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Security market can grow in tough economy

During a webinar March 12 entitled Impact of the Global Economy on the
Security Industry, Frost & Sullivan security analyst Dilip Sarangan
said the increase in infrastructure funding from government stimulus
plans will improve the outlook over the next few years, but there is
still work to be done to educate end users on the benefits of adopting
new technology.

“A lot of companies aren’t spending as much money as they were a year
ago, and it is due in part to the economy, but vendors also haven’t
been able to deliver on promises for some technologies,” says Sarangan.

With a decline in traditional analogue-based systems, growth in the
security industry right now is with network-based technology, which is
growing at about 15 to 20 per cent, whereas analogue technology is
either declining or having low growth rate of one to two per cent,
according to Sarangan.

“When we look at what the vendors are introducing it’s moving towards
megapixel technology and IP-based systems, so a lot of the future
technology is starting to be embraced,” he says.

The economy has had an adverse impact on demand for various
technologies such as analytics, which has seen a decline over the last
year, and there has been a delay in migration to networked-based access
control.
“Basically people are saying if the system works, don’t fix it,” says Sarangan

Security technology prices have come down over the last two years and
is now more affordable for end users and will continue to decline over
the next few years.

During the webcast, Sarangan asked the audience over the last year,
what video surveillance systems have generated the best response from
customers: Analogue systems, network-based systems or hybrid systems?
The No. 1 answer was hybrid systems.

“It’s a response I did expect and is in line with what I’m seeing,”
said Sarangan. “A lot of people have analogue systems installed and
they want to move into newer technology so hybrid makes the most sense
as far as end-users are concerned.”

Frost & Sullivan have studied the crossover from analogue to
network-based systems and a couple of years ago forecast that it might
be 2015 before the numbers reached 50 per cent where network based
system crossed over, but now it is expected it will be 2012.

“I believe we will see more crossover to network based systems where
more than 50 per cent of the systems will be network based,” he says.

“Manufacturers must create security systems that clearly demonstrate the cost benefits,” says Sarangan.
He added that using high definition cameras or mega-pixel cameras can
help obtain better images for evidence and doing this can reduce the
number of cameras required and cut capital expenditure for customers,
therefore making surveillance systems a better value to end users.

Sarangan also emphasized the importance of increasing the use of a
common platform to build products to ensure interoperability and
integration of various systems.

“We want to make sure these systems can be built on a platform so that
different products from different vendors can be integrated into a
solution to provide the best value to end users,” he says.

Network-based systems also traditionally have lower operating expenditure and this can help reduce the total cost of ownership.

“Companies should use case studies to show ROI compared to other
technologies so end users can see the benefit of using these
technologies,” he says. “The industry must educate channels and end
users on the pitfalls of systems. End users may not have the
capabilities to support certain systems.”

The other means to grow business in a tough economy is to identify opportunities and service offerings.
“A lot of end users are looking to cut costs and that can mean cutting
back on security guards on site by making use of technology,” says
Sarangan. “Companies may not be able to spend a lump sum for technology
but may be able to spend over time.”

In terms of targeting vertical markets that are growing, Frost &
Sullivan identified health care, critical infrastructure, education and
public surveillance as opportunities for future business.

“All the security money these days is going into public services, infrastructure, education or health care,” says Sarangan.