Uncertainty is the theme for 2012. a&s talks to researchers, solution providers, channel partners and consultants to find out what's next in the year to come.
Uncertainty is the refrain of 2012. While the 2008 financial crisis eliminated unfit players in physical security, a looming debt crisis slowed a “recession-proof” industry.
As security players hunker down for tough times, the lessons of 2008 apply to 2012. With impending austerity cutbacks across Europe, the immediate economic effects will be felt for at least a decade. However, the risk of increased crime will fuel security demand. “Businesses have limited budgets and we advise them on activities to achieve the best value for money and return on their investment,” said Jon Roadnight, Senior Director of Cornerstone Group, a UK consultancy. “The ROI and additional business benefit are things people look for more in tough times, as opposed to just achieving security.”
Manufacturers had to prove their solutions offered clear financial benefits during the recession, which will be the business case in 2012 as well. “We believe that having a compelling value proposition for our products, constantly driving efficiency improvements and targeting the early warning threat detection niche — rather the general market — is the key to our success in good and bad economic times,” said Kim Loy, VP of Remote Surveillance, Xtralis.
Although 2011 was the year of delays, other experts are more optimistic about 2012. “A theme I see carrying over in 2012 is doing more with less,” said Eduard Emde, 2012 President of ASIS International. “There are some differences, but in general security practitioners must do more at a higher level with less resources and money than in the past.”
Tyco Security Products exemplifies a company in flux; it was split from ADT services into different business units for better focus. It expects triple-digit growth in APAC for the next five years, but will take a few more years before it can match EMEA for sales, said David Grinstead, VP of Worldwide Sales.
While consolidation continues, the emphasis has changed from size to strategic value, Grinstead said.
With the recession still a fresh memory, some trimmed in-house costs such as operations and supply chain expenses. An efficient business model paid off for UK distributor Norbain, with plans to continue it into 2012. “If you follow industry standards of a lean organization, you make use of human and operational resources,” said Barry Shakespeare, MD. “A lot of our competitors chased very thin-margin business. Some competitors chased any and all business, regardless of the quality and customer.”
Given the gloomy economic climate, 2012 is expected to be challenging. “However, SimonsVoss Technologies is confident to achieve in 2012 — as in year 2008 — a business performance well above the industry average,” said Hans-Gernot Illig, CEO.
In the face of lean times, security providers are more focused on R&D than ever, making sure their product road map is tied to real customer needs, said Debjit Das, VP of Marketing, Verint Systems.
Beating the Market
For a lucky few, the recession had little effect. “Our sales in 2008 actually grew globally by about 25 percent, so we are fortunate to be growing rapidly and we have been able to put on a number of resources in our corporate head office and globally in the growing markets,” said Curtis Edgecombe, GM of Security, Gallagher Security (a Gallagher Group division). “We have found there is a need for innovation, particularly during a recession. It's important to differentiate business and products, and to grow your brand, to maintain loyalty from existing customers, and attract new customers to your offering.”
Megapixel video manufacturer Avigilon also did well despite the downturn; its revenue grew 26 times to US$5.2 million in 2008 and reached $32.3 million in 2010. The company went public in 2011. “When you're the best in uncertain times, people want to get more value for their money,” said Alexander Fernandes, President and CEO. It plans to use its funding from the stock offering to expand its sales team into emerging markets and double its R&D staff in the next six months.
Network video manufacturer Vivotek experienced growth from government initiatives in emerging markets and its comprehensive supply chain. “Our market share in China now stands at No. 4,” said William Ku, Brand Business Director.