2021 Security Industry Forecast: Expectations, Challenges & Opportunities

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Like a sporting event in which the absence of star players makes it foolhardy to predict the outcome, in the face of an ongoing pandemic where it comes to projecting the fortunes of the electronic security industry — all bets are off.

Just a year ago, experts could hardly have been more bullish on the future as we embarked on a new decade. However, due to the COVID-19 outbreak, the socioeconomic situation soon took a historic turn for the worst and although there are hopeful recovery signs, many variables and unknowns persist.

The best we can all hope for is progress in eliminating the virus, a comprehensive resumption of life and business as usual, and a security industry windfall from pent-up interest, need, budgeting, requisitioning and spending.

There’s no doubt security businesses emerging on the other side of 2020’s trials will be the better for it, and ready to take on the broad range of opportunities, challenges and other matters before the industry.

Particularly considering how essential its solutions are in helping assure safety, security remains one of the best trades in which to do business. That outlook shines through the annual SSI Security Industry Forecast, with more than two dozen authorities and analysts from throughout the channel offering perspectives and insights.

2021: Security Technology

Brian Wiser, President, Bosch Security and Safety Systems, North America

Technologies that enable remote commissioning and programming and those that allow additional capabilities to be activated remotely through Cloud connections became more important in 2020.

While this has allowed integrators to continue to service customers throughout the pandemic, many have found reduced travel has helped to maximize the efficiency of employees and drive savings in labor costs. As a result, they will continue to be important in 2021 and beyond.

In addition, with the Internet of Things and increasing intelligence, there are greater possibilities for connected security devices beyond their traditional uses. For example, new opportunities in 2021 will be driven by the launch of open platform cameras that allow integrators to securely add software apps in order to customize solutions for their customers.

Using intelligence built into the camera, along with apps, enables the camera to be optimized to act as an IoT sensor to gather information on activity or objects in an area to provide business insights and bring new value to organizations. These capabilities will help drive the trend toward intelligent buildings that increase safety, security and wellbeing.

Jerry Burhans, Managing Director of Critical Infrastructure, ABLOY USA

Our view on technology from the critical infrastructure position has been laser-focused in providing digital key technology and listening to the VOC in order to provide a digital bridge to customers.

Along with integration solutions, the customer is now requiring platforms to make sure security is not compromised and offers a complete top-to-bottom solution.

Brad LaRock, Vice President Marketing, Alula

We see data becoming ever more important and interwoven in the operation of smart homes and businesses, creating a challenge in interoperability and the ability for all data sources to play well together — thus optimizing the homeowner’s experience.

Within the commercial space, there is greater need for remote operating systems and nonhuman engaged systems that allow for transfer of payment and goods, limiting direct contact and reducing COVID exposure.

Fredrik Nilsson, V.P. of the Americas, Axis Communications

The ability to reduce the number of surfaces touched — like keypads — is essential to curbing the spread of viruses, so touchless access control solutions will experience increased demand. Today’s access devices can also integrate with other technologies to offer new conveniences like automatic or remote door opening and closure. Furthermore, intercoms and video technology can add a valuable layer of communication, security and safety to access control.

As companies connect more devices to the network and analytics become more prevalent, system demands will increase. Greater processing power in edge devices will help to meet demands and create opportunity for hybrid computing solutions.

More companies will look to implement smart architecture that directs processing tasks across the edge, core and Cloud to wherever it makes the most sense. These multi-tiered solutions will give customers the flexibility to deploy and manage their ecosystem more efficiently and cost-effectively.

The versatility of IP video technology — its ability to serve multiple purposes and provide enhanced value — will become a growing realization. In addition to benefits like active monitoring, loss prevention and perimeter protection, IP cameras armed with powerful analytics will help end users gain intelligence they can use to improve everything from workflow and inventory control to sales promotions and customer service.

In the COVID world, video coupled with occupancy analytics or audio alert capabilities has helped end users comply with safety guidelines by managing in-store traffic, maintaining social distancing, and ultimately protecting the health of their employees and customers.

