slower economic recovery and a work-from-home model, these businesses will be negatively impacted. There is probably a bit of time before the commercial market settles into where we are working, and how we are going to be working, which will slow them down a bit.
Monitored services providers …
Keefer: There is great potential for large growth among these service providers, especially among the larger companies due to organizations deciding to no longer conduct their own monitoring, as well as the fact that large, non-traditional companies have not yet started to offer this service. Capital investments will be required to accommodate this potential growth, so those with strong financial backing will fare well, while smaller operators may struggle a bit.
Manufacturers / Suppliers / Distributors …
Forsythe: These organizations will face increased pressure from large, well-capitalized and sophisticated companies with skill sets that exceed those in the security industry. The more we allow commercially generated products to be used for security, it will be increasingly difficult to compete.
Manufacturers will have to think about how they build and compete with the products available from other companies, especially those entering the market with large capital behind them. Supply chain improvements will continue to evolve. A big question is: will innovation be able to thrive when employees are working remotely?
End-user security directors …
Meyer: End users are facing unprecedented times and have a real concern around security with the transition to a remote workforce. They will continue to look for more information, automation and convenience. The more commercially generated products are used for security, the more risk there is in transmission and sophistication, which will result in an increasingly challenging world.
Expectations will grow in these roles regarding how they receive and consume information. They will be looking for new and easier ways to manage their assets and workforce, potentially through new apps and new software platforms. That will raise the bar for the security industry to provide the kinds of tools that end users expect and we’ll need to keep up — something that traditionally has not been a strength of the industry.
We are all consumers and have come to expect a certain level of interaction and engagement thanks to Amazon and the like — and we get jaded when we interact with other systems that don’t have that level of sophistication and experience. The industry is competing with software written for consumers and that’s a challenge.
Read on as Bold Group execs describe security industry issues expected to remain unresolved and much more.
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