The post-conference euphoria stemming from big crowds and emerging technologies on display at last month’s ISC West event seem to contradict what most experts are predicting for overall economic growth in the United States this year.
Traversing the show floor, I was encouraged by vendors and solutions providers who said they could see some positive signs when it comes to them filling their future pipeline and the prospects of clients actually having capital budgets.
That Las Vegas has become the “coming out party” for many security vendors — where both new technologies and cutting-edge solutions are launched — was certainly evident here. There were a bevy of companies rolling out more software, incident-based solutions and mobile apps than ever.
While the kingdom of the security acronym grows each year, driving end-users to the world of PSIM and VMS, with stops along the SaaS and NFC highway, it leaves me wondering, is all this new technology doing nothing more than tempting potential buyers?
Having attended several end-user leadership summits since January, I hear the same unfortunate battle cry from most security practitioners — do more with less. And it doesn’t matter if it is more with fewer people or more with less stuff. End-user budget constraints that began to strangle the channel pipeline more than five years ago have not yet let up. Will the exuberance witnessed last month in Vegas among both vendor and buyer translate into an industry recovery?
Making Sense of the Middle Market
Probably not if you listen to the experts like Deloitte, which in its “Mid-market perspectives: 2013 report on America's economic engine," said that after sustained economic turmoil, mid-market executives have a stronger footing and are taking the necessary steps to make the middle-level businesses in the U.S. an engine for growth in the next year. However, while optimistic about their own growth, according to the survey’s findings, middle-market executives have lower expectations for U.S. economic growth as a whole.
The majority (57 percent) of respondents anticipate that over the next year the economy will grow less than two percent or not at all. Mid-market executives that responded to the survey believe government budget challenges (69 percent), rising health care costs (60 percent), and high tax rates (53 percent) are the greatest obstacles to U.S. economic growth.
Outside of the giants like Tyco and Honeywell, the security industry is a market that is comprised of the mid-sized companies reflected in the Deloitte survey — and we are seeing them take significant actions to grow revenue, boost productivity and increase competitiveness. When those companies put those actions into practice, you get the perceived technology boom that is created by encouraging business-to-business events like we just witnessed at ISC West. In turn, security executives in these mid-market companies — with interesting tech demos and new products fresh in their minds — are somewhat optimistic about their own abilities to increase capital expenditures, and thus fund technology upgrades and retrofit projects. But the hard truth is that more government regulations, compliance for compliance’s sake and anti-business tax initiatives are dousing the euphoric afterglow of events like ISC West.
Despite their desire to start spending, those security executives return from Vegas and realize the hard truth about mid-market budgets.
Pragmatism Still Reigns
The most distressing aspect of the Deloitte survey shows us that those companies are still operating pragmatically, with nearly half (43 percent) of mid-market executives deferring major investments due to the uncertain business climate. Those that are making investments are prioritizing according to their re-adjusted expectations. Although 46 percent of the executives said that technology investments rank high on their priority list, the fact that only two percent ranked hiring personnel among their capital investments plans for 2013 speaks to the utter disconnect when we look at market growth.
Simultaneous investment in people and products is essential for any economic engine to run at optimum speed. Until the scales get closer to balancing, I’m afraid many of you will just be window shopping.
If you have any comments for Steve Lasky regarding this or any other security industry-related issue, please e-mail him at [email protected].
