Expert industry leaders and analysts Bill Bozeman, John Brady, Peter Giacalone, Sandy Jones, Jeff Kessler and John Knox look at where the marketplace has come in the past year and where it is going in 2014.

Bill Bozeman, PSA Security Network

Trends
1. DIY made its first serious inroads into the security space.
2. Logical security commanded the majority of the attention in the ‘C’ suite.
3. Wireless security devices and applications went mainstream, including commercial and industrial applications.
4. Physical security integrators continued to slowly but diligently adopt the managed services business model.
5. Bald security execs qualified for hair transplants under the new Affordable Health Care Act.

Industry Challenges
1. Finding network-savvy tech staff who wish to be employed in the
physical security space.
2. Keeping top personnel motivated and paid well enough to stay competitive with opportunities outside physical security.
3. The slow growth economy in the United States and abroad.
4. Washington’s inability to show the leadership necessary to build confidence in the business community, resulting in tight budgets.
5. Keeping employees up to speed with the rapid technology changes.

Projections
1. DIY will makes its initial impact on the physical security integration
space in the retail and light commercial markets.
2. A slowdown in M&A, especially in the systems integration roll-up space.
3. Increased acceptance of video verification.
4. Cyber security rules the budgets of major corporations with physical security taking a backseat.
5. The telcos and cablecoms are here to stay.

John Brady, TRG Associates Inc.

Trends
1. Video verifi cation continued to gather acceptance, while assisting AHJs to resolve the increasing response dilemma between protection of their constituents and ever-decreasing budgets/resources.
2. The PERS market continued to expand and garner increased outside capital interest as providers expanded their services to meet tele-health needs of the health-care community.
3. Attrition was maintained at very manageable levels by the industry as a whole as the interactive services portion continued to expand in the residential market.
4. The telecoms and cablecoms transitioned from “planning” to enter the residential security space, actively off ering bundled services in most U.S. markets.
5. The standard contractual Dealer’s Limit of Liability cap of $250 was increased to a more material level of $1,000 in many new industry contract forms to maintain relevance and enforceability.

Industry Challenges
1. Addressing the fast-paced transition away from POTS lines and early cellular technologies with products that maintain and expand intrusion off erings.
2. Developing service off erings that compete with and take advantage of the ever-expanding presence and advertising budgets of new entrants.
3. Working closely with the respective AHJs to educate and collaborate with in the adoption of the new technical solutions (PSAP, video verifi cation) to improve response dynamics.
4. Adoption of HIPAA rules and regulations as a way of doing business for those PERS and tele-health providers that seek to expand beyond the private pay consumer market.
5. Increasing customer utilization of and satisfaction with their security services to combat attrition and fend off new entrants in the space.

Projections
1. As the economic realities of “Obamacare” take hold, companies will be forced to adjust their current employment terms and health-care benefi ts.
2. Health-care providers and tele-health applications will continue to seek partnerships with the industry’s highly reliable central station platforms.
3. Increased awareness generated by the large advertising budgets of new entrants will help increase market penetration for all providers.
4. Steady economy and continued strong security industry metrics will continue to attract new capital to the industry.
5. Security providers will see even more crossover by A/V and IT managed service providers into their domain, thus emphasizing the need to maintain capability as a single-source provider.

Peter Giacalone, Giacalone Associates

Trends
1. Dealers, both traditional and mass marketers, continued to adopt and provide more automation and control systems resulting in increased sales and increased average RMR.
2. The expansion of services and convergence of technologies attracted new capital to the industry.
3. Energy management and controls started to become more prevalent and show signify cant potential as a standard within the channel.
4. Traditional dealers began to adopt and emulate the structure, marketing and sales approach of the door-knocking summer program giants.
5. The telecos and cablecoms stepped up their marketing of their security and home controls propositions.

Industry Challenges
1. Competing with the telco and cable com value proposition is both a challenge and an opportunity for those who understand and demonstrate the ability to compete.
2. Understanding the paradigm shift that is taking place from focusing on hardware to apps and services, and how it aff ects the industry.
3. Transitioning from an analog industry to a digital industry on more than just an equipment level; the method in which the growing companies market and sell is changing rapidly.
4. Applying the lessons learned with residential systems as they migrated to remote managed services will play even a larger role when perfected in the commercial space.
5. Companies need to reevaluate and adjust accordingly to the economics required to maintain a stable and talented team to support these systems and services.

Projections
1. Certain factors and technologies when deployed properly will continue to improve attrition rates for those who engage them.
2. Residential and commercial managed services will continue to expand; new platforms deployed by a variety of channel types are creating a highly competitive discipline.
3. Increasing M&A activity with an increase in the merging of traditional RMR-based companies with larger integrators.
4. Great success for regional players that compete wisely with telcos and cablecoms.
5. Increase in self-installed professional systems and services and DIY deployment organizations with an increased product off ering and value proposition.

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