Sean Foley, Senior Vice President, Interface Security Systems

The march toward “everything Cloud” will continue, but storage costs and bandwidth constraints will require on-premises NVRs for the foreseeable future. Better AI integration will make video more feature-rich. We already see this with “person recognition” on very low-cost video platforms, like Amazon’s Wyze cameras.

Expect to hear more smartphones buzzing as video systems push relevant new info to business owners and homeowners. Expect to see drones with improved video and analytic features deployed by security teams to protect and surveil larger areas like stadiums and corporate campuses. Police departments may also use drones for 911 response and alarm verification.

2021: Security Markets

Clint Choate, Senior Director Security Market, SnapAV

Pros and homeowners alike crave products and services that make smart home security and home automation easy to use and capable of providing seamless support for an ever-growing ecosystem of smart devices. Feedback from our partners tells us that product differentiation matters and the ability to distinguish their businesses matter.

This is the case not just among the panels and same interactive service providers everyone sells, but also where it comes to the experiences and conveniences DIY products can provide.

Kichul Kim, President, Hanwha Techwin America

Budgets will be slow to return to normal for some markets. Schools have had so many unplanned expenses and will be recovering for some time. Healthcare, on the other hand, will remain strong as they push to secure and protect employees and patients.

For manufacturing, and especially for supply chains and distributors, there will be opportunities to upgrade and expand as companies work to streamline operations and logistics while seeking to protect employees. With lower budgets across most markets, investments will have to be smart and seen as futureproof.

The NDAA [National Defense Authorization Act] ban will provide opportunities for those with compliant products to work with the government as well businesses that understand the importance of cybersecurity to maintaining trust and protecting brands.

Peter Giacalone, President, Giacalone Associates

Although I expect smart home business to persevere, I image it will be challenging to achieve projected growth for this area. With unemployment and tightening of budgets, there may be higher attrition than in previous years and a stall in new growth.

Other markets like government, education and healthcare will see new and expanded opportunities due to the great changes in the way we are living. Examples like enhanced access control with thermal imaging and other sophisticated technologies will continue to grow as the need will remain.

Jamie Vos, President, Electronic Security Association (ESA)

I believe the multifamily vertical will continue to pace forward. Security like access control and video has become synonymous with development, so 2021 is going to be good there. For K-12 education, bonds and levies that passed in 2020 are going to continue producing powerful results in secure schools.

We’re going to see a move toward pandemic-proofing. But I would be nervous if I was in higher education, as they are trying to figure things out. I also see healthcare depressed a little due to budgets and grappling with COVID.

I envision an uptick in the food manufacturing industry related to COVID, catching up on regulations and we’ll see some fear-based buying to keep doors open.

2021: Business & Operations

Kirk MacDowell, Principal, MacGuard Security Advisors

Harvesting internal talent and keeping them loyal to a particular company may be the best defense in the training and talent race. Competition will continue to be robust and that is a good thing.

Our industry has proven to be recession- and pandemic-resistant, and investors like what they see. Attrition will continue to decrease as companies continue to get a better handle on their operational efficiencies and responding to the needs of the consumers. Credit will continue to be tight until we see the light at the end of the tunnel with the pandemic. I envision banks and specialty lenders will pick up speed in Q2 2021.

Celia Besore, Executive Director, The Monitoring Association (TMA)

The most significant changes will arise from companies’ search for new ways to stay connected with their customer base and engage new prospects. Different means of communication, selling, maintenance and service will evolve to sustain retention and drive RMR.

We have already seen an increase in demand for video monitoring. Financial stability could prove challenging for both the residential and commercial markets.

Record and sustained unemployment may impact consumers’ decision to continue or initiate security services. Likewise businesses, especially SMBs, have struggled due to the pandemic. However, that situation has also created opportunities never before considered.

Geoff Kohl, Senior Director of Marketing, Security Industry Association (SIA)

The big gap we still have is cybersecurity expertise, a problem that exists not only in the field but also at the heart of the industry.

Dealers and integrators are installing IoT devices on customers’ networks, which are endpoints that can be attacked.

Our workforce has to be diligent about cybersecurity and we need to have training and cybersecurity certifications to help show customers our people can be trusted.

2021: Security Industry

Paul Boucherle, Principal, Matterhorn Consulting

The aggressive M&A activity we have experienced has been reset around viability of sustainable business models in new ways.

