Becoming good at selling, installing, managing and operating Internet-based (IP) video surveillance solutions is a difficult yet strategic challenge for global security integrators. IP surveillance growth has been strong and will continue as such, taking market share from analog solutions. An approximate 15 to 20 percent share currently might grow into an 80 percent share of IP-installed solutions in the next five to six years, meaning substantial growth, depending of course upon changes in overall demand for surveillance products and the global economy.
Being able to compete for this growth poses, however, some significant challenges for the traditional security systems solutions provider. What you need to do is develop competence in both managing and excelling in IP-based surveillance technology.
The Lusax Security Informatics team from Lund University in Sweden recently concluded a two-year study, including both statistical surveys and case studies, of integrator strategies and competence in the IP area. We examined the critical factors behind integrators’ success or failure with regards to running an IP surveillance business. More than 1,700 responses from 31 countries around the globe were collected from the survey, which was split evenly between respondents from traditional security integrators and IP integrators.
The picture that emerges clearly indicates that the development of a strong IP surveillance business is, first of all, a learning process in two quite different steps, both of which in turn are driven by a set of different factors. The two steps or hurdles include:
The ticket hurdle - It is clear that it is important to be recognized as an IP-savvy integrator and in order to do that, companies need to recruit, educate, or in the extreme, acquire companies that have IP-savvy staff.
According to our research, the higher the general degree of education, the stronger the company is at IP surveillance. That knowledge includes explicit knowledge of technical conditions, including electronics, cabling, networking, systems management and so on. It is knowledge that is explicit in character and which can be learned by means of theory understanding, such as classroom training and book-reading, not necessarily practical experience (even though this will is also beneficial). This explicit technical competence however, is primarily a ticket to the dance-floor, a basic requirement and a hygiene factor, that will allow integrators to enter the market. But it doesn’t necessarily mean integrators who have climbed the ticket hurdle will actually succeed in the long run with their IP surveillance business. And we believe, it will not generate price premiums or competitive advantages in the long run, even if it might in the short term.
The experience hurdle - Experience of IP surveillance, for instance from different parts of the value chain, is also a success factor. In contrast to the explicit and technical knowledge discussed above, IP experience is implicit and tacit and based on practice, not classroom training or studies of theory. It includes all the competence and skills required from the point of approaching customers first time, throughout design, specification, installation and after sales activities such as service and systems management. Experience generates competence by means of the trial-error-correction-trial loop, and so requires reflective practice, where experimentation is supported (and first failures accepted). This implicit and personal knowledge is a logical extension to technical competence and a potential source of competitive advantage and price premiums in the future, if it is combined with technical competence.
These two steps are sequential, meaning the former generally is a precondition for the latter. The Lusax Study reveals that pure-play IP integrators are ahead in this race towards IP excellence, but that overcoming the first ticket hurdle most likely will open up for advantages to traditional security integrators as they already have established customer relations and stronger awareness about operative security issues.
This implies that the choice of strategy differs between security integrators and IP integrators. For the IP integrators, it is primarily the experience hurdle that must be managed to be recognized as a security-competent player. They need scale and recognition, improved operative security skills and customer relations with the security community. They need geographic footprint, and they need to continue partnering and collaborating with other players, something the IP and IT industry traditionally has been good at, at least in comparison to the traditional security industry. So, while the IP integrators have the necessary technical skills and competencies, and thus have the ticket to ride so to speak, we believe this is an easier-to-imitate asset, which will become a necessity, a hygiene factor in the future, which will only give limited avenues for competitive advantage and no greater opportunities for price premiums. IP players will have to focus on the experience hurdle—building relationships and know-how of the intricacies of the traditional security market--to get leverage from their technical skills. Furthermore, IP integrators will need to expand their networks at end-users, particularly so, the security director’s office.
Security has to adapt
Security integrators, on the other hand, face a different scenario. They have the operative experience of securing spaces, but urgently need to work on the technical ticket hurdle to increase their recognition in the marketplace as technically competent IP integrators. This includes education, training, recruitment or inter-firm collaborations and even mergers with competent integrators. Security integrators also need to relate to new manufacturers and to the IT directors and staff of the end-users.
Integrators need to become better at networking and partnering. Integrators are also wise to leverage their existing relations to security officers. However, what is probably more problematic is that security integrators will have to face periods of trial-and-error as they sell and implement IP solutions to end-users.
It is, we argue, inevitable to foresee a market characterized by experimentation, which, traditionally, is a quality that the security industry is not too keen to embrace, in fact the contrary. But as the experience hurdle can only be dealt with by means of, well, experience, smart integrators find ways to minimize the risks, for instance by driving the early IP implementations in end-user’s environments where the risks are lower. Trying is imperative. The security integrators who succeed with the infusion of technical knowledge and quickly accumulate experience will have great opportunities for price and volume premiums and sustained competitive advantages, as the combination of technical know-how and experience-based knowledge will be a scarce asset in the future.
Professor Thomas Kalling PhD is director of the LUSAX Security Informatics Project, a four-year global economic study on the impact of IP technology on the security industry underway by the Institute of Economic Research, School of Economics and Management at Lund University in Sweden.
Want IP Success? Check this List!
Here’s a checklist based on the knowledge of the Lund studies to help you master the IP surveillance business:
• Create consensus, buy-in and your own approach to IP internally, through experience, not through hype or theory.
• IP is a strategic choice to be fit with other strategic priorities: If? When and what pace? Are we going to be a fast follower or a first-mover?
• Understand the value for the customer and decide how to present the value proposition (e.g. ROI, TCO)
• Top & middle management must push strongly
• Address education strategies
• Experiment and prepare for occasional failure
• Target segments and customers and products and services where it is less risky to drive IP
• Set targets, e.g. “X% of annual EBIT,” “Y% growth of IP,” “outcompete rival Z”
• Put the objectives on the to-do list and on the management agenda: TALK about IP
• Allocate responsibility
• Monitor aggressively, reward and add incentives
• Incorporate with regular reporting