It’s a great time to be in the physical security industry. That doesn’t mean there won’t be challenges to the traditional way of thinking in designing, installing and maintaining solutions. Success will follow for those who can adapt to the rapidly transforming technology landscape of security contracting.
Some of the presiding changes in the industry, including the move to the internet of things (IoT), cloud computing, cybersecurity and automation, will continue to test contractors and cause them to re-evaluate their businesses. Disruption is everywhere—from sales, design and distribution to monitoring and maintenance—and those who don’t keep up with or pursue new opportunities will find profitability dipping beyond what’s sustainable.
Eva Mach, president and CEO of Pro-Tec Design in Minnetonka, Minn., said the three categories of disruptive influences facing security integrators are technology, a shortage of skilled workers and lack of workforce development, and customer expectations influenced by the residential sector, do-it-yourself and mobile devices. Pro-Tec Design is a 100 percent employee-owned company. Mach said the loT will continue to have the biggest impact on security.
“It will bring new opportunities, such as how to make all the data collected usable through application of analytics,” she said. “It will increase competition as physical and logical security converges along with smart buildings and highways, and it will increase vulnerabilities that will challenge all manufacturers, integrators and end-users as never before. The need for greater collaboration between manufacturers, integrators and end-users will increase the importance of open-platform systems [being] able to combine and integrate best-of-breed technologies to serve our customers. At the same time, as convenience drives the consumer experience at home, it will increasingly influence the commercial space.”
Security contractors need to embrace the rapidly shifting security business model as it moves from hardware to solutions and services.
“We need to stop talking about the need to change the business model and actually do it,” Mach said. “This requires a commitment by owners and management, constant communication, education and training throughout our companies. Few integrators are in the position to finance flipping their entire business from a project-based to managed services model overnight. However, we need to commit, start and build.”
Technology shifts, service matters
Success in adaptation means a mindset change, but security will still lead the way, according to Kirk MacDowell, president of MacGuard Security Advisors Inc., Lake Oswego, Ore.
“One thing contractors don’t need to do is abandon security,” MacDowell said. “Many are so excited about the loT and advanced devices in residential, such as video doorbells, lights, connected locks, etc., that they start to abandon their security roots. Fact is, security is still the heartbeat, and contractors need to make sure it’s the driver.
“Success in terms of being a contractor is the ability to provide the best possible service to create the best possible relationship.” Bob Harris, Attrition Busters
“To be successful, contractors need to embrace technology that is happening today and make sure they have core competencies and educate, train and mentor their technicians through the process. Success is 100 percent about the employees because they are the ones who ultimately takes care of the customer,” he said.
However, traditional models have turned upside down. With hardware margins nose-diving, only large projects can remain profitable. That is unlikely to be sustainable, especially in an economic downturn. Amazon, Apple and Google have successfully entered the fray, increasing exposure while using their experience in consumer markets and deep pockets to fund research to develop products for commercial markets. Customers are tech-savvy, installing systems themselves and relying on self-monitoring. They don’t want contracts, or they want to be able to choose the type that fits. Distribution models are also being significantly disrupted. Why would a contractor buy from traditional suppliers when Amazon might have it for less?
According to Bob Harris, president of Attrition Busters, West Hills, Calif., ECs have an opportunity to grow their business and thrive with recurring monthly revenue, bundling services and becoming subject matter experts.
“2019 presents many opportunities as long as they get in the game to keep up with and identify new technologies that fit in the fabric of their business,” Harris said. “They need to be resourceful enough to step out of their traditional space—identifying new security, life safety and mobile technologies that fit right into what ECs are doing. There’s a new suite of offerings that will freshen and refresh their customer’s perception of doing business with them.”
Getting into the game means doing research to find technologies that will help customers address specific challenges.
“Everything is solution-based now,” Harris said. “When a customer has a problem, how can you help them fix it? Read up and talk to manufacturers specifically about what your clients are looking for. Ask your customers: ‘What are you looking for now that you don’t have that would make your life easier?’
“Become a disruptor. Investigate meaningful ways to stand apart from the competition. Pay attention to the mobile market and personal emergency response and GPS systems for the safety of lone workers, meter readers or postal employees. Entertain systems and services that generate revenue for you and keep your eyes on profits. Talk to manufacturers and tell them what you need and ask them to help you compete,” he said.
There are other criteria for contractors to address in this new environment. That includes agility, providing a positive customer experience and offering range of options so clients have choices.
“Contractors need to be customer-friendly instead of adversarial,” Harris said. “They need to offer many options and solutions and take time to make sure they understand them. Success in terms of being a contractor is the ability to provide the best possible service to create the best possible relationship. The first time someone asks them about their positive service, they will think about you and refer you. A lot of installing companies have taken their eye off the ball in differentiating themselves because they are focused on product and price.”
“Security is still the heartbeat, and contractors need to make sure it’s the driver.” Kirk MacDowell, MacGuard Security Advisors
Differentiation is critical and starts from within, according to MacDowell.
“Lock the door and get senior management together to talk about strategy,” he said. “Talk to someone who is a futurist. Develop a plan, and focus on core competencies. Bring in manufacturers and other partners, and discuss how they can help you achieve your goals. One of the biggest concerns right now is people chasing the shiny penny. People believe, if they bring in a new product and service, it will cure everything, but they need to make sure they have investigated the products and have the resources to install, service and maintain them. They need to look at false alarms, as that’s becoming a major issue we need to solve and will be where we all come together as an industry.”
For Pro-Tec Design, a successful company needs to be open to change, unafraid to innovate, and resilient enough to work through inevitable tough times.
“Companies need to create a culture of integrity, curiosity, lifelong learning and continuous improvement,” Mach said. “They need to invest in their people and communicate constantly. But most of all, they need to be customer-centric—the only thing that matters at the end of the day is uncovering and satisfying customer needs.”