Security Experts Share Their Top 5 Trends From 2017
Industry leaders and analysts from PSA Security Network, IHS Markits and more examine what has influenced the security marketplace in the past year.
The 2018 Gold Book is loaded with industry information to help installing security systems dealers and integrators keep up with market changes and succeed.
In the latest edition, we asked six security experts for their top five trends from 2017. Check out their answers below and then download the full Gold Book here.
1. The integrator business model continued to gradually transition into managed services driven by product-specific availability, cost benefits and end-user demand.
2. The DIY market continued to grow rapidly, presenting a challenge to integrators who focus on the residential and light-commercial space.
3. Commercial systems integrators started to expand their offerings to include adjacent offerings, especially in the pro A/V and electronic communications space. The integration between security and A/V systems has expanded rapidly and end users are demanding single point of contact integrators to manage such complex systems.
4. The focus on cybersecurity is here to stay. Integrators and vendors started to feel stronger demand from end users to demonstrate cyber safeguards and proactive cyber policies for their installations.
5. Consolidation of integrators and manufacturing continued to change the landscape of the security integration business.
1. Gross and net attrition went up in 2016 for residential and commercial accounts versus 2015 but seemed to hold steady in 2017.
2. Transition from landline technology to cellular really kicked into gear as installing security contractors began to transition out of the old technology and the manufacturers took development of 4G/LTE equipment seriously.
3. Valuations began to swing from recurring monthly revenue (RMR) multiples to free cash flow versus steady-state cash-flow metrics.
4. Cable providers continued to make inroads into bundling security with other in-home services, and helped drive up the market penetration percentage.
5. DIY systems and accompanying connected products such as video doorbells, etc., clearly took hold and helped to expand the market as well.
1. Forward-thinking dealers monetized connected security and lifestyle devices via Cloud-based services, whether in a monitoring-it-yourself (MIY) or professional monitoring model. From this, a hybrid model is developing, taking consumer product choices and the expertise of the pro dealer channel to deliver best-of-breed technology and services.
2. The accelerating adoption of video cameras continued to drive video RMR models, whether from Cloud storage or from MIY or professional monitoring, such as video alarm verification and virtual guard tours.
3. Security companies continued to make the strategic decision to close their internal monitoring stations and outsource their monitoring services to wholesale providers, allowing them to focus on core strengths while also mitigating their financial and technology risks.
4. The industry remained attractive to strategic acquirers of RMR, integrators, manufacturers and service providers, with little abatement in the near future.
5. Consumers’ buying decisions were being driven by connected lifestyle devices and the delivery of interactive services from the pocket, rather than just choosing a traditional security system with standard monitoring service.
1. New offerings from existing players along with new players entering DIY security, safety and home controls grew in exponential fashion. The offerings are becoming more robust with competition increasing, offering aggressive pricing, systems and buy-in structure.
2. Mobile personal emergency response systems (mPERS) and other location-based services and mobile video continued to gain traction and growth. Better adoption and understanding that these technologies leveraged properly extend beyond traditional markets, such as the elderly.
3. The use of month-to-month monitoring contracts without long-term commitments seemed to spread. Although most of the noticeable use was predominately with the DIY market, in some areas others tested the waters.
4. Mergers and acquisitions remained compelling to lenders, strategic and private equity investors in the operational and manufacturing segments of the market.
5. Organizations that previously provided their own in-house central station monitoring continued to demonstrate confidence in outsourcing to larger third-party providers.
1. We started to see the first widespread marketing of next-generation “deep learning” video analytics, offering greater accuracies than seen previously. Some of the first vendors offering these began marketing them as value-add differentiators in a crowded marketplace.
2. Professionally installed intrusion alarm systems began to offer integration with consumer video cameras, which are primarily used for video verification of alarms but also can be used for self-monitoring. Cameras with built-in PIR sensors have also become more popular.
3. The Federal Risk and Authorization Management Program (FedRAMP) is changing how mass notification system (MNS) software will be sold to government entities. Sales into the federal government sector will change as vendors switch to Cloud-based solutions.
4. Lower sales prices of building automation equipment, as well as increased concerns related to unnecessary energy consumption in commercial buildings, lead more building owners of small and midsize properties to invest in BAS.
5. The blending of DIY and professional services created more smart home options, but also more consumer confusion. IHS Markit estimates 21% of U.S. broadband households had at least one smart home device in 2017.
1. Smart home, app-based services continued to drive opportunities for expanded services and create stickier clients.
2. Cybersecurity continued to represent an ever looming threat that impacts a larger component of operations’ budgets.
3. New and improved biometrics and use of other technologies such as user credentials further impacted the access control market.
4. An aging population continued to be a growth market for PERS providers with the appropriate technology for a more affluent and mobile market.
5. Recruiting, training and maintaining a work-force with today’s necessary frontline skills challenged organizations.
Stay tuned as we will reveal what these experts predict as challenges for the industry in 2018.
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