Industry to Reap Rewards of Homeland Security … Eventually, Say Event Attendees

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NEW YORK – The windfall of new business for the electronic security industry post-Sept. 11, 2001 will come, but may take longer than most anticipated. That was the perspective heard at the 7th Annual Securing New Ground Conference (SNG), held Nov. 13-14 in Manhattan.

Subtitled “The Business of Security,” the two-day event provided its more than 200 attendees with presentations by and access to some of the industry’s leading executives and authorities. As usual, mergers and acquisitions were the general focus, but Homeland Security, systems integration and monitoring were also prominently featured.Referring to Islamic fundamentalism and the war on terrorism, “We are in this for the long pull, by that I mean centuries,” explained Jules Kroll, executive chairman of the board of Kroll Inc., whose “2,000-Year War” session got the proceedings off to a rousing start.

“I believe the Office of Homeland Security’s impact on materially changing national security will be less than immediate,” he continued. “As for corporate security, 80 percent of what has taken place has been the soft stuff [policy, training, procedures]. Implementation in terms of design has not taken place in a significant way. However, there are good opportunities in utilities, transportation, hospitals and government.”

Some of other speakers, such as Les Gold of Mitchell, Silberberg & Knupp and Jeff Kessler of Lehman Bros., a co-sponsor of the event, were more optimistic about the industry’s short-term prospects. “We have seen a significant increase in M&A [mergers and acquisitions] activity recently,” said Gold. “I envision an interesting 2003, particularly on the systems integration side.”

Meanwhile, Peter Michel, chairman of the Security Industry Association’s (SIA) Homeland Security Council, pointed out that “total security solutions are needed, which is a challenge because our industry has traditionally only handled segments. These solutions must include convenience for customers, which the DOT [Department of Transportation] has not yet figured out. Security is at a point now where it can also be sold as a means to enhance the operational efficiency of organizations.”

Yet, as many attendees mentioned, the systems integration business remains underdeveloped. “There is currently a lack of technician talent out there that is proficient enough to truly integrate systems,” declared Allen Fritts, president of Honeywell Fire Systems. “This is something the industry will have to move toward.”

As far as biometrics, which was all the rage following the attacks, Identix Inc. President and CEO Joseph Atick, brought attendees up to speed on where the market stands today. “I believe this decade will come to be known as ‘The Decade of Security,’ but so far, in some cases, there has been a total paralysis in budgets and appropriations,” he said. “But I am very optimistic because a biometrics pipeline is being built for the first time; the growth will be steady and long-term.”

On the monitoring side, Protection Service Industries President and CEO Larry O’Toole was among the panelists who touted exciting new opportunities. He cited services such as asset and people tracking, remote video and medical devices as emerging areas that are being enabled by technologies such as global positioning systems (GPS) and wireless devices.

“We are only limited by our ability to listen to our customers and our ability to tie their needs to technology, while making the ROI [return on investment] worthwhile,” stated O’Toole.

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