Security Dealer & Integrator

JUL 2015

Find news and information for the executive corporate security director, CSO, facility manager and assets protection manager on issues of policy, products, incidents, risk management, threat assessments and preparedness.

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July 2015 / Security Dealer & Integrator 21 such as automotive. Information technology trends are the pri- mary enabler for the accelerating rate of physical security technol- ogy advancement, as well as for the advancement of technologies in other industries. Widely pervasive IT megatrends such as digitization, miniaturization and virtualization — combined with rapidly expanding capabilities in computing power and networking — are driving increased incorporation of information tech- nology into products across all industries. Tis pervasive utilization of computing has made algorithms the single most powerful instrument of change in today's world. Bremner: From the viewpoint of a systems integrator, techno- logical innovation appears to have slowed down in the security equip- ment markets. Another factor related to this is that the security industry's desire to guard against risk and protect assets is not evolv- ing rapidly in the physical security space — the risks they are facing and the assets they protect are rela- tively stable. What has been evolv- ing is the method of achieving this aim, which in the past has been in the form of technological innova- tion. Tis has allowed integrators to ofer an enticing value proposition for customer by ofering new, "best- of-breed" technology. As this com- petitive advantage lessens, integra- tors turn to diferent strategies such as reducing prices, building a strong brand or reputation, and building a channel strategy, such as focusing on certain vertical markets or geo- graphic regions. Ofen, this leads to consolidation as smaller integrators are bought by larger ones who are looking to improve their geographic or vertical market coverage. Mack: Te key factor is larger acquirers who are now selling full, integrated product solutions. Te key driver for consolidation among integrators is the ability for larger integrators to handle more sophis- ticated technology and to handle larger jobs across bigger geographies. Bozeman: Available cheap funding, strong fnancial incentives on the buy and sell side and a frag- mented industry that has growth potential all lead to an ideal market for consolidation. Sampson: On the manufactur- ing side, consolidation is driven by an attempt to get some economies of scale or to fll in holes in a product line that they might not have with- out having to go the R&D route. For some manufacturers in our industry, it is very important to have a com- plete ofering of products that inte- grate together, such has as cameras and access control systems, so they will look to complete their portfolio with that fully integrated ofering. On the integrator side, a lot of the consolidation is due to customer demand. It is important to have the resources to handle a regional or national account. Still, for some integrators, the drive for consolida- tion is fueled by a desire to build a business and then exit the market. How will vendor consolidation change the landscape of the security industry in the next 5-10 years; and did the recent Canon acquisitions change or influence your opinion? Cropley: Te supply base for video surveillance equipment remains highly fragmented. In 2014, the top 15 vendors accounted for just 52 percent of revenues. A large number of small vendors accounted for the rest. Only one vendor had a market share greater than 7 percent. Most people agree that there are too many vendors out there. Greater consolidation is coming, it is just a question of when. Te recent Canon acquisitions could speed up the Jon Cropley is a principal analyst for IHS Research in its video surveillance and security services group. Frank De Fina is senior director of strategic sales for Hikvision USA Inc. John E. Mack III is Executive Vice President, Co-Head of Investment Banking and Head of M&A at Imperial Capital. Skip Sampson, CPP is Vice President of Security-Net's Board of Directors and President of KST Security, Indianapolis, Ind. Paul Bremner is a senior analyst in the industrial & medical technology group at IHS Research. The Roundtable Panel Ray Bernard, PSP, CHS-III is the principal consultant for Ray Bernard Consulting Services (RBCS). Bill Bozeman, CPP is the President & CEO of PSA Security Network. Dr. Bob Banerjee is Senior Director of Training and Development for NICE Systems' Security Division.

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