I believe valuations have shifted to deeper looks at the talent that will continue to fuel investments in very nontraditional ways beyond simply EBITA numbers, and more toward a company’s ability to adapt and prevail in rapidly changing times.

Richard Ginsburg, President & CEO, Alert 360

Credit markets continue to have a negative bias toward the security industry due to Brinks Home Security’s Chapter 11 filing, the poor performance of ADT’s IPO and some companies with credit challenges.

I anticipate we will see more consolidation with well capitalized companies doing M&A. The security industry should continue to grow, especially if defunding of police budgets comes to fruition.

DIY players need to work harder to combat problems from cheap equipment and false alarms caused by nonprofessional installation issues.

Charles Durant, Managing Director, Sandra Jones and Co.

Barring a significant downturn in the economy, we should see continued robust M&A activity in the physical security industry. While valuations are arguably at all-time highs, buy-side demand remains very strong with a significant driver being private equity. Those acquisitions have soared to the highest level since the lead-up to the global financial crisis.

There is no end in sight for the buyout boom as companies chase investment opportunities for a record amount of unspent cash that totals almost $2.5 trillion. These financial buyers are providing strong competition to established strategic buyers for deals.

John Brady, Principal, TRG Associates

Remotely training employees will continue to be a challenge. Attrition will rise, especially in the commercial segment.

The 4G transition will be a big challenge to implement and will cause its own level of attrition due to customers shopping for provider alternatives as they are being swapped by the existing security company.

2021: Overall Expectations

George Brody, President, Telguard

With cord-cutting and POTS service declining, cellular alarm communication is the technology of choice for new installs and upgrades, while providing additional RMR for dealers. Penetration rates are still relatively low and independent dealers are achieving impressive metrics.

Integrating technologies beyond access control and video, like thermal imaging, is providing integration companies more growth opportunities. Monitored services continue to be strong with insurance companies and new services are boosting RMR.

Plus ASAP-to-PSAP is gaining momentum providing improved response times for first responders. For suppliers, I expect a very good year with the themes of connectivity, integration and economical solutions.

Jeff Kessler, Managing Director, Imperial Capital

For security dealers there will be continued market share gains by the larger companies that can provide enormous help through technology that the end user sees as an easier-to-use, “smarter” system that hopefully requires less service calls.

Systems integrators will experience continued bifurcation of the industry into companies installing smaller systems for smaller clients and those installing highly complex systems with longer use cases for larger clients. The question is if the latter will disappear into technology integrators with a security segment or remain dedicated security-focused businesses.

As for the monitoring industry, commercially it is about looking to serve other segments of the enterprise like HVAC, building systems, IT and HR so service discussions increasingly rise and stay at the C-suite level. Residentially, it will be all about the rush to 4G and 5G, police/municipal scoring and timing of response, and increased fines for false alarms.

On the supplier side, as an industry analyst I cover Allegion, Identiv, Resideo and Napco and closely monitor ASSA ABLOY and Wesco Int’l, which bought Anixter. I am very bullish on all of our coverage for the second half of 2021.

Andrew Elvish, Vice President of Marketing, Genetec

Businesses will be very careful with their budgets and so systems integrators will have to be very smart positioning themselves.

They’ll have to clearly articulate the value-add they bring as trusted advisors, consultants and partners in success.

End users will reward integrators who show them how to do things without being coin-operated.

Jim Henry, Independent Consultant and SSI Industry Hall of Famer

Residential security dealers in suburban and rural areas should see increased business fueled by migration from troubled urban environments and careers where remote employment will become more prevalent. SMBs may join that migration seeking safer locations following the population shift of middle- and upper-income professionals.

Systems integrators that heavily focused on commercial real estate and retail will have a tough 2021 first half. The education market should fare better, but large infrastructure projects and mass transportation will continue to be hard hit. However, the promise of increased funding from Congress should start the recovery in late 2021 and continue strong for several years.

Monitored service providers will benefit twofold in 2021, as those contracts have proven more sustainable than on-premise service contracts during shutdown of businesses. Secondly, as corporations seek cost-cutting measures outsourcing monitoring will drive more business.

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