News
In praise of the security “middle class”

Who remembers Burns, Well Fargo, Amplitrol, Guarda, Guardian, Precision, Trans Alta, Henderson and a myriad of others? Some of these were national companies — national in that they had offices in more than one region of the country. Or they were prosperous local and/or regional players in the electronic security business.

Many of them were absorbed into one of the existing national companies such as ADT or Chubb. But as they were acquired, they left a vacuum that seldom was filled by a company with the same level of competencies.

As the industry moved into a more digital environment over the past couple of decades, there was a real transition in the marketplace. New alarm monitoring companies gave the independent contractor an avenue to offer competitive monitoring options to their clients, whether residential or commercial. Franchise opportunities also offered the smaller dealer an outlet to sell monitored services and benefit from the recurring revenue stream without the major and prohibitive investment in a monitoring station.

By and large, the industry is now dominated by either the national account or the independent monitoring station model. The days of the strong “middle class” have all but disappeared.

The same is true for the systems integrator. Arguably not to the same extent, but true nonetheless. There are fewer of the significant regional or national integrators providing competitive options to the current limited number of national players.

In both instances, alarm monitoring and systems integration, I cannot help but feel that the industry is losing an important market segment. Clearly I am not against the free market system and I recognize that most of the companies who no longer exist have had owners who made conscious decisions to be acquired. It was a legitimate “exit strategy.” But too often we have lost expertise and we have lost a critical element of the competitive fabric that keeps all members of the industry sharp and sensitive to the values that our clients need and expect.

In my experience this middle class of company combined the best of both worlds. They were large enough to offer the sophisticated solutions that the national accounts could provide. They were able to hire and keep technically capable staff in sales, installation and service. And they were respected enough to command the attention of major manufacturers and to demand pricing that was competitive with the largest purchasers.

And yet, they were small enough to be close to their clients and offer the “touch points” that made clients feel like they were still dealing with a local supplier.

---

Certainly, a middle class does exist. And for those companies in this category, I commend you for your success and for the important contribution you make to the industry. I believe that the real standards of excellence are found in your domain.

Smaller dealers may have technical competence in some areas but not in all. They have a small and loyal following and deliver that “feel good” level of personal service. But they remain too vulnerable. Skill sets can be lost with the departure of even one key person. And their ability to sustain economic downturns is very limited.

The majors, in contrast, have a broad base of technical competence and can sustain these downturns. But there is still a decided lack of response that generates that personal touch. Think of it as a circus. The independent is the carnival at your local mall. There are rides and games and candy floss. It is a reliable and inexpensive day. The national is your “Barnum and Bailey” with all the elephants, tigers and lions. Rides cost extra and so does the program.

But the “middle class” is your Cirque de Soleil. Flexible, inventive, creative and altogether a pleasure to watch. And because they are so good, price is never the issue.

By “middle class” I am defining a revenue model, not a competency model. Moving forward, I am convinced that this is the model that will best serve our clients and therefore our industry. There will always be a place for the smaller independent player. And nationals will still be the most appropriate way to serve the national client.

But unless the independent can grow towards the middle and unless the national can develop a better way to “think global but act local,” our middle class will continue to offer the best of two worlds.

I just wish there were more of them. Or I wish more of the others acted like them.

Just this man’s opinion.

Jim Brown is the principal of James B Brown Consulting Inc., a management consulting firm with a focus on the electronic security industry.