The arrival of truly integrated electronic security systems will benefit security managers in a manner far greater than they could ever before consider.
Canvass the majority of security managers regarding the major advantages they expect from the convergence of IT with security and most will indicate `more control', `efficiency savings' and `superior security'. Pertinently, as has been the case in the US market, new entrants and global standards are increasing demands on the industry's traditional service providers.
Electronic security - rich pickings for the IT industry
Much has been written about the new generation of integrated security products and the significant anticipated end-user benefits of these devices migrating onto the IT network. Indeed, a stroll around any recent electronic security trade show provides an indication of just how much security products have changed since the 1990s.
Despite the forward-thinking security manufacturers hastily dumping their closed systems and embracing IT protocols, an increasing number of today's dominant security manufacturers are from, or have their roots in, the global information technology industry. It is not hard to see why.
The IT industry is one of the most competitive industries in the world. Global standards mean global competition. Margins are low, qualified staff costly and product life cycles short. Hardware has become a commodity, subject to ferocious price competition. Software has often crippling development costs. There is a need for global scale or to be first to market, dominating a niche sector, to be confident of being around next year. Little wonder the arrival of the multibillion dollar electronic security industry, ripe for IP conversion, has attracted the interest of the biggest names in technology software and hardware, as well as many aggressive start-ups.
So what effect is all this rapid change in the - to use IT parlance - original equipment manufacturer (OEM) market having on the rest of the industry and, critically, on the readers of Hi-Tech Security Solutions. A simple examination of the evolution of the IT industry provides some of the answers.
When in Rome...
As a bi-product of the increasing domination of mainstream technology, hardware and software manufacturers are putting pressure on electronic security distribution channels to adhere to the standards provided by the highly efficient model of their parent IT industry.
The high development costs and short product life cycles within the IT industry have resulted in suppliers requiring huge volume sales to be confident of a return on their investment. Technology firms have grown to serve global markets, this needed their dependence on a network of intermediaries in each local sales territory to become efficient and competent, to sell, integrate and support their products. Such was the commitment required by both parties, particularly in costly staff and product training, that OEMs and their intermediaries sought formal mutually beneficial agreements to protect this investment. The 'approved reseller' was born. As with all channel members in a highly competitive market, resellers had to continually add value for their customers to survive, hence the term 'Value-Added Reseller' or VAR.
The role of the VAR is to typically perform high value services for customers, advising them on the best mix of products to meet their immediate needs while providing an understanding of the rapidly changing technology that could affect these decisions in the future.
These services often include project managing and the implementation of complex installations that require support and ongoing upgrades. Low value functions, such as running cable or mounting hardware are often outsourced to preserve channel efficiency. Usually the customer, such as an IT manager, is technologically aware, but has multiple responsibilities and limited time so actively seeks a genuine partnership arrangement.
The confidence to hand key elements of service provision to a third party is simplified by the manufacturer's stamp of approval of the VAR, which generally takes the form of the licence to sell and support the manufacturer's product within a geographical region.
The functionality of technology products and their use across an entire organisation utilising the IT network means one centralised solution could now support every user. In large organisations, the CIO or IT director often selects products from a single (preferred) product vendor for universal application and only then would approved resellers be chosen for each site or region.
This selection process is no longer based on the product selected by the security integrator but, more importantly, on the range and quality of their services. If one accepts this principle, the electronic security industry will increasingly become a subset of the IT market, initially at the corporate and public sector level. It is then essential that security intermediaries need to expand their core competencies beyond the traditional role of designing, installing and maintaining a security system (if they are to fulfil the role of a VAR). This is made even more likely when examining the changes underway on the 'demand' side of the equation. These concerns are causing security managers to re-evaluate what is considered acceptable value from their suppliers.
The drive for efficiency
Organisations have been under increasing pressure to reduce overhead costs. Despite the increasing emphasis on the protection of workers and company data, staff functions such as the provision of security, are non-revenue generating activities and therefore under constant budgetary pressure. Demands are increasing on security managers who are now expected to broaden their roles within an organisation to include the managing of additional facilities provision, this often includes the performing of a consulting role across the entire organisation. IT managers are progressively more involved in the approval of security systems and in many cases electronic security projects are now funded from within the larger IT budget.
Purchasing procedures have also undergone radical change in the corporate and public sector. Electronic security purchases by default now require the input of those responsible for the network it now shares. In addition, procurement departments apply their own criteria to vendor selection, often introducing mechanisms such as e-bidding to drive costs down.
