Back to the Future at TEC 2016

If a security integrator from 15 years ago suddenly found themselves transported to TEC 2016, presented by PSA Security Network from May 9-12 in Westminster, Colo., they would note a whole lot of changes. From the Internet of Things (IoT) to cybersecurity to robots, there was a decidedly futuristic feel to much of what was discussed and presented, from beginning to end.

When it comes to setting a tone for an event, PSA has been spot on, at least for the past couple of years I have been attending. The opening reception of TEC 2016 provided an apt — and highly entertaining — metaphor for where the commercial security industry is right now. Last year’s opening night featured an engaging speaker on personal and professional cybersecurity that had many attendees running back to their rooms to password protect their laptops. This year PSA went with a lighter entertainment choice: Spinphony, a cutting-edge electrified string quartet that expertly mixes classical baroque music with pop hits, such as Pachelbel’s Cannon with The Verve’s Bittersweet Symphony, and even more current fare from Lady Gaga and Katy Perry.

What does this have to do with security? Today’s systems integrator is more than ever faced with the perplexing problem of blending the old with the new, staying cutting edge but not bleeding edge, yet out front of upcoming trends that are racing towards this industry at a faster and faster rate.

This theme was highlighted by the topics chosen and the advice given at the annual “State of the Industry” panel, held May 10 to a standing-room only crowd. PSA President and CEO Bill Bozeman moderated a C-Suite level panel that included Michael Kaiser, executive director, National Cyber Security Alliance; Dave Carter, managing director, NetOne; Chuck Wilson, executive director, NSCA; and John E. Mack, executive vice president, Imperial Capital. The “State of the Integrator” panel immediately followed, with panelists both expounding on and reacting to many of the topics brought up at the first panel. The Integrator panel included Brent Franklin, president, Unlimited Technology, SDM’s 2014 Systems Integrator of the Year; Carey Boethel, founder, president and CEO, Securadyne Systems LLC; Mike Meridith, president, SEi; Jeffrey Nunberg, founder, president and CEO, Integrated Security Systems; and was moderated by Paul Boucherle, founder/principal, Matterhorn Consulting.

The State of the Industry session began with comments on the recent spate of mergers and acquisitions at both the manufacturer and integrator level. “We have seen more significant M&A activity in the last year than in the previous 30,” Mack said. He and others encouraged PSA integrators to view this trend as an opportunity, in many ways.

“There may be consolidation at various levels, but our industry is growing in a significant way,” Mack said. “If this were about taking share from the other guy, that would be different. But this industry has a really solid, net growth and we are going to see new and interesting technology come into the industry.”

Franklin later said he was not worried about acquisitions at the top. “We are most nimble in the middle market and can act on things quickly. I smile when a competitor gets bought up. With all the acquisitions it will make a difference for small and medium sized integrators who can take some of the customers while the big guys are still figuring out how to turn the ship.”

Boethel, whose has been on the acquiring end in the past few years, also saw consolidation as a positive overall trend. “Not only because I have been an acquirer, but there is a gap between the largest top five, which just became the top three, and the hundreds of thousands of smaller, independently operated companies. Enterprise customers are often forced to make a choice of two evils: larger companies that can operate globally or smaller service-oriented ones. It gives us an opportunity to differentiate ourselves.”

Another way to take advantage of the M&A trends, Mack pointed out, was for integrators to offer managed services that produce RMR on the commercial end of the spectrum. “We are in a transformation now, seeing higher value on the commercial side where residential is getting tough. Yes, there are a lot of cool new things, but there are a lot of guys doing it. The M&A appetite now is almost all focused on the commercial side of the business and in the next few years the companies showing up with commercial RMR will be more valuable. No question about it; you have a bigger opportunity than you have ever had before with a big, robust group of buyers out there.”

While there are some challenges with the RMR model, the integrators were largely positive about it. “I am really bullish on managed services,” Meridith said. “It is amazing how that is growing every single day.” Franklin added, “We have to learn to sell on managed and cloud-based and the things that take you away from just purchasing equipment. If you can’t get more into that, you will be left behind, because the pricing will force you out.”

But as Bozeman pointed out, the alarm side of the industry has been doing well with RMR for years because the technology was there to support that model. On the integration side it has only been in the last few years that technology such as IP and the cloud have even allowed it as an option. “We now have these tools, but it is tough to get salespeople not to want to sell 600-card systems. We need to help integrators build out that model.”

