Siemens’ Chris Payne: 2012 Will Bring an Increase in Long-Term Service Contracts
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!
Director of Intelligent Response, Fire Safety and Security
Siemens Industry Inc.
Chris Payne: The biggest challenges for security technology will continue to revolve around two areas that have long plagued the security industry: integration and the cost of replacing legacy systems. Over the last 10 years, security technology vendors have come a long way regarding the integration issue. Customers have asked for open systems and the ability to leverage existing legacy systems for longer periods of time. The response is to provide easier pathways to project specific integrations. Many third-party integrators have emerged in the market place to address project specific integrations. Today, the product vendors are providing products with more and more options for “out of the box” integrations. The challenge is for the security product vendors to work with other product vendors as they compete for the customer’s money during a time when the customer is trying to reduce costs. Integration of legacy systems and new systems from “competing” product vendors has created a very dynamic environment. Customers must dedicate internal resources or seek the support of a trusted advisor or consultant in order to assure they receive the intended system at a reasonable cost.
Large systems integrators and security product vendors are taking this opportunity to step in and become a hybrid partner to the customer. Integrators are becoming product vendors and trusted advisors. Product vendors are expanding their portfolios to include PSIM products to provide a more readily available integration and more functionality to the customer. In both cases the goal is to provide lower upfront costs to the customer.
Payne: Customers will continue to demand a higher level of product functionality at a lower total cost of ownership. Systems integrators must be able to provide a wider range of products and system support/maintenance options to the customer. The challenge is for security vendors to provide new products and services at a cost comparable to upgrading legacy systems. In addition, there will be less federal funding available, requiring the customers to plan and budget over multiple years. Systems integrators must be able to adjust and be more creative with the procurement processes.
Security Business and Operations
Payne: The landscape has already changed, systems integrators no longer rely on dealers and suppliers for all of their product needs. The large integrators have their own product portfolios and are continuing to expand these portfolios. This trend will continue putting more and more pressure on the independent dealers/suppliers. The opportunity is for integrators to develop a product portfolio that addresses the needs of its focus markets better than any competitor. Savvy customers will continue to seek a one-stop shop for all of their security needs.
Politics and Legislation
Payne: The economy will continue to put pressure on the federal and local government bodies to reduce cost and limit the amount of funding for large programs that do not have a favorable public opinion. This phenomenon will create an environment of higher scrutiny and more transparency. Projects will take longer to develop, will require increased justifications and must produce results in a shorter period of time. As the global security environment changes, our own regulations will continue to evolve. Funding for these changes typically lags the actual need and sometimes the mandate. Fortunately, technology continues to advance and provides significant reductions in the time from concept to installation.
Risks and Threats
Payne: While every customer environment is different, most are not ready for the significant level of involvement required by their own IT departments. Often the customers are not aware of the value and in some cases the cost savings that may be realized by engaging the IT organization upfront in any major security deployment.
Payne: Integration will continue to constrain the industry. Product vendors are improving in this area, but continue to be segmented.
Payne: I believe 2012 will follow our current economic trend of modest growth for new business, but see an increase in long-term service contracts.
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