Shifting security emphasis
In most instances, the majority of organisations have had tried and tested physical security systems in place for some time. The emphasis has now shifted to include both the protection of information assets, often described as 'logical security' as well as a drive towards the 'safer building'. The convergence of IT and buildings systems has a tremendous impact on the ability to create safer buildings. The inter-operability of devices and networks ensures critical realtime data can be presented cohesively and then instantly acted upon.
As the trend continues towards this new security business model, the pressure will be increased on security managers to apply their risk assessment and security planning expertise across the entire organisation, this requires them to become rapidly conversant with all systems that input to that model.
From control room to the boardroom
These changes mean security managers find themselves thrust into the spotlight assuming the role of high profile project sponsors, negotiating consensus from colleagues who have a limited understanding of physical security. Their proposed projects are being evaluated against competing non-security projects for funding and must demonstrate a strong return on investment (ROI).
Corporate security managers now expect real value in terms of business case drivers to be delivered in the investment argument. It is therefore imperative these providers have a comprehensive knowledge of networked solutions and their impact on the corporate communications infrastructure.
While IT resellers are accustomed to this expectation and typically present their proposals as business cases, security managers are often faced with the need to demystify or recompose proposals from even the largest traditional security providers - which are littered with jargon unknown outside the industry - before this can be reviewed by IT and other business professionals. In many instances, the chief security officer, or CSO, is becoming the latest addition to boardrooms, and this being the case, how long can security managers continue with this time-consuming exercise?
Even without huge technological advances, the security manager's requirements are changing and with these, the demands being placed on their suppliers. Are traditional security installers ready and able to meet them?
A structural time bomb
"As an IT-centric manufacturer whose chosen field of endeavour is security management solutions, we have seen a slow adoption of new converged technology by the traditional security channel," comments Phil Mailes, UK director of US firm Lenel Systems. "Most security companies initially ignored the warnings that the industry was changing and we are now seeing a scramble to embrace the IP revolution. It has been a case of catch-up or lose your client base."
Many of the leading incumbent security companies continue to focus their management and resources on making their existing operations more efficient or are busy digesting their latest acquisition. Mailes adds, "As reluctant and late adopters, the traditional security channel has, in my view, missed the opportunity of integrating certified database administrators and network specialists into the fabric of the company before these skills were required at the sharp end which is on the customer's site."
At the other end of the scale, local security companies often run as 'lifestyle' businesses built on recurring service and monitoring revenues, having either minimal resources or a reluctance to reinvent themselves.
The rise of the VAR
Given this background of rapid product innovation, a rise in customer expectations and an abject failure by incumbent installers to embrace this technology, it is no surprise to see the arrival of electronic security's version of the VAR - the security integrator. "It is refreshing to see integrators take on the role of evangelists of the new converged technology," says Mailes, "they have been a key element of Lenel's success in the US." Security VARs have indeed been booming in the US, with average growth rates of the top integrators outstripping traditional dealers by a factor of four since 2001 alone.
Rather than supporting vast product ranges, security integrators align themselves with a few strategic suppliers, investing heavily in staff training and developing networks of partnerships to deliver the optimum combination of products and services required by each customer, just like their peers in the IT industry.
Household names such as Cisco have benefited from this new approach and have embraced companies who display these new skills and form partnerships with IT networking specialists. These talents are becoming a pre-requisite to deliver services upon which the new security business model is based. Free of the burden of huge field forces with progressively more unsuitable skills as well as legacy products and software to support, security integrators can focus on a single-minded customer proposition: peace of mind.
By providing partnered solutions, such as project management of an entire roll-out and at the same time reassuring sceptical IT specialists with their understanding of technology, integrators have found resonance with the new expectations of customers. Companies such as Unisys are leaders in their field and demand a lot more than just an installation service. Not only best in class delivery of today's security solutions, but also a partner who is capable of raising their game when challenged with new ideas, business models and opportunities.
Like their counterparts in the IT industry, integrators' profits are generated through solution provision, rather than by simply applying margins to the sale of products or an engineer's hourly rate on site. Despite supporting higher per capita staff costs, integrators are able to present compelling business cases by offsetting these costs against the significant efficiency savings that the new technology will bring to customers.
Payback time - at last
The arrival of new out-of-industry entrants into any market, bringing with them enhanced competition and different ways of defining value, can only be good news for the customer. Couple that with products capable of delivering benefits unthinkable a few years ago at the same time as the emergence of security as a board-level issue and Hi-Tech Security Solutions' readers are surely set at last to experience what their colleagues in the IT department have long taken for granted.
Mike Smiles is the managing director of Masc Solutions; he can be contacted on 011 609 1775 or e-mail [email protected]
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