State of the Market: Access Control 2013
2013 access control sales are being boosted by integration, mobility, managed access and continued regulation.
The average access control system lasts 10 years. Additionally, the average customer wants to do more with less within continuingly tight budgets.
“People are often not looking to update or replace existing access control hardware due to budgetary reasons, and when they do, they are looking to solutions with a lower total cost of ownership. Plus, access control is a very mature product/solution,” observes James Crowley, product marketing manager, Lenel Systems International, Pittsford, N.Y.
With those realities in mind, it would seem the opportunity for sales is negligible.
Not so, say the manufacturers, distributors, integrators, and end users SDM interviewed regarding the state of the access control market. Instead, success in 2013 starts with shifting the entry point for the sale — and positioning access control as an essential element of a security system.
“Security professionals and end users are realizing that there are three components to a complete security solution — access control, video and audio — and their purchases reflect this,” Crowley shares. “Video continues to drive access control decisions in the United States. This phenomenon started overseas and is now fully entrenched in the U.S. market. We are seeing video and third-party products/solutions as the entry point for access control sales.”
Complete security solutions — access control included — are top of mind for end users.
“We believe that nearly every facility, building and enterprise is in some stage of consideration about security systems — new systems, construction, upgrades, and integration,” says Dave Porter, general manager of AlphaCorp Security, Ogden, Utah, pictured on this month’s cover. AlphaCorp, a PSA Security and SecurityNet dealer, has been in business since 1983, and has offered security since 1993. The company complements security solutions with full-service design, engineering, and project management.
“We believe there is momentum in the direction of thinking that a failure to protect and prepare is where the real cost and liability lie for any enterprise, and that synergies can be realized which reduce various operational costs when the right system is designed/implemented,” Porter thinks.
Leveraging things like enterprise capabilities, video integration, visitor management, asset management — all of which can be built around an access control platform — is powerful, and end users are seeing it, making it an exciting time, Porter adds.
Even with today’s global economic uncertainty, security is a critical component for most companies, and as a result, HID Global experienced growth during 2012, shares Anthony Ball, senior vice president, Identity and Access Management (IAM), HID Global, Irvine, Calif.
“Protecting employees and assets remains of utmost importance for organizations of all sizes, worldwide, as the threat landscape continues to evolve and attack patterns grow in sophistication. Although we do not share our financials publicly, we continue to see growth throughout our access control business, including increasing demand for higher-security solutions such as our latest iCLASS SE platform and iCLASS Seos credentials, which are also portable to NFC-enabled smartphones for enhanced convenience and flexibility.”
Ball expects to see growth in each of HID Global’s major markets, which include the financial, healthcare, enterprise/small-to-medium business (SMB), government, and education sectors.
“The ability to integrate surveillance with access control is no longer considered a luxury in the market, but a necessary step to providing a comprehensive picture of security operations to an end customer,” says Dr. Michael Luetzeler, Siemens, member of ONVIF Steering Committee. In 2013 ONVIF is working to release a specification to include access control functions like door monitoring and control and govern interoperability between access control and video surveillance systems, as well as between individual components of an access control system.
“As the migration towards IP-networked security systems continues to gain traction at double-digit growth rates, the ability to implement advanced access control solutions integrated with other core security technologies such as video surveillance will continue to drive sales in 2013,” says Wayne Jared, chief technical officer, Observint Technologies, Austin, Texas, parent company of Infinias, Carmel, Ind., a provider of IP hardware and software technology for physical access control.
“Advanced networked-based access control solutions offer increased efficiencies from both implementation and operational perspectives. Equally important is the ability to reconfigure systems as the need arises with the flexibility to expand the system one door at a time. Such attributes make it much easier for users to justify the need for new and/or enhanced access control solutions in their facilities,” Jared says.
INTEGRATION DRIVES GROWTH
Integration is a key driver for growth in 2013, with more manufacturers focusing on offering integrated systems, says Michael Flink, president, ADI Americas, Melville, N.Y.
“We are hearing from more dealers every day that their customers are requesting integrated systems that can perform multiple functions, including access control and video surveillance.”
David Hood, president, First Alarm, Aptos, Calif., reports his company is working on several projects where video is integrated into the access control. “The capability has been around for a long-time, but the integrations are getting better — more user friendly,” Hood explains.
Open integration is a key fundamental for end user Joe Silivestro, Corporate Security, physical security specialist, Frontier Communications, Rochester, N.Y.
