The security industry is changing at a faster pace than most dealers/integrators and end users can keep up with. The growth of alliances and partnerships between manufacturers is one answer to meeting market needs. This month’s discussion focuses on the convergence in partnerships and alliances that are resulting from this new competitive arena.
Jim Gompers: What criteria are manufacturers using to make partnership/alliance decisions? What is dealer/integrator perspective on such partnerships?
Paul Bodell, Vice President Sales and Marketing IQinVision: Manufacturers should look for partners that bring the greatest value to the customer. To do this, manufacturers have to clearly understand market demands, their own capabilities and the impact of technology. In emerging markets there is no proven formula as yet, so successful partnerships can occur virtually anywhere. Similarly, dealer/integrators should select manufacturers that can add value and ultimately make their customers happy.
Gary E. Venable, CEO/Founder, All Systems Designed Solutions, Inc.: I think most manufacturers would prefer their long-term channel (the integrator) to grow and fulfill the market needs, but they have and will continue to develop other channels. As an integrator, I wish the manufacturer would be totally loyal to the integrator channel.
Mark Peterson, Director of HID Corp. “Intelligent Technology Design Resource” (iTDR) Group: Partnerships with multiple product manufacturers can provide a suite of solutions from which to choose, allowing a customized solution tailored to meet unique needs. Obviously, a key element of these types of partnerships is product compatibility that allows products to work effectively together to provide a collaborative solution. In the future, compatibility via compliance with established standards will be paramount.
Partnerships and alliances with companies that provide installation, integration, maintenance and value-add services are necessary to take products to market.
Gompers: Are the security dealers ready for converged solutions? What resources are needed to be considered a “true” integrator? Are security dealer/integrators partnering with VARs (value added resellers) to accomplish this task?
Venable (All Systems): All Systems is ready. The integrators are ready and have been building the resources needed. We have been developing software and network skills into our technical team for several years. Many traditional security technicians are very capable of learning and applying network and software based solutions. PSA is working to develop industry standard training to meet the market expectation. PSA has been a great source of product and system training and now has a very aggressive plan to meet the challenges of a converging industry.
Peterson (HID): Security dealers as a whole have been somewhat reactionary to the trend toward converged solutions. As more and more of the products they represent become IP-enabled, and their customers desire to deploy across the organization’s network, security dealers have had to out of necessity, acquire some new level of expertise.
Such preparation and re-tooling of internal skill sets requires a financial investment in training and personnel. How much of an investment and how fast to make the investment, depends on the business’s profile and market segment being served. The trend toward convergence of physical security onto the IT network is in its early stages and not all system solutions require this new skill set.
Integration now includes bringing together non-security subsystems such as: time and attendance, human resources, environmental controls, voice communications, etc. Security management systems are evolving into information management systems; with a functional security component. Expanded expertise is necessary to provide a comprehensive solution. These expertise can be deployed within the integrator’s organization or can be provided through partnership with other dealer/integrators or VARs that provide the necessary complimentary expertise.
Shelly Binder, Vice President, Tech Systems Inc.: Security dealers are more than ready for alliances and partnerships that provide interfaced or integrated solutions because they create an opportunity to sell more sophisticated systems to existing and new clients. “True” integrators are those that can integrate multiple systems into one GUI, including such things as video, access, intrusion, point of sale, data storage and retrieval, and other related systems, sometimes requiring the need for custom programming or configuration.
Though Tech Systems partners with many types of companies in order to deliver the desired solutions to our clients, we haven’t said, “Our goal is to partner with VAR’s in order to accomplish true integration and focus on convergence.” Most integrators will do so as the need arises or when opportunities for new business are presented by VAR’s or by clients wishing to utilize the services of VAR’s. In other words, we are more reactive to the trend than proactive.
Bodell (IQinVision): Some security dealers are ready for converged solutions; in fact, many are driving these advanced solutions. A “true” integrator is someone who provides a one-stop shop for the end users and can solve customers’ problems on their own using their own employees or with reliable sub-contractors.
Gompers: What is needed for traditional dealers to achieve continued business success?
Binder (Tech Systems): The more sophisticated software-based security solutions require a much higher level of technical expertise than before. We are seeing many more certification requirements from the manufacturers before they will sell their higher end product lines. These certifications will not be offered to every security dealer, nor will every security dealer possess the resources and staff to obtain them. Having said that, there will always be a place for traditional dealers. Not every facility requires a state-of-the-art, integrated, high-end solution. Security dealers offer value in that they understand how to analyze risk, design a security system, position cameras, install door hardware, pull cable and handle other security-specific tasks.
Peterson (HID): Traditionally, the line between security dealer and integrator has been blurred as the terms have been used loosely. There is a market need for the less sophisticated security solution, and probably will be for the foreseeable future. However, this does not mean that security dealers will not need some level of IT-centric expertise. Even home burglary equipment is now often deployed to report to central stations via the internet, or the expanded use of digital video verification for mitigation against false alarms, require some level of network knowledge to configure and provision the equipment. Security dealers will have to acquire the necessary level of expertise to survive as more IT-centric products are introduced into their product mix.
