New Tech Transforming Way Security Pros View Industry, Survey Finds

Capital One surveyed attendees of the 2017 Honeywell Connect conference and found a majority of respondents expect improved financial performance in 2018 amidst fast-paced change.

BETHESDA, Md. — New technologies are transforming the way that executives view the security industry — from their market outlook, to competition, to future capital needs, according to a Capital One survey.

The survey, conducted during the 2017 Honeywell Connect conference in San Diego (Nov. 9-10), found a high level of industry optimism, with 86% of respondents expecting better financial performance, balanced by concerns over decreasing margins and the furious pace of technological change.

Along those lines, 38% of respondents said they expect interconnected devices to be the most impactful technology in 2018, compared to 28% last year, demonstrating the growing influence the Internet of Things (IoT) is having across the industry. As residential market penetration continues to tick up, the growth of do-it-yourself (DIY) technology that allows individuals to set up and monitor their own security at home is beginning to build. Nearly one in five security professionals (19%) surveyed selected those technologies as potentially having the largest impact — a significant increase from just 7% who said the same last year.

“We are seeing rapid change across many segments of the security industry,” John Robuck, Capital One’s managing director of security finance states in a press release. “This transformation is primarily being driven by the growth of new technologies that are revolutionizing the implementation and monitoring of security systems.”

In evaluating challenges for 2018, 43% of executives cited decreasing margins as their chief concern for the year ahead, reflecting expectations of tighter competition in an evolving marketplace. More than a quarter of respondents (26%) said keeping up with the pace of technology will present the biggest challenge for their business over the next 12 months.

Approximately half of those surveyed (51%) said local or regional providers are their primary competitor, compared to 35% who said the same last year. Only 12% see DIY and self-monitored systems as their top competition.

“While there is clearly growing interest in this technology, DIY is not necessarily being viewed as major competition at this point,” says Robuck. “Established industry dealers view these products as additive and not comparable with professionally-monitored systems.”

New lines of credit are projected to remain the most important type of financing for the industry in the next 12 months (as cited by 43% of respondents), but notably, 15% said leveraged buyouts (an acquisition funded in part by borrowed money) will be the most important type of financing to their business — a 50% ncrease over the previous year.

“Although new lines of credit continue to be the funding vehicle of choice for security professionals, the growth of leveraged buyouts may reflect an increase in M&A activity, with more executives looking to retire or sell to other companies,” says Robuck. “Our team is well-positioned to work with companies and investors to navigate the changing industry, and to provide advice around the best type of financing for their business.”

The proprietary survey of Honeywell Connect 2017 attendees was developed to gauge views on the security system industry in the next year. Respondents included security system dealers and integrators, and other professionals who serve the security industry. Percentages were based on 118 responses.

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