New Opportunities: Shifting Business Models and the Open Platform Community
The security industry is once again on the edge of significant market shifts. This is a familiar position for an industry that within just a few decades has already weathered substantial core technology and business moves. The growing-pain-laden steps from analog and closed circuit, to digital and network-based technology have moved the industry forward in countless ways. The migration has been remarkable and is continuing to accelerate.
The PSA Security Network is the world’s largest electronic security cooperative. Composed of progressive security integrators throughout North America, PSA takes great pride in being more than just a distribution partner. In addition to exceptional equipment selection, PSA offers industry-leading education and training as well as vetted solutions and services that can enhance any security company’s operations.
We help our security integrators excel in a market that changes quickly and to stay ahead of the game on emerging issues in the industry. Our mission is to empower our owners to become the most successful systems integrators in their markets. –Bill Bozeman, President and CEO of PSA Security Network.
And for more than 40 years the PSA Security Network has been doing just that; on top of the pulse of industry trends and opportunities, and working to keep their members informed, educated and successful.
The Integrated Platform
The security and video surveillance industry has reached a point where manufacturers and integrators can continue with traditional business models that focus solely on their own products and services, or move in a direction that emphasizes partnerships for the benefit of the customer.
Bozeman points out that there are multiple changes happening in the industry right now and integrators must adapt to survive. Some see the opportunity and are thriving, some understand and are tolerating the changes but not embracing them, and others are resisting change at every step. This goes for integrators worldwide, not just PSA integrators.
From the PSA point of view, integrators face two big changes: one of technology, and one of business.
In today’s environment, integrators must embrace the entire open platform and not focus on a single service or a single brand or product. To be successful, integrators must work with the best partners they can find — for hardware and software — and bring those pieces together with excellent service to meet the needs of the end-user. To me, that’s the very definition of what a security integrator does. – Bill Bozeman
The Open Business Model Opportunity
An open, partner-based ecosystem also presents a business model shift that integrators need to engage in. After many years of dealing with eroding, product-based margins, a business model based on long-term relationships can be beneficial for all involved.
The nature of the open, partner-based business model lends itself toward a recurring, more predictable cash flow model. Integrators no longer install a system and walk away, hoping to clear their expenses and make a profit on the hardware margins. Business today is best accomplished with open platform technology, where APIs, SDKs and people in an organization are dedicated to working with third parties to encourage innovative development and build up the community.
At this year’s PSA-TEC conference in May, the PSA Security Network Vendor Award and Customer Service Award Winners were announced. Vendor Award winners are selected by PSA owner companies based on rankings for pricing, shipping, support, lead generation, returns and product performance. PSA’s customer service team votes on the Customer Service Award winners based on professionalism, support and performance.
The PSA Star Award is granted to vendors who have demonstrated exceptional service, support and growth in the PSA community of HOW MANY? integrators. Milestone Systems was a recipient of a 2016 PSA Star Award. Bozeman explained that Milestone winning a Star Award this year was indicative of many points, including good customer service and integrators being pleased with their service and products.
Milestone has become a key player of ours. They are really doing a lot of things right. The whole open community approach is icing on the cake. Other companies may say similar things but, for many, it doesn’t go very deep. Milestone really means it. It will be fascinating to see where the company takes this vision. – Bill Bozeman
Open architecture solutions are a win-win for customers and integrators alike. They create excellent, long-term functionality and value for customers, and at the same time, integrators can feel confident about the solution they are providing without fear of future limitations. The community model is about putting the customers and partnerships first.
We’re encouraging our integrators to partner with software and hardware manufacturers and service partners who allow them the opportunity to become part of their customers’ lives. This works beautifully to establish a more predictable cash flow model for the business, instead of having to go out and get that big $800,000 project every quarter. We’re really preaching this change; the products and services that allow our integrators to develop this model are being promoted heavily by PSA. – Bill Bozeman
Market and customer requirements can change drastically over time. Evolving needs necessitate the flexibility for innovations that allow customers to add functionality and thereby maintain and extend their existing investment. When partners work together to create a comprehensive solution that meets customer needs, the result is a solution that can be expanded and upgraded as customer needs evolve over time, and as new functionality is developed and introduced.
The Next Big Things, Now
If integrators and manufacturers want to stay relevant, they must adapt good cyber security hygiene, and they must integrate into security robotics. These aren’t ‘I don’t think I want to do that’ topics, this is like changing the oil in your engine, you have to do it. It’s a pain, it costs money, but you have to do it. – Bill Bozeman
Good cyber security hygiene for the physical security community is critical. As it becomes increasingly common for video and security systems to integrate with or migrate onto enterprise networks, organizations expect system designers and managers to maintain policies and practices that are aligned with network security goals.
All systems contain vulnerabilities that can be exploited by determined hackers. Security flaws within IT-attached devices can be potential openings for launching attacks on other IT systems. It’s critical that security professionals know how to proactively mitigate this risk.
As integrators deploy products on company networks, they need to be well versed in the potential risks to themselves and to the end user. This is a very important challenge. We’re working with the SIA and other integrator groups to define best practices and educate our industry. Internally we have a very active cyber security committee. – Bill Bozeman
Adding complexity to cyber security, robotics present a huge challenge for the security and video surveillance industry moving forward. Robotics and drones are already here. But legislation, best practices and business opportunities are in early stages or have yet to be developed.
Video surveillance integrators will be impacted, access control integrators will be impacted, guard companies and corporate security directors will be impacted. These are big changes in our industry that people are scratching their heads over. PSA is creating a robotics committee and doing a lot of work and research to keep up. – Bill Bozeman
Open and integrated systems, cyber security, drones and robotics all present both challenges and opportunities for video security and surveillance professionals. These new technological opportunities offer the physical security integration community an opportunity to create a recurring business model, which is great news for the integrators who want to get their arms around it.
To my knowledge, there is no single provider on the planet who has all the answers. No one brand has the best cameras, the best VMS, the best cyber security, and so on. Companies need to grasp where the industry is going, find partners, and create a community to face the challenges together for the benefit of the customers, the industry and their own business. – Bill Bozeman
This article ran in Business Solutions magazine, October 19, 2016.