Gompers: With all the new vendors coming into the security market causing confusion amongst the dealer/integrators, what should they look for and look out for?
Bodell (IQinVision): They should look for companies that develop their own products, not simply private label other products. The products should be highly differentiated so they are not stuck fighting a commodity war. They should also look for companies that have responsive, regional customer support and those companies that come out with new products regularly and have a management team that understands the market. They should also be able to easily reach a senior manager of the company.
That’s the positive side, there are also warning signs to watch out for: Beware of web sites that promise the world; beware of companies where you don’t get a response within 24 hours; beware of companies that sell products based on the lowest price in the market and beware of any company that does not own its intellectual property.
Binder (Tech Systems): If nothing else, these vendors offer a glimpse of the near future. We see a lot of very cool technologies, but the real world application for the technology isn’t always apparent. The most important question often is, “What problem does it solve?” If the answer is that it is a true, realistic solution, and it fits nicely within one or more of our vertical markets, we look further. If not, we wait.
With respect to the new technologies, it is a risk with small companies offering something new. Reasons include the fact that these companies are often under funded, which means they may go as quickly as they came, or they may be acquired, which can sometimes leave an integrator without an ongoing support channel. Nothing is worse than selling a client a new technology and then not being able to support it. Generally speaking, if the new technology has merit, established manufacturers tend to bring their own version to market shortly after the initial offering, so it sometimes pays to wait for the more stable scenario.
Peterson (HID): Confusion caused by new vendors is not new to the security industry. Past examples include: PC-based access control, integration of ID management with access control; RFID asset tracking; video integration with access control; and emergence of digital video recording. Introduction of products based on new technologies initially causes some level of confusion while the market works to find the salient issues that allow effective evaluation. The challenge presented is to understand the technology that allows effective product evaluation.
Gompers: Does ROI or cost justification play a significant role in the sales and solutions process? Is ROI or cost justification for the security industry needed? What can we learn from the IT space or building control space?
Binder (Tech Systems): ROI is the business hot button these days, but it doesn’t appear to be promoted in the security industry nearly as much as in other markets. Most salespeople I know, on both the manufacturer and the integration side, seem to be a bit unclear about how to present a compelling ROI case during the sales process.
Certainly it is always a plus to be able to convince a potential client that their purchase will be an investment that will pay for itself over time. However, the cost-benefit analysis is a bit more arbitrary in security, where “benefits” may or may not be measurable, depending on the application. IT and facilities management can more easily measure benefits in lower staff costs, utilities savings, etc. However, it wasn’t so long ago that these spaces were also viewed as cost centers only, so the security space can dig a little deeper to find convincing ways of making the ROI case. In fact, it will probably become a necessity in the very near future.
Peterson (HID): Cost justification and calculating return on investment have always been effective sales tools. Traditionally, physical security system ROI was somewhat hard to determine; unless, of course, calculating for retail or gaming industries where shrinkage and/or loss can be easily measured. Security in itself has been somewhat like selling insurance; with the level of loss mitigation somewhat of an educated guess. Convergence of physical security onto the IT network however, provides a new opportunity to show a quantifiable ROI.
Today’s IT departments touch almost every aspect of an organization’s business in some form or another. IT departments are often tasked with accomplishing mission critical goals with minimum budget and resources. So providing cost justification is business as usual within the IT industry. Some fundamental (an obvious) cost savings exist where the network infrastructure can be used for security equipment communications, but there are other significant “total cost of ownership” savings that could be realized through convergence onto the organization’s network. IT organizations can leverage their enterprise software licenses, and corporate hardware purchases for security applications; saving initial investment dollars. Ongoing service and support may provide a savings as a level of system support can be handled internally in lieu of outsourcing service and support. Data from security applications may be used for other non-security business uses to monitor employee production, resource allocation and improve existing processes. At which point, security systems, and more importantly the data they provide, become more than simply risk/loss mitigation tools and provide a tangible business benefit; and perhaps even a profit center.
Standards-based, IT-centric security products will create opportunity to integrate subsystems to provide comprehensive solutions easier than ever before. Limitations of integrating traditional stovepipe system configurations increase the effort necessary to make subsystems work together. Proprietary transport/communications protocols and data formats require a considerable amount of customization effort to make one product or system communicate effectively with another. Moving data distribution towards the network edge enables data to be more easily shared across subsystem solutions; thus reducing cost associated with integration.
Bodell (IQinVision): While it may be called something else or may not be specifically mentioned in a process, just like every other industry ROI drives the security industry too. The security industry protects personnel and property and there are many ways to do this. Ultimately the solutions that accomplish this in the most effective manner with the best return on investment, win.
Gompers: How are the manufacturer alliances and partnerships changing their approach to the dealer/integrator market?
Venable (All Systems): We see manufacturers consolidating and making alliances that allow them to grow at rates greater than the current security dealer/integrator. Ultimately, if we do not adjust our strategy, others will have our customers.
