The new year is upon us. For electrical contractors that continue to add low-voltage security to their operations, there is a light shining brightly on what can really boost the overall future stability and profitability of a company, and that’s the category of video surveillance.
Deployments of high-definition and high-resolution internet protocol cameras continue at record pace. In public venues, cameras are being installed as part of upgrades and new construction projects. Recently, Chicago’s Soldier Field upgraded security to include high-resolution network cameras deployed on a fiber network. This included cameras with pan-tilt-zoom functionality to provide a more secure environment, according to Moira O’Connor, director of operations, Soldier Field.
This scenario is playing out across the country, especially as price points for superior cameras continue to drop. Also, the future deployment of unmanned drones is now part of the ongoing security and video surveillance conversation.
“Drones can respond to security alarms autonomously and use analytics to learn what a customer’s parking lot should look like at a certain time of day and take exception if there are more cars than expected, for example,” said Tim Wenzel, executive protection special projects head and residential security program manager, Facebook, Menlo Park, Calif.
In critical infrastructure applications, drones can be used for perimeter control and rapid response, said Jack Wu, cofounder and CEO of Nightingale Security, San Francisco.
“We are one step closer to being able to predict what’s going to happen and when with video analytics,” Wu said. “Drones, as a species of robot, is not just a data gatherer, but the execution of data. That’s the holy grail of robotics: you teach them how to fish and then they are able to go out and fish for you.”
While the real discussion and application of drones in the security space is still up to Federal Aviation Administration requirements and other pending compliance activity for deployment, there’s still plenty of action and potential for growth for ECs in more traditional video surveillance.
A recent survey conducted by Capital One, Chevy Chase, Md., for Honeywell, Morris Plains, N.J., found that 52 percent of security professionals see video surveillance as the technology trend that will have the greatest impact on their businesses in the coming year, a significant increase from 2015 (23 percent). Growth of interconnected devices and the Internet of Things was cited as the second most significant trend, according to John Robuck, Capital One’s managing director of the security finance team, which provides working capital and acquisition support to security companies.
“It’s been a transformative year for the security industry,” Robuck said. “The key drivers in this transformation were significant advances in technology and resulting business model changes. Video surveillance technology along with more interconnected devices are revolutionizing the industry and delivering more sophisticated data and analytics, allowing companies to update their security processes and refine business strategies.”
The security industry continues to grow and innovate, reaffirming a positive outlook for the sector.
“Security companies are embracing the fact that success is not just centered on products and hardware,” Robuck said. “They are providing ongoing solutions beneficial to their end-user customers. This creates recurring monthly revenue streams, and RMR is key. Valuations tend to be higher for customers with higher RMR.”
Robuck said companies continue to change their models from project-oriented solutions to managed services, which speaks to profitability.
“Companies providing more thoughtful approaches to the market are rewarded [with] better valuation and more interest from investors,” he said. “Growth can be gauged by historical experience of the company and projected, in the example of companies with managed ‘as a service’ approaches, which have shown stable valuations.”
Robuck said focusing on vertical market specialization is another factor that could help a company grow.
“[These companies] provide more customized solutions and have deeper relationships with customers and the ability to scale operations more easily,” he said.
Other positive growth factors: management teams oriented toward growth, liquidity and capital structure, account creation costs and how much it costs to create RMR, and low attrition (customer loss) rates.
With increasing market pressures, companies that want to maintain or exceed an edge need to stay close to customer needs and service, keeping the client front of mind, Robuck said.
“Continuing to lead with security technologies as a primary cost center is important from a long-term perspective,” he said. “Security and loss prevention solutions should be viewed as the bread and butter, with additional services only sweetening the pot.”