As 2012 approaches, the world is watching as events unfold in Europe and the U.S. All industries are connected by the world of finance, and all people are affected by the global economic situation. What does shaky world finance mean for security? In this special feature, a&s discusses key market conditions, needs and drivers that are propelling industry movers and shakers to innovate, transform and adapt to a world of uncertainty and a possible second recession in just three years. The security markets in 2012 are being moved by two large trends: first, the need to protect in times of financial uncertainty; and second, a shifting focus from developed to emerging markets. For 2012, security industry players need to focus more on specific applications. Localized R&D and marketing may lead to more favorable results. IP will continue to boom, and channels will be affected, as more try to understand IP and join the movement. Industry players also need to look for the added value in their solutions — why should end users use your security offerings? This 2012 preview feature is composed of five parts. Our first article discusses two trends that are emerging from the global market. Our second article analyzes the security market by product segment. Our third article focuses on security from the manufacturing perspective. Part 4 includes tips, tricks and trends to watch for in 2012, from Johnson Controls, Schneider Electric and Siemens Building Technologies. Our final article contains insight from market researcher Memoori Business Intelligence. We hope after reading this special feature, you will be better prepared for the world of security in 2012.
As 2012 approaches, the world is watching as events unfold in Europe and the U.S. All industries are connected by the world of finance, and all people are affected by the global economic situation. What does shaky world finance mean for security? In this special feature, a&s discusses key market conditions, needs and drivers that are propelling industry movers and shakers to innovate, transform and adapt to a world of uncertainty and a possible second recession in just three years. The security markets in 2012 are being moved by two large trends: first, the need to protect in times of financial uncertainty; and second, a shifting focus from developed to emerging markets. For 2012, security industry players need to focus more on specific applications. Localized R&D and marketing may lead to more favorable results. IP will continue to boom, and channels will be affected, as more try to understand IP and join the movement. Industry players also need to look for the added value in their solutions — why should end users use your security offerings?
The biggest news item in recent months has been the turmoil within the E.U. Many concerns still remain about the economic situation and the future of Europe. In response to the eurozone crisis, there has been much talk about double-dip recessions and the long recovery ahead. Given the state of the global economy, the greater need to protect assets and the move toward emerging markets are two prevalent drivers behind the world of security.
Greater Perceived Need for Security
The security industry is known for its resilience during recessions because of continued security needs in times of financial uncertainty. During a recession, businesses, governments and households find it just as important, if not more important, to protect the assets that they already have. Following the financial turmoil in 2008, Navin Rajendra, Industry Analyst at Frost & Sullivan, noted, “During the last recession, many companies feared that many security projects would be delayed because of the financial crisis; however, these projects continued as planned. During such economic climates, we find that there is even more impetus for security projects globally.”
Protecting what you already have is important for two reasons in this financial climate. First, as the economy tightens, businesses will find it more difficult to earn money, making it all the more important to protect assets that are already in pocket. “While security pressures are greater now than ever before, resources continue to be limited. Improved security is no longer a want, but a mandated need,” said Balaji Srimoolanthan, Program Manager for Aerospace, Defense and Security, Frost & Sullivan. “Squeezing every bit of value out of your facility investments gets tougher by the day.”
Second, crime and events that endanger your assets are more likely to happen. “The higher concern with more unemployment makes retailers more concerned and gives rise to an increased need for security,” said Barry Shakespeare, MD of Norbain. “So, what you might call the bad times become, for different industries, the good times.”
There is evidence of increasing crime of late. KPMG, an audit, tax and advisory firm, conducts a biennial fraud and misconduct survey for Australia and New Zealand. In its 2010 report, following the global economic downturn, the company found that the total amount of money that had been lost due to fraud increased from US$301.1 million in 2008 to $345.4 million in 2010. A global retail theft barometer study also found that shrink was at its highest levels since 2007, up 6.6 percent from the previous year, and at a value of $119 billion worldwide. In addition to crime, the world has also seen an increase in social unrest. Demonstrations in Tunisia inspired political movements around the Arab world and the overthrowing of governments in Tunisia, Egypt and Libya. Though the causes behind these occurrences are complex, global economics and its role in unemployment rates and commodity prices have played a role. Similarly, the August riots that started in London and spread to other parts of the U.K. were affected by government spending cuts and youth unemployment.
Social unrest increases the perceived need for security. As Srimoolanthan put it, “Increasing numbers of terrorist threats, civil unrest and crime rates in Europe will lead to an increase in security spending. While the economic downturn has lead to cuts in defense spending, countries are seeing security investment as a way to proactively safeguard their nations and infrastructure against threats.”
Following the Arab Spring, Egypt has seen an increase of surveillance camera sales and installations, according to the Egyptian Gazette, a local newspaper. In London, burgeoning discussions about privacy rights have been quelled with greater acceptance of video surveillance since the riots. A survey by a member of the British Security Industry Association found that 76 percent of the individuals surveyed feel safer knowing that video surveillance is in operation in public areas, and 62 percent of the respondents suggested they would actually like to see more surveillance in their local area.
Though it is difficult to predict events of social unrest, it changes how security players prepare for the future. “We are seeing, as a result of these different types of incidents, that these agencies are being more proactive in planning and financing more projects, so that they have a higher level of readiness,” said Debjit Das, VP of Marketing, Verint Systems.
Preparing for these risks is part of what is going to drive the security markets forward in 2012. Both Frost & Sullivan and Memoori believe that the global security market will continue to grow over the next five years. Memoori indicates that the security markets are resilient and demand will edge forward at a CAGR of 3.7 percent over the next five-year period. Gary Wong, Senior Research Analyst at IMS Research, agreed, “Even if Greece (or any of the other weaker eurozone members) defaults, we believe that security (more accurately, spending on security) will continue to grow.”