Security-Net’s Coleman Comes Clean With What He Sees in 2015
Security-Net’s Jim Coleman shares his predictions on where the electronic security industry is headed in the New Year.
The January edition of SSI includes our annual industry forecast as a cornerstone of our special 2015 Industry Forecast Issue. For the piece, I interviewed more than 20 of the industry’s most knowledgeable market analysts, business experts, security dealers, systems integrators, supplier representatives and trade association directors. Some of their perspectives can be found in the magazine article, with the balance of their assessments appearing in separate blog posts.
Featured in this installment: Jim Coleman, president of the Board of Directors of Security-Net, and president of Operational Security Systems
How do see the vertical markets playing out in 2015?
Jim Coleman: If you look at the verticals, utilities are motivated to invest in security because of compliance requirements such as FERC SIP standards. In the education market, many school districts have completed security enhancement projects. This market is driven by how long it takes to complete a security study and political pressure. Health care continues to be a strong market with hospitals looking to reduce operating budgets. Hospitals are willing to make capital investments that improve security and reduce operating costs. The economy continues to improve, but not in all places and all segments. Hot spots include high-tech industries and the petrochemical industry. New construction is starting to revive in a lot of places providing more opportunities for systems integrations.
What do you foresee for business and operations as it pertains to suppliers, integrators and monitoring providers?
Coleman: Manufacturers are not having an easy go of it, particularly on the video side of our business. Some are growing fast, taking market share away from traditional market leaders. I expect in 2015 we will see more consolidation, especially larger companies that thought security would be a growth engine. For integrators, margins have not rebounded to prerecession levels. To thrive they have to become more efficient, so many are focusing on internal processes to make sure quality standards are good and that the business runs efficiently. Dealers and integrators continue to look at how to grow their recurring revenue. For integrators, there is an added focus on service and bundling access control and video with support service verses selling it outright. A lot of monitoring providers have been looking into how to jump into monitoring video and provide security as a service, enabling them to support access control or video remotely and build an additional recurring revenue base. I expect the monitoring stations will be successful at this and figure that out.
What do you see developing in the areas of political, legislative and standards issues?
Coleman: Barely a week goes by without the reporting of a cybersecurity breach of sensitive information. The credit card industry has been mandated to transition soon from magnetic stripe to smartcard encrypted technology. Logical access is shifting from username and password to two-factor authentication and one-time passwords. These standards of stronger security will need to be adopted by our industry as the functions of security systems, continue to become part of our increasingly interconnected world.
What type of year in 2015 are you anticipating overall for suppliers, integrators and monitoring providers?
Coleman: Distribution is growing and consolidating at the same time with manufacturers choosing to shed logistics and credit challenges and reduce associated risks. The year 2015 will see integrators busy. Margins will depend on the regions and markets being pursued. Monitoring companies have traditionally weathered a fluctuating market. The central stations market will remain strong in 2015.
What pressing security industry issues do you expect to remain unresolved?
Coleman: I expect the adoption of industry standards like OSDP, Open Supervised Device Protocol, which is the protocol between panels and card readers, to continue to be an issue that remains unresolved. While industry standards are coming, we have yet to reach the tipping point.
What is something that might surprise security professionals in 2015?
Coleman: One surprise trend is the introduction of guard companies in the integration and service business. We have begun to see several guard companies enter the market within the past few years and I expect that will be a growing trend in 2015 and beyond.
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