For many IT players the issues described above were learned the hard way. Given the sheer size advantage of some of the IT giants, one might wonder why they haven’t simply solved these problems by acquiring leading security integrators to gain quick access to specialized security skills and end-customers. But this would be both costly and risky, as fragmentation makes it difficult to gain a footprint in the market through acquisitions. In view of this, IT players cannot be expected to go to any lengths to penetrate the security market, and some of them may simply have decided that the market is too small and unattractive to be worth pursuing--at least for now.
This does not mean that incumbent security integrators can simply sit back and declare victory. Far from it. Everyone knows and agrees that integrated systems based on IT and IP is the future of the security industry. While the IT players may be licking their wounds at the moment, they can be expected to launch a second wave anytime soon. IT companies are well accustomed to rapid change and have adapted their organizations and employees to quick retraining. The IT side made a mistake in believing that electronic security would simply become a subset of the IT industry overnight. As that didn’t happen, IT entrants of the second wave have realized they have to understand the nuts and bolts of the security industry in order to formulate winning entry strategies.
At the lower-end of the market, things are already stirring in this direction. Smaller security installers and VARs are increasingly seeing local IT and network companies taking over parts of their foreseeable market. These smaller security incumbents, who cannot build up the customer lock-in and advanced integration expertise already held by the larger integrators will find it difficult to compete against nimble and fast moving IT competitors offering sophisticated solutions at reasonable price points.
Compared to the smaller installers, the larger security integrators are in a better position to defend their positions. The slow and incremental pace of change in the industry has already allowed them valuable time to bridge the knowledge gap to the IT side. However, in the face of a second wave of convergence, security integrators will need to focus harder and identify and capitalize on their most important advantages over the IT competition. In particular, security integrators will need to leverage three distinct strengths:
1.) Security integrators have a major competitive advantage in the strong, trust-based customer relations they have been built up over decades. These customer relations translate into hard-earned knowledge of the particular requirements of different vertical markets or geographical locations or conditions.
2.) Security integrators are today in a unique position to grasp both the ‘old’ and ‘new’ ways of the security industry. Security integrators understand (and have in many cases installed) the legacy systems that many customers will continue to use for years yet. Provided that they manage to ramp up their IT and IP capabilities, they should be in an excellent position to help legacy customers migrate to the latest digital technologies, while providing backwards compatibility and continued maintenance of legacy systems for as long as these remain operational.
3.) Traditional security integrators are uniquely positioned to provide a total, one-stop security solution. While IT and IP integrators have seized eagerly on network surveillance and emerging technology such as video analytics, they are less likely to start addressing legacy systems or more traditional aspects of security, such as fire and intrusion detection.
Although the challenges posed by convergence are many, incumbent security integrators and VARs who get it right have everything to gain. Although they might not be able to acquire the leading-edge capabilities of some of their IT competitors, the integrator’s firm grasp of all aspects of traditional security, their unique ability to integrate old with new technology, and perhaps most importantly, their knowledge of the market and its end-users, will give them a unique advantage in becoming successful in the converged market.
Benjamin Weaver is a Ph.D candidate, M.Sc., at the Institute of Economic Research, School of Economics and Management at Lund University in Sweden.