Electronic Security Industry Analyst Sandy Jones Offers 2012 Projections
What does 2012 hold in store for your business and the industry? Find out with the many insights offered in SSI‘s annual Industry Forecast, which is featured in our January issue. This year, more than 25 of the industry’s most prominent research firms, trade associations, business and finance specialists, systems integrators, manufacturers, consultants, and alarm companies rendered a deep and sweeping portrait of the impending security landscape. The participants addressed the most significant changes, challenges and opportunities they anticipate taking place during the next 12 months in seven critical areas. They are: security technology; security markets; security industry; business and operations; politics and legislation; risks and threats; and ongoing challenges. With the boundaries of print being too constrained to present all of the fascinating and valuable assessments, each of the respondents’ complete, edited interviews are being offered exclusively online. Happy New Year!
Sandra Jones & Co.
Sandy Jones: The biggest technology change will come from the phasing out of an old technology; the digital dialer. For more than 30 years the digital dialer was the primary method for sending alarm signals and the backbone for recurring revenue, investment and lending in the alarm market. Although no clear date has been set for its elimination, the move away from POTS lines began in earnest in 2010 and is expected to accelerate in 2012. Rather than seeing the elimination of this technology as a negative, dealers should see the new alternatives as an opportunity and means of creating new recurring revenue, a way to build customer loyalty and differentiate their services.
Jones: While the industry has already seen significant consolidation and strategic alliances within the security market, future consolidation will come through acquisitions, affiliations and alliances with nonsecurity companies. The result will be the development of full service organizations that provide comprehensive outsourcing services that allow their customers to focus on their core business. The new alliances and acquisitions will range from security and HVAC services providers to building maintenance and other noncore business services.
Security Business and Operations
Jones: The biggest challenge is relearning how to sell. There are new influencers, technology-savvy buyers and new methods for communication; all which require new methods to demonstrate technology and sell today’s more complex services. The days are gone when dealers or integrators can rely on referrals and current customers. While those remain important, a more proactive sales approach has to be used to ensure growth.
Jones: I see the opportunity to change and resurrect a business paradigm that birthed the intrusion alarm industry. Insurers are now begging for “loss control with a badge” where police respond to alarms to make arrests and reduce claims. This change is occurring now because the financial crisis changed the insurance industry from an investment business to a loss prevention business. By moving to video intrusion alarms, alarm dealers can provide tangible value to the insurers as they help reduce loss. Additionally, underwriters are beginning to encourage and even mandate video intrusion alarms in certain applications; a reincarnation of the certificated alarm systems of yesteryear where underwriters subsidize policy holders to upgrade their systems.
Politics and Legislation
Jones: The mass notification industry was born out of the tragic events of 9/11 and the 2007 Virginia Tech shootings. While there are many regulations and standards already in place, many are lagging in providing the clarity required for IT and security personnel regarding system design and selection. I believe there will be changes to these regulations in 2012 furthering the growth of the mass notification market and the broader sale of managed emergency communication systems.
Risks and Threats
Jones: 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. In either case they can change the market and could catch the market off-guard.
Jones: The economic recovery and tax issues affecting business growth remain unresolved and as such will continue to influence building starts, investment in new technology and hiring practices. The volatility of the global economy and Washington gridlock may become the new normal versus a temporary unresolved influence.
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