“In our business model, our access system really is also an intrusion system, as well as reinforcement to company policies for worker safety, as well as providing reliable services for our customer. We are always tying our systems back to operational principals,” he says.
Silivestro adds Frontier Communications will continue to invest in access control systems and services in 2013 to meet company-wide goals to consolidate, working with its integrator, Stanley Security Solutions.
Integration played a key role in an access control project AlphaCorp completed for American Nutrition, a pet food manufacturing company with more than $350 million in annual revenue, located in Ogden, Utah.
“We tried to create a vision for them and solutions that would meet both their initial security needs and in the future,” Porter describes about meeting with American Nutrition to review its security needs. “We were also one of the only vendors that talked about protecting other facilities across the country and how they could have one platform, one database and one management tool to secure their other buildings. They saw value in that.”
Read the full case study, “Manufacturer Benefits from Centralized Access Control,” on page 108.
Daniel Kilgore, director of Global Accounts for RFI Communications & Security Systems (RFI), San Jose, Calif., SDM’s 2012 Integrator of the Year honoree and No. 15 on the 2012 Top Systems Integrators Report, lists improvements in the video integration with access control systems as a catalyst for growth in 2013, and he also adds the convergence of logical and physical access to the mix.
Joe Buccino, vice president, research and development, Tyco Security Products, Boca Raton, Fla., agrees that a continuing shift in the access control space is intelligence at a cloud level and intelligent edge devices.
“While the security industry doesn’t move at the same fast pace as the IT space, the market is heading towards this direction with the introduction of cloud-based solutions and technologies such as near field communications (NFC) that is bringing credential to smartphones,” Buccino says.
Joe Griffen, director of safety security and transportation, Buckingham Browne & Nichols, a pre-K through 12 day school in Cambridge, Mass., shares that the integrator’s promise of greater flexibility and remote control of the system, allowing Griffen to lock and unlock doors for events remotely, was the key to the school’s choice to upgrade the system last year.
The school is also currently fundraising to switch all of the locks from hard keys and hopes to do so this year or in 2014.
“Mobile apps remain one of the biggest topics right now in the security market, followed by integrations. Within the security industry, demand for mobile apps is high, even though implementation is still relatively low. Integrators can lose a job if the products they offer don’t have a related app, and asking for an app has become second nature,” Buccino says.
“In addition to the ability to lock and unlock doors remotely, report generation is another service enhanced by the mobile app in combination with the access control system. Via an app, a security officer can tap into the access control system and create a time and attendance report, or gather information based on a specific event, such as the triggering of a door alarm,” Buccino describes.
MOBILITY DRIVES GROWTH
The emergence of mobile access control as a key growth market is dependent on NFC being integrated into mobile phones, according to Ball. The February 2011 Research and Markets report stated that only 5 percent of the total mobile phones during 2011 were NFC-enabled; it was estimated that in the next five years (by 2016) this number would rise to approximately 46 percent, Ball reports.
The industry won’t see plastic cards going away anytime soon, though.
“At the end of the day, the mobile access control infrastructure will augment what already exists for plastic smart cards in the typical physical access control system (PACS). Many organizations will still want their employees to carry traditional cards because they are used as a means of photo identification,” Ball adds.
Vince Lupe, systems marketing leader, Honeywell Security Group, Melville, N.Y., also observes mobile as one of the biggest mainstream technologies having an impact on the security industry.
“For the last few years, intrusion experienced most of the impact as the ability to control alarm systems using mobile devices took hold, but we are seeing mobile play an important role in access control as well,” Lupe explains. “For example, Honeywell is introducing a mobile reader as part of the widely used Pro-Watch® platform. The system can be used to validate credentials at locations such as construction sites, industrial facilities and more.
Just the same way this move has enabled non-security applications in the intrusion industry (e.g., controlling thermostats using a smartphone), it has opened the door for integrating non-security applications in access control. For instance, one of our beta sites for the new Pro-Watch Mobile Reader is a school board that’s using the system to pinpoint which areas of town are underrepresented at board meetings,” Lupe shares.
MANAGED ACCESS DRIVES GROWTH
Peter Boriskin, director of Product Management, Electronic Access Control, ASSA ABLOY, New Haven, Conn., sees “critical mass” building with cloud-based computing, virtualization and edge devices.
“A lot of major players from the systems perspective are moving traditional systems into the cloud. There are more IP edge devices and more wireless devices being deployed, and they are being tied back into systems that can be managed or hosted off the customer’s premise,” Boriskin says.
