Growing Security Threats, Concerns Have Security Pros Expecting Opportunities for Growth in 2016
SSI interviewed 20 leading members of the industry to offer their projections for the new year across six categories.
2016: SECURITY INDUSTRY
Bill Bozeman, President & CEO, PSA Security Network: Security revenue during 2016 will be driven by high alert security concern from the boardroom. Security has become paramount and boards are aware of the risk and their liability. This security concern bodes well for the security industry in general.
As distasteful as it is, the constant threat of terrorism will change the outlook of security decision-makers in all the major verticals. Education, health care, government and the other verticals are all on high alert for cyberattacks.
Consolidation will also increase as larger companies seek to either enter the security niche or add to their existing security offering through acquisition. Manufacturers must face the reality that cybersecurity breaches are important to the integrator and end-user community. Anything less is all in the name of saving a buck.
Integrators, on their end, must not accept mediocrity integration of video surveillance, access control and life-safety components. Part of that is ensuring better training.
Paul Bremner, Senior Analyst, Video Surveillance and Security Services, IHS IHS forecasts the security system integration market to grow 6.9% from 2016 to 2017, with this rate exceeding 10% in Asia, while the Americas see sub-3% growth rates. EMEA is forecast to be the middle-ground at just over 6% growth from 2016 to 2017. Overall, this is a positive picture for integrators, despite the challenging conditions in the physical security equipment markets regarding price declines. It is expected that integrators will continue to shift towards a service-oriented approach for their customers.
Jeff Kessler, Managing Director, Imperial Capital For suppliers, we see highly differing growth among the manufacturers, with video slowing slightly to 13%-15%, and revenues improving slightly from 5%-8% as the initial hit of price degradation annualizes. Access control internally has several growth drivers, with wireless locks growing 10%-12%, mechanical locks remaining flat to slightly down and electronic access control equipment up 8%-10%. The latter may prove optimistic if the pent-up “discussion pipeline” in regulated organizations and education remains slowed up.
For dealers and monitoring providers, RMR-oriented companies should be able to grow subscribers at 3%-4%, with average revenue per user increasing about 2%-3%. Some companies may be able to drive higher ARPU depending on their capabilities to install and service more complex applications. There will be a large group of smaller companies with little or no growth at all beyond attrition, which characterizes many of the smaller, POTS line-based legacy businesses. Cloud video monitoring and access control services should continue to grow at 15%-20% as these companies prove their value proposition to midsize companies, not just small commercial and medical offices.
For integrators, we don’t see very much growth beyond GDP in the integration industry as it generally follows the capital budgets of enterprises, government spending, and multi-national companies and state clients. However, this does not mean there is not a group of companies that can grow 10%-15%, taking share from the rest of the sector. These are integrators that not only have demonstrated the IT IQ but have developed customer-centric business models that promote a long menu of services that develop trusted relationships at the ‘C’ level of enterprises.
Jon Cropley, Principal Market Analyst, IHS: China is hugely important to the world market for video surveillance equipment. IHS forecasts that China alone will account for over 40% of the world market in 2016. Also, the world’s largest two largest vendors, Hikvision and Dahua, come from China. Furthermore, much of the innovation in the industry, such as H.265 and HD-CCTV, is being driven by Chinese vendors and component suppliers. As much of the spending on video surveillance in China comes from the Chinese government, it has a key role to play in the future of the world market.
Tim Hewitt, Smart Home Analyst, IHS: Fragmentation in the smart home continues to be one of the most significant challenges to market adoption. The plethora of connectivity technologies and communication standards create a convoluted market that is not consumer friendly. This trend has meant that closed ecosystems have been most effective at delivering reliable smart home solutions. However, standards bodies are attaining more influence within the industry, increasing interoperability between different products within the smart home.
be continued pressure on security companies from other service providers moving horizontally into the monitored security market through smart home solutions. Although the growth from multiservice operators has slowed recently, they are expected to increase market pressure in 2016. Additionally, DIY device companies are gaining traction across the world as wireless smart home security solutions become more affordable, and the range of devices that are available increases. IHS expects security providers to continue the transition toward smart systems and to develop partnerships with other device companies in order to cover adjacent smart home applications, such as smart thermostats and lighting controls.
Tony Sorrentino, President, ScanSource Networking and Security: Managed services will continue to become the norm in the industry. It’s transforming the way resellers can do business, as it allows them to offer value in addition to the products they sell.
By offering managed services to their end-user customer, resellers are able to create an ongoing contractual agreement in which they remotely monitor, manage and update their customers’ technology devices, systems and services. Resellers can proactively monitor their end user’s technology to uncover potential problems, allowing them to remotely manage consistency, security, users, policies, analytics, among other things.
When it comes to wireless network management, resellers can provide access point setup and configuration, manage the security of the wireless network, set appropriate signal strength and much more. The breadth of managed services provided by a reseller can vary based on the level of expertise and ability. The opportunity is there, and it’s not to be overlooked.
2016: REGULATIONS & COMPLIANCE
Richard Brent, CEO, Louroe Electronics: With the rise of active-shooter incidents and terrorist threats, security will be an important topic among policymakers in 2016. Laws will pass in 2016 that grant institutions greater access to monitoring technologies that have been known to mitigate crime, provide verification and ensure accountability. A great example is the recently passed Texas SB 507, which requires certain classrooms to install security cameras and audio equipment to better protect students and deter misconduct. Government officials are becoming trailblazers in this arena by responding to the public’s need for greater security while balancing the expectation of privacy.
Bob Banerjee, Senior Director, Training and Development, Qognify (formerly NICE Systems): The overarching challenge that security departments worldwide will face in 2016 is the need to be recognized as relevant. While the public sees value in security resources, security organizations are also perceived as a commodity service that doesn’t directly improve the bottom line. And, if organizations aren’t seen as relevant, their security budgets will likely shrink. To change that perception, organizations must gain more visibility in the C-suite, draw a direct line to business continuity and streamline operations.
Stan Martin, Executive Director Security Industry Alarm Coalition (SIAC): Police responding to alarms will continue to be an issue that impacts our industry. This is exacerbated by nontraditional entrants with big marketing budgets, but no connection to the industry. Regardless of the fact that these companies do not reflect our hard-fought image with law enforcement, we will be painted by the broad brush of anyone installing/selling alarms as representing the industry. This will not be resolved soon and will probably only grow as an issue as more see an opportunity in the security alarm industry. This is compounded by the fact that many of those manufacturing for this segment of the market are also not our traditional vendors and have no allegiance to our equipment standards such as CP-01.
On the positive side, ASAP-to-PSAP is gaining a foothold and will further impact not only dispatch reductions but also our image with law enforcement. ASAP-to-PSAP will not be an overnight transition, primarily because both the industry and law enforcement will have to fund their sides of this project. That said, look for it to advance, primarily in the 100 major cities and counties first, but this is where the majority of our customers are anyway.
Monitored video continues to advance and with the revised CSAA/ANSI CS-V-01 standard well on the way to approval, we should be able to better integrate video into our industry.
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