Security industry veteran and SSI Hall of Famer George De Marco has earned an esteemed reputation as a successful entrepreneur, trade associations leader and forward-thinking analyst and consultant.
In the following interview, De Marco, who is managing partner of DECO Ventures and chairman of the Electronic Security Expo (ESX), shares his opinions and expectations for the security industry in 2021. Read on to learn his expert perspectives on wide range of topics across the security ecosystem, including M&A, RMR, cybersecurity, disruptive technologies and much more.
How do you anticipate the COVID-19 pandemic impacting the electronic security industry — best- and worst-case scenarios — overall in 2021?
Navigating this pandemic-driven economy will bring significant challenges and opportunities in 2021 for industry professionals based on their risk tolerance. I can’t predict the future, simply because each business owner is different in their approach to opportunities and their associated risks. Some will hunker down, while others will be bolder in their approach in adopting to what the “new norm” will be in the next stages of the pandemic. Traditional go-to-market strategies and operating methods were already evolving prior to the pandemic’s impact on the industry.
Best case and worst-case scenarios will depend a lot on how the industry and individual companies adopt new methods, maximize opportunities and minimize risks in the marketplace. Best case scenario is that with treatments, vaccines and herd immunity, the pent-up demand creates a boom for security professional. The worst-case scenario is in expecting to return to the old playing field with an old play book, hoping the future will take care of itself. For those, this will be problematic, regardless of the pandemic or economy’s status.
Let’s dive into some specific areas and what you expect to be the biggest changes, challenges and opportunities as they relate to both residential and commercial markets. Starting with technology …
The pandemic disrupted how we work, get an education, care for children, communicate with family, friends and work associates and travel for work and pleasure. Technology plays a critical role in keeping us connected, especially in the virtual world, during these confusing and frustrating times. It also affords security professionals the ability to offer viable solutions and relevant products and services that solve real world problems for their residential, commercial, and governmental clients.
For homeowners, they have embraced smart technology to a greater degree than businesses. Consumers are getting more comfortable with technology to control and manage their homes, giving them a greater sense of security, safety, comfort and convenience. As consumers add more connected devices in their homes, they’re realizing how difficult and frustrating it is to do it themselves, especially getting disparate products and Cloud-based services to work seamlessly together.
This continues to be an opportunity for security professionals to step in and remove the frustration felt by end users. From my perspective, the more connected devices you install for the homeowner, the harder it becomes for them to leave your company, but only if you create a frictionless and seamless experience for them.
While it’s important to add new customers, it is equally important to refresh existing technology for clients before the competition does. This requires a well-thought out business plan that addresses product obsolescence and the introduction of newer product and service offerings. The challenge is balancing how to manage growing the business without alienating your existing customer base. In other words, the mission is to leave no customer behind.
As an example, many homeowners have older networks or outdated communications pathways that need to be upgraded to handle newer technologies, such as high-resolution cameras and smart doorbells that consume high amounts of bandwidth from broadband service providers. Installing a 4K camera is cool, but only if the network can support it. Also, a more robust network allows the security professional to confidently layer on more connected devices and security services that offer real value for homeowners and a better customer experience.
With a plethora of new products and services hitting the marketplace, consumers’ appetite for connected devices is accelerating. It seems that convenience still outweighs privacy concerns. This leaves security professionals with so many new opportunities that it’s becoming a challenge to keep up with consumer demand and expectations.
We are dealing with the shiny penny syndrome — the sheer number of new products and services is staggering. Security professionals need to be diligent and rigorous when choosing their vendor partners and adopting new technologies, along with a viable service strategy that supports them for end users.
In addition, Internet of Things [IoT] and Cloud-based services allow the industry an opportunity to extend security beyond the traditional physical perimeter. Cameras provide homeowners the ability to view activity outside the walls of the home, and Cloud-based technology is extending security far beyond the property lines.
Whether for children, adults, seniors, or pets, security professionals can provide more monitoring services that keep end users safer when they’re traveling, going to school or work or taking a walk in the neighborhood. We become their connected life hub for securing and managing people, places and things, which transforms the traditional burglar alarm system into a multifocused solution.
What are some specific dynamics at play in the commercial sector?
In the commercial and governmental sectors, organizations are preparing to welcome their workforce as they return to the office environment. Although the work remains the same, the conditions in the office will change dramatically and be different now and into the near future. Employers will be expected to take safeguards and measures that lessen the anxiety and risks associated with employees reentering the workplace. As a result, organizations will need to adopt new group dynamics that address old work habits and patterns.
Commercial clients are embracing and adopting Cloud-base technology, touchless automation, and As-a-Service models for running their organizations, especially access control systems and cameras. This gives security professionals access to a wider array of technologies that provide insightful and useful data for commercial applications beyond traditional burglar alarms.
For example, cameras using intelligent video analysis will be able to collect valuable business intelligence that optimizes operational processes, delivers situational awareness for safety and security, and tracks the customer experience for valuable feedback.
Video analytics can be like Clark Kent, collecting meaningful data that helps with daily operations, but then rise to the occasion, like Superman, when a security breach is identified. As AI and machine learning evolves, complex security decisions will be made or suggested on behalf of their human counterparts using multiple data points such as access control, sensors, IoT devices, and camera surveillance systems.
Touch-free access control will play a greater role in the touchless experience. This technology will help to keep people safer and bring back the trust needed to return to public spaces.
Using a multiprong approach, many complimentary technologies will have a shared responsibility to not only keep the bad guys out, but also manage the workplace for health check compliance, business processes, and safe work practices. Employers will also be evaluating or expanding work-from-home scenarios, confirming that home technology will need to be more robust and secure for certain use cases. Conversely, the workplace will need to hasten its adoption of similar smart home technology in this digital shift as people will expect a similar digital life experience at work.
Focusing on the right technologies and vendor partners will allow security professionals to decipher the differences between short-term technology fads and longer-term trends that deliver a better customer experience, sustainable revenue streams and higher profits.
What do you view as key factors driving top vertical markets?
The overall market growth for security services is being driven, in part, by newer players bringing their strong marketing influence to bear, which is a positive effect on business for traditional players. Yet, consumer buying habits are shifting as newer players introduce disruptive products and go-to-market strategies that capture the attention of end users. Although not all new products and services will ultimately be successful, there are competitive forces that become so disruptive that sometimes they become outright destructive to an industry, such as a Netflix or Uber.
In the residential segment, market penetration remains relatively low. However, market growth is ticking up as end users embrace smart home technologies and security-related products and services. For the commercial segment, Cloud-based technologies are driving opportunity for this sector.
Businesses need to refresh their outdated security and add newer technologies that go beyond traditional burglar alarms. They are more willing to adopt newer technologies and subscription-based services that help deliver a more robust security solution and operational improvement with intelligent data from connected devices.
Depending on core competencies, specialized verticals for commercial and residential clients will be important to focus on for dealers and integrators as opportunities vary in markets, depending on commerce, size and demographics.
Growth outcomes will differ depending on an organization’s appetite for growth initiatives and their ability to attract skilled labor. Successful organizations evolve their selling processes and improve their operational performance to meet the demands of a changing competitive landscape.
The good news is there is ample opportunity for dealers and integrators with strong and disciplined leadership to increase revenues and profits, especially sustainable RMR, by focusing on the customer experience and delivering real-world solutions that resonate with end users.
Read on as De Marco describes how to overcome business operations challenges, such as customer retention and attrition.
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