Managed access, or access control as a service (ACaaS) dramatically changes the revenue stream.
“In the past, an access control equipment installation was more of a one-off purchase provided with software and maintenance. However, most access control systems will last for approximately 10 years before being completely replaced/updated. Conversely, ACaaS offers continual revenue streams that are compounded each month,” shares Blake Kozak, senior analyst at IMS Research in “Access Control Industry Changes Course,” on page 51.
Managed access control is also an option for businesses tightening their budgets, shares John Smith, senior marketing manager, Honeywell Security Group. “By moving to managed access control, businesses are able to eliminate the expense of maintaining and updating the system, lowering its total cost of ownership. With managed access control dealers can provide customers with higher levels of service and at the same time increase their RMR. Distributors also benefit from the managed access control model, as the reduced operational costs allow business to add more hardware,” Smith explains.
Stanley Security Solutions’ Lance Holloway, general manager, Software and Controls - Global Vertical Market Solutions, Naperville, Ill., shares that 2013 is a race for cloud-based IP edge solutions.
“So many manufacturers are delivering on cutting-edge product engines that allow for customers to wave off head-end server requirements. While this benefits the customer and simplifies their lives, integrators will need to ensure they scale up their IT central station competency, or at least outsource the administrative functions. This is a major opportunity for recurring service models in hosted / managed turnkey solutions,” Holloway says.
HEALTH OF THE MARKET
ADI reports access control is one of its best-performing product categories, and the distributor is very positive that the market will continue to grow.
“Both dollar volume and unit sales were up in access control systems at ADI for 2012, and we have been experiencing double digit growth. We expect 2013 to produce even stronger results. Manufacturers have been driving growth with the introduction of new products,” Flink shares.
Integrators like AlphaCorp have been driving growth by investing in people, processes and technology.
“We increased sales by more than 20 percent in most aspects of our business, including revenue and customer accounts, in 2012 and we anticipate growth of more than 25 percent in 2013. We are increasingly offering our customers one of the things the industry has struggled a great deal with: effective communication, expectations management, and visibility to key information. It makes a difference,” Porter describes.
The truth is that demand for these systems is not a fixed static characteristic, he shares. “Demand is driven by awareness, which is a function of the security integrator’s effectiveness in an area. The right security integrator can increase demand for these systems by 50 to 100 percent in a relatively short time,” Porter says.
For example, Remote Protection Systems, an Atlanta-based security systems provider, recommended a managed access control system in its bid to global IT services provider, Internap Network Services Corp., when the company was relocating its headquarters and designing a new access control system.
“This was the first time we had been approached with a managed access control solution,” says Laura Miller, director of IT Services and Infrastructure at Internap. “As an IT hosted-services firm we understood the managed model, but it was not something we had thought about.”
It worked, though. Remote Protection Systems won the bid. Read the full case study, “Global IT Services Firm Reboots with Managed Access Control,” on page 105.
“We continue to see demand for outsourced solutions. We provide a managed access control product where we manage the system for our customers. In this outsourced solution, we take care of all of the system administration, which makes it easy for our customers to have an access control system. We think there will be more demand for this type of outsourced solution,” says Scott Hightower, president, Remote Protection Systems.
The company anticipates that the market demand for access control will be steady in 2013.
“We are not anticipating a significant increase in access control sales nor are we expecting a significant decrease,” Hightower shares. “The economy seems to be slowly recovering and companies are hiring again. So, as companies hire, they will need to expand their facilities. As they expand their facilities, there will be demand for access control.”
RS2 Technologies, Munster, Ind., is experiencing demand. Its year-to-date sales are running consistently 40 percent-plus ahead of the same period last year, reports David Barnard, director of dealer development, RS2.
“I believe it can be attributed in part to the pent-up demand that was created by a lot of things in 2012 — anxiety over the 2012 elections, the end of the Mayan calendar, even the ‘Fiscal Cliff.’ Now the election is over, the world didn’t end and no one still has any idea how high the cliff is; so people just decided they needed these systems and have started to buy them!”
Barnard expects the company to grow in 2013 at least on pace if not well ahead of the 25 percent to which it is accustomed.
REGULATIONS DRIVE GROWTH
Regulations and compliance also continue to push end users to look into installing or upgrading access control systems.
“The pet food industry has really evolved and has become more regulated,” observes Duane Goff, director of MIS at American Nutrition. “Our customers and FDA requirements were the initial drivers for looking at an access control system,” he admits.
