One trend that today's economic climate is significantly influencing is the nature of analog to IP migration. An age-old debate in the industry, much has been written over the years about how quickly and completely a transition from analog-based to IP-based security solutions would take place. It seems the European economy is writing us all a new chapter.
One trend that today's economic climate is significantly influencing is the nature of analog to IP migration. An age-old debate in the industry, much has been written over the years about how quickly and completely a transition from analog-based to IP-based security solutions would take place. It seems the European economy is writing us all a new chapter.
At Honeywell, over the last few years, we have started to observe a significant market shift in the migration. Specifically, we have seen the economy creating a divergence in IP adoption between the mid-to-lower end of the market and the top end. On the one hand, a recessionary environment is leading to a slower uptake of IP as businesses try to “make do,” for the most part avoiding any noncritical capital expenditure. On the other, larger businesses — many of whom embraced IP prior to the economic downturn — are seeking to optimize their initial investments with highest specs, highest performing IP system at a premium price. So, what is the industry impact, and how can installers respond?
Mid-to-Low
In a period of belt tightening, it is understandable that security managers would encounter resistance from procurement or finance sign-off on a brand new IP-based solution, particularly if your existing one still works. In this context, the focus of the business is less on future-proofing for the long term and more on making cost-based decisions in the short term. With this in mind, we are still seeing strong demand for analog products and systems, a trend that shows a still significant financial opportunity for the industry.
Other than opportunities for manufacturers and installers, this trend also has other implications. First, since analog installation requires less training, it could tempt installers to step back from investing as much in the education of their staff. Although manufacturers like Honeywell offer free training to their partners, it is typically a lack of IP skills that drives installers to invest in paid training; and, in a climate where analog is “good enough,” that need is less pressing. This is a threat that installers should be wise to.
Top End
In this bracket, we are increasingly seeing an “in for a penny, in for a pound” mentality. A fully integrated IP system allows for easy management, maintenance and control of multifaceted solutions across an organization in a cost-effective way. In addition, for IP-ready organizations, failure to embrace the latest is often viewed as a waste of the system's potential.
In the utilities sector for example, end users are keen to utilize IP networks in a much broader way in order to bring process efficiencies to managing multiple large sites over wide areas. IP networks allow utilities to monitor an unmanned site, analyze the activity taking place on the ground in real time before dispatching an engineer, cutting down on wasted time and expenses. In the retail sector, the higher-end shops are using IP networks to monitor footfall in certain areas of the store to make informed decisions on layout and stock. This requires upfront investment in sophisticated products, but delivers measurable ROI.
Given the prevailing pessimism regarding the UK economy, it represents an opportunity for installers to sell premium, integrated solutions to customers at the top end of the market. It will also boost the uptake of IP-based equipment and software that can ensure that the full power of the system is unlocked for the customer's safety, security and ease of use.
Industry Response
Returning to the market divergence, how can installers respond to these two interrelated trends, which represent both a challenge and an opportunity? First, it is essential that installers have the ability to understand and respond in an agile way to a customer's financial situation. It is about demonstrating flexibility and the willingness to help an end user implement an analog upgrade to keep immediate costs down, through to a cutting-edge IP system that delivers immediate ROI depending on their needs.
Relationships with trusted manufacturers that can deliver a wide range of products, solutions, services and skill sets at different price points are essential. Installers must not be tempted to underinvest in training. At the top end of the market in particular, the bigger and more complex the integrations, the greater the likelihood that IT specialists will take business away from traditional installers.