Editor's Angle: Happy New Year!
Here’s to a prosperous 2011 for all of SDM’s readers. Let’s look at some of the near-term growth opportunities.
Is the security industry turning the corner on the recession? That’s what the results of SDM’s Industry Forecast Study tell us, supported with observations by industry leaders The Protection Bureau, SDM Dealer of the Year, and Siemens Industry Inc., SDM Systems Integrator of the Year. Expectations are that the security channel will grow at least 1 percent this year following two years of decline in total revenue.
But where do the opportunities for growth exist? According to industry professionals, opportunities exist in both technology solutions and services, as well as in the industry’s ability to convey their value proposition.
For example, although most people think that capital spending by businesses is only affected by the general economy, Siemens Industry Inc.’s Carey Boethel thinks the security industry is in the driver’s seat when it comes to business spending on security. The key to loosening spending, he says, is demonstrating productivity gains that businesses can achieve as a result of implementing security in their businesses.
“The industry’s ability to quantify business productivity gains has the real potential to stimulate growth,” Boethel says. “As we transcend traditional security risk and look for business productivity gains, there is tremendous growth potential embedded in that.” One of the best ways to deliver productivity gains is through remote services such as software as a service and managed service, where the return on investment (ROI) is easily quantified, Boethel explains.
Second, due to decreasing cost IP surveillance systems are becoming “a better spend for the client,” says The Protection Bureau’s Matthew Ladd. “The robustness of networking and the acceptance of video on networks is also a driving factor…and now the implementation of cloud recording has become a cost-effective reality, so that is going to drive customers towards more video sales,” Ladd believes.
Both Ladd and Boethel are excited about the role that cloud computing is expected to play in security. “The interest in cloud computing is really unprecedented and we think that it’s changing the landscape of our industry,” Boethel says.
Third, both monitoring technologies and remote access to security and video data are expected to be a key driver in 2011. “Phone lines are going away so we see a huge up tick in that,” says Habitec Security Inc.’s John Smythe. His company had good growth last year in the retrofit residential market due to increasing crime in the areas in which Habitec operates.
“I think the residential recurring revenue growth for our company is the largest opportunity. Not only are more people getting security systems, but with certain features like Total Connect [remote, mobile access], that increases your RMR per sale. It’s not just an alarm system now. Manufacturers really have caught up with the technology and given us something to see which is cool,” Smythe says.
Fourth, diversification is as important as ever for dealers who have been adversely affected by decreased construction and general economic conditions, says Michael Flink at ADI North America.
“More and more users are looking for integrated systems they can control remotely. Dealers can offer a complete solution for security, temperature controls, lighting controls, home automation, whole house audio, and more. New media and technology, such as 3D, streaming video and music that integrates with personal computing devices will continue to open up opportunity for dealers to call on their previous customers to offer these solutions,” Flink says.