Compliance legislation continues to have a positive influence on sales, agrees John LaFond, vice president integrated systems, Linear LLC, Carlsbad, Calif.
“Whether it’s the Health Information Portability and Privacy Act (HIPAA), or Payment Card Industry Standard, many companies are now legally required to bring access control, security and other systems into compliance with federal law. Failure to comply can result in fines, loss of insurance, audits, or even civil and criminal penalties,” LaFond explains.
There are increasing requirements in every major industry for greater audit-ability and accountability, Boriskin shares.
“Industries need observable controls that they can put into place to ensure only the right people have access to critical areas. Sarbanes-Oxley and HIPPA are just two examples of these regulations,” Boriskin says.
With the growing regulations, it is no surprise that healthcare is predicted to remain a strong vertical market in 2013.
“Healthcare has been and continues to be a market segment that recognizes the value of access control from small offices to multi-city health facilities, and in adjacent segments, such as pharmaceuticals. Another market we see growing, amidst flat or declining budgets, is the educational segment,” says Honeywell’s French. “Student and staff safety has become a top priority for school administrators, and access control has the ability to provide administrators peace-of-mind by giving them visibility into who is on campus and the ability to control movement during a crisis situation.”
RS2’s Barnard shares that perspective.
“I’m sure it is no surprise but our largest growth areas are still in healthcare and education.”
He also reports great traction in the communications market and a growing interest in senior living facilities.
“In the senior facilities it is not only perimeter access control but, almost more importantly, electronic access control with alarm notification and an audit trial on the individual apartment or condo unit,” Barnard says.
Care facilities are increasingly depending on technology to monitor patients and residents while reducing staffing costs, describes Linear’s Duane Paulson, senior vice president product and market development. Read the full interviews with Linear’s Paulson and LaFond at www.sdmmag.com/LinearQ&A.
“Increased theft of pharmaceuticals and medical equipment and proper lockdown plans have also driven demand for better accountability and tracking of health and long-term care personnel through access control systems,” Paulson says.
Paulson also shares that within the housing market, multi-dwelling units have invested heavily in access control systems and services for screening visitors and better overall security.
Overall security — and positioning access control within that picture — will have the most positive impact on the market in 2013.
“In 2013 we are both expanding the capabilities/offerings and ways in which we offer solutions and service value to current and prospective customers,” Porter says. “There is an increasing attention, awareness and understanding of security systems generally, and access control systems are a big part of that.”
Access Control Industry Targets Service
“As competition in the access control industry heats up and vendors seek new ways to innovate and provide new, flexible solutions, access control as a service (ACaaS) may become the differentiating factor,” comments Blake Kozak, senior analyst for access control research at IMS Research — now part of IHS Inc.
Kozak continues, “At times, the need to feel secure has stifled innovation in the access control industry but I think we can safely say that we have now turned the corner in terms of the market’s adoption of applications such as hosted and managed access control that were once considered foreign to this portion of the security industry.”
ACaaS offers end users all kinds of benefits when it comes to installing an access control solution. Buildings come in all shapes and sizes and each has its own security concerns, number of employees and in-house security expertise. The flexible nature of ACaaS means that it can be used in large, medium and smaller buildings with limited restrictions. Understanding the unique circumstances of each building is pivotal to success.
Large buildings tend to house dedicated IT and security personnel, large numbers of employees and increased data privacy needs. One of the primary benefits for large organizations to adopt ACaaS may be to reduce the cost of server and infrastructure maintenance. Often times, owners of larger buildings will want to keep tighter control of the access control system.
For medium-sized buildings, there is a greater opportunity for hosted and managed access control with convenience becoming a greater factor for facility managers. In addition, there are typically fewer doors to manage and less in-house expertise to manage the solution.
Within small buildings there is typically no in-house security expertise, high staff turnover is common and only a small amount of hardware is installed, making it a perfect market for a fully hosted and managed solution. ACaaS can offer a balanced approach to security and convenience that many traditional access control systems cannot. As a result ACaaS is opening new doors and increasing people’s awareness to access control technology that was once seen as complex and tiresome.