Binder (Tech Systems): I haven’t seen too many vendors reaching outside the traditional security industry to create partnerships, but I have seen activity within the industry. Surprisingly, I don’t see a lot of change in the way manufacturers with alliances are approaching the integrators. In fact, it doesn’t seem that promoting such alliances is the priority I would have expected. I usually don’t find out about partnerships/interfaces unless I ask—vendors don’t come into our office touting their latest partnership. My sense of it is that some vendors, even the independents, are working toward offering more of their own pieces of integrated total solutions (video, access, intrusion) so perhaps they are less focused on promoting alliances with others.
It seems that for many, the alliances may be a “stop gap” until they can introduce their own technologies or complete integrations with products under their own company umbrella. Large conglomerates with huge R&D staffs and other divisions (such as consumer electronics) would appear to have the advantage due to their ability to utilize technology developed for other uses.
Bodell (IQinVision): Many of the newer, leading edge security companies recognize that their manufacturing partners are both Security and-IT based companies with different dealer/integrator networks. This will likely require different go-to-market strategies, marketing, services and products for success in both market sectors. While the two markets are slowly converging, they are still different. Manufacturers need to offer unique value propositions to both channels.
Gompers: Is the security market being educated as a whole as to what convergence is and what it brings to the end user’s operation?
Bodell (IQinVision): The successful companies of tomorrow are educating themselves on the benefits of convergence and the visionaries in the industry see convergence for what it is: opportunity. Convergence means new products, new services, new technologies, new manufacturers and new partnerships. Forward thinking “security” integrators will no longer be pigeon-holed into Fire/Burglar Alarm/Access/CCTV; instead, they will offer a more diverse and comprehensive suite of products and services. This will create more opportunities for growth and further drive consolidation and change.
Binder (Tech Systems): In the past 3-4 years, it seems like the security industry has been flooded with information about “convergence.” If you ask someone, they will tell you they know what convergence is, though it seems to mean different things to different people. Video manufacturers are, in my opinion, definitely taking the lead with networkable and IP-based product lines, and more software-centric solutions than ever before.
On the other hand, most integrators seem to be embracing convergence only when the need arises, such as when large project opportunities dictate the need for such expertise. Those who rely heavily on existing clients with existing (expanding) systems have perhaps not yet seen the need to jump on the convergence bandwagon as much as those who are playing the bid market and seeing the demand for a great deal of new technology.
Gompers: With respect to the alliances and partnerships you are observing, are we heading in the right direction in the physical security industry? What is on the horizon in this arena?
Binder (Tech Systems): I think security is on the right track, in spite of the predictions about other industries taking over and about consolidation squeezing out the independents. With respect to the integrator world, it will be important for integrators to continue to find ways to offer value, such as in being technically competent and certified, selling ROI, learning to communicate effectively with the decision-makers at the client site, and recognizing that it is difficult to be an expert at everything. That’s where the value of partnerships comes in—organizations that perhaps have been islands unto themselves in the past may be forced to ally themselves with firms they never would have even thought about a few years ago.
The key to a successful partnership is recognizing the value of your own expertise, not feeling threatened that someone else has different competencies, and playing off the strengths of both. On the manufacturer side, I don’t think partnerships and alliances are necessarily the wave of the future. However, we will continue to see manufacturers acquiring other companies and technologies that will allow them to round out their own product lines.
Bodell (IQinVision): We are most definitely heading in the right direction. Virtually every device in the security industry is either IP network ready or will be soon. The old school proprietary attitude and practices that effectively locked customers into a solution have been replaced with a customer-centric approach of solving problems with non-traditional products and companies. This new way of doing business creates tremendous choice and value for the end user.
Venable (All Systems): We are seeing larger organizations like IBM and defense contractors merging security into their services and systems. In order for the independent integrators to grow and prosper I believe we have to have a strategy of keeping the clients we have plus adapting to the market direction for new clients. It is not about us or how we want the world to be, but about our clients, their needs and expectations, and how we respond to meet those expectations and needs.
As you can see, the industry as a whole feels the market is moving quickly and vendors seem to be heading in the right direction. New alliances and partnerships are driving this whole convergence direction in security. At the same time dealer/integrators are gaining the resources and aligning themselves to succeed in this ever changing security world. It is a tremendous opportunity for bringing better security solutions to the end users and real value to their businesses. Anyone not currently looking at the new and innovative solutions that these new alliances and partnership are bringing to the security market will be left behind.
James Gompers is founder and President/CEO of Gompers, Inc., which is made up of Gompers Technologies Design Group (GTD Group), Gompers Technologies Testing and Research Group (GTTR Group) and the Gompers Alliance. The Gompers Alliance pools talent from top consulting firms in the security, communications and data industries to provide total solution plans and services to clients in North America and around the world. Gompers has more than 20 years of experience in the security industry. E-mail questions or comments to him at firstname.lastname@example.org.