The quicker they figure it out the better, Mack added. “There is a fundamental transition to managed services happening for all facets, including any kind of interactivity with building controls, IoT, etc. that can be sold as a managed service.” Whether RMR-based or not, the IoT and building automation were on the minds of most panelists in both sessions, and in other sessions throughout the event.

“The scale of older systems were monolithic,” Salvatore D’Agostino, CEO or IDmachines LLC told the audience in his session on Identity Relationship Management Requirements to address the Cloud, Mobile and the Internet of Things. “Access control systems top out in the millions of card holders. That will literally jump to the billions with IoT.”

For the last several years, cybersecurity has been a big push at TEC, with PSA offering sessions, partnerships and ongoing education throughout the year. These efforts seem to be paying off, with more and more integrators on board with it, even if they don’t like it. While it is still the “big bad wolf” in the room, it is also, increasingly, viewed as a potential opportunity as well.

“Cybersecurity scares me,” Meridith said during the integrator panel. “The more I tie into people’s networks the more I worry I am going to be the breach. We have really amped up our IT department and are making sure we are connecting properly.”

Moderator Boucherle agreed. “Cybersecurity scares me to death. When I work with IT people and they realize we put NVRs in 10 to 12 years ago that are still running on the same version of software, you should see their faces.” For this panel and the attendees in general there was definitely a sense that cybersecurity needs to be learned, dealt with and handled as soon as possible. The State of the Industry panel was more positive in its outlook, even tying it back to offering RMR-based services.

“Cybersecurity is going to affect everything you do down the line,” Kaiser told the audience. He pointed out the potential for increased connection between cybersecurity and physical security, particularly at the intersecting point of shared data. “Data is the coin of the realm and wherever you are collecting data that is where cybercriminals are going to be looking. But the opportunity through this connectivity is incredible. When you think about the IoT or devices with the ability to talk about their current state, you can make services around that with every piece of data you collect.”

Mack added that the people in the room were at an advantage. “For 100 years our business has been life safety and security. Guys coming out of IT are not security guys. If you bring that mentality to protecting your infrastructure, that is our DNA 24/7 and it can be a big competitive advantage…. If I were going to get back into the operative side of the business, that is where I would be.”

Besides cybersecurity, the other thing many of the experts said “kept them up at night” was how to continue to attract and retain the talent necessary to stay current with all of these trends. “The good news is the business is there; the difficult news is how do we compete in this talent management war when we see the millennials heading to the companies that already have inroads into the technology schools,” Wilson said. “We all have to be proactive with our talent management philosophy. We need to think less in terms of a career ladder than a career lattice — less linear and more lateral.”

In summing up the integrator panel, each was asked for parting words of wisdom.

“We all have the opportunity to be part of the greatest shift in technological advances in security today,” Franklin said. “We are all seeing that, so what is your plan to be above the ‘me, too’s?’ You have your secret sauce. Do you use it every day? If not, find that ingredient. If you have the right team and the right formula, you are going to succeed.”

Nunberg looked back to the point when the industry really started to change, particularly after 9/11, as a model for going forward. “The whole world changed then. Now everyone needs to be focusing on training for cybersecurity and network security.”

Meridith suggested visiting fellow integrators in different parts of the country to learn what they do better and borrow ideas. “It is amazing how much you learn by looking at someone else’s culture.”

Echoing the others as well as the earlier panel, Boethel pointed out that all of these trends and technology changes bring both challenges and opportunities. “What we try to do is see the big picture. If you think about the cloud and the move to mobility, the risk is that the integrator’s traditional scope of work is going to shrink. But we try to anticipate that as best we can and change the way we think about things like Op Ex and Cap Ex.”

The role of an organization like PSA is to educate, but perhaps also to push, a little. The last few years of stressing the importance of cybersecurity seem to be making inroads, but what comes next? This year PSA introduced another “far-out” concept the industry is just starting to think about — robots.

In announcing a new Robolliance, formed between Sharp Electronics Corp. (SEC), PSA and a number of others, Mike Kobelin, former PSA board president and now director of sales at Sharp Robotics Business Development, a  division of SEC, said, “One thing that has become clear to me is this is a brand new market. As we try to help our integrator partners be successful, it won’t happen overnight. The Robolliance is something they can use as a tool for the customer, to demonstrate the potential.”

Of course an event that started with an evening of electrifying entertainment also ended with one — the always popular TEC JAM, featuring musicians from within the ranks of PSA members and partner companies. This year also featured professional musician Johnny Sansone. There was no metaphor necessary for this evening’s event. Sometimes integrators just want to have fun, too.