There are several market drivers for providers of ACaaS. These include not only the possibility of further extending the installed base, but also further penetration of existing markets that have not yet been fully realized. This is very much the case with small installers that, in some cases, act only as a locksmith. Such installers have traditionally not been comfortable with installing access control systems because of the intensive nature of the hardware and more importantly, the complex nature of installing the software. The margins involved when installing an ACaaS solution have the potential to be much higher. In the past, an access control equipment installation was more of a one-off purchase provided with software and maintenance. However, most access control systems will last for approximately 10 years before being completely replaced/updated. Conversely, ACaaS offers continual revenue streams that are compounded each month.
The latest data from IHS suggests that in North America managed access control was estimated to be the largest market for ACaaS in 2011, representing about 73 percent of the total market. IHS defines managed access control as a service where the end user pays a third party to administer the access control platform. Services include tasks such as adding and deleting access rights, printing badges and credentials, door ajar/propped monitoring, changing/assigning schedules, etc. The servers are located at a third-party location.
Overall, the access control industry is primed for a series of changes over the next 12 to 36 months, with ACaaS likely to lead the way. In most instances, new concepts such as ACaaS will remain niche with widespread adoption unlikely in the immediate short-term. Integrators and manufacturers must therefore identify and target the best end users with each offering. This will promulgate best practice and reduce the chances of ill effect from technology not working correctly that could put a negative spin on the product and its future. One way to overcome these challenges would be for ACaaS providers to accurately define pricing schemes and offerings, such as those offered in the alarm monitoring industry. Finally, less proprietary systems will also enable ACaaS to reach its full potential at a quicker pace. — Contributed by IMS Research, part of IHS Inc. For more information or full research reports, visit www.imsresearch.com.
Sustainable Access Control
Wireless devices and IP-enabled locks and exit devices, as well as devices with lower power consumption, are the big things to look at in 2013. Reduced power consumption and the overall trend toward miniaturization, which help improve battery life and overall performance, are factors that are improving overall access control sales for edge devices.
“When you consider the sustainability movement coupled with the need to reduce costs, these devices consume less power and ensure the opening will cost less per year,” says ASSA ABLOY’s Peter Boriskin.
For more green/sustainable-related information, visit www.sdmmag.com/green.
ONLINE ONLY CONTENT
"Top 10 Questions You Should Ask When Choosing an Access Control System"
AlphaCorp, Ogden, Utah, a PSA Security and SecurityNet dealer, has been in business since 1983, and offering security since 1993. The company complements its security solutions with full-service design, engineering, and project management. With that in mind, Alpha Corp chooses its solutions very deliberately. Dave Porter, general manager of AlphaCorp, lists the top 10 questions one might want to ask when choosing an access control solution to offer.
1) Will you be able to upgrade the system in next few years?
Often end users think they know they only want basic functionality, or that they know the extent of what they want, without realizing that needs evolve just as capabilities do. It is likely that how they see their needs in three years will be very different than how they see them now. Integrators need to position themselves with solutions that are likely to continue to be developed and to provide the options their end users may want in the future, helping build long-term relationships.
2) How long has the access control manufacturer been developing / providing these systems?
System maturity very much is an indicator of how much it has been tested, and how much feedback has gone into its development.
3) What other end users, similar in size and scope, have deployed this solution? How long has it been around?
The more experience the market has with your system, the more confidence you might have that it’s been tested, improved, developed, etc. It is absolutely true that newer, less well-known systems can lack some basic capabilities that one might not at first notice. Be meticulous.
4) With what other systems and manufacturers does the system integrate or work with?
The partners a manufacturer has can indicate how seriously it will be regarded in the industry. Partnerships also can indicate how likely others believe that the manufacturer will be around in the future.
5) What is a breakdown of costs over a five-year period?
Don’t look for the cheapest solution to offer now. Look long-term. Items like annual software support agreements, fees, etc. should be considered.
6) What would be involved and what are the possibilities if you need to change systems in a couple of years?
There are a number of reasons this is important to consider. One is that the hardware required for some systems works with no other systems, so changing the system would require hardware changes, and could be quite costly. Leave yourself flexibility.
7) What operating systems and versions are supported?
This is an indicator of how mature and how serious this manufacturer is in the market, in addition to potentially addressing important questions related to your own system.
8) What Web-based capabilities do you care about and what are supported?
Whether interested in these capabilities or not, innovation and keeping current are an important indicator about an access control company.
9) Does the manufacturer have a professional services group or custom solutions group to help with database-to database integrations and large-scale deployments?
Having such a custom group is an indicator of a) the importance the manufacturer places on satisfying customers and b) the sophistication of the system and the likelihood it will be around awhile.
10) How many other integrators in your area can support the system?