Ray Bernard, a well-known security consultant and author, today released a security industry report titled, “The 21st Century Customer and the Security Industry.” Its analysis examines two monumental shifts that are taking place right now. It is also a wake-up call for manufacturers. Why? Because for the first time in modern history, sellers no longer dominate the seller/customer relationship. Power is permanently shifting from seller to customer. This powerful analysis also presents proof about the security industry’s position relative to technology trends, and how the coming wave of technology advancement could wipe out unprepared companies in the near future.
To learn more about the report and purchase a copy, visit: www.go-rbcs.com/report-2016.
SIW: Ray, you’ve been writing and giving valuable insights into the security industry, for manufacturer’s and end-users, for over 25 years, what compelled you to write this industry report now?
Bernard: The electronic security industry is being hit by two major shifts at once, and we’re just not prepared for them. One has to do with customers, and the other with technology. You can’t pick a worse combination in terms of impact – your customers and your products. But either one of them has the ability to devastate any single company. That has happened in other business sectors. The good news is this: There is one major technology trend that has the ability to increase product profitability for many products. That’s explained, too.
The coming technology challenge is seriously underestimated. It’s on the order of thinking a million dollars when you should be thinking a billion dollars. The coming impacts are explained and illustrated in detail.
One important aspect of the customer change is how customer expectations are set. Ten and 15 years ago the security industry set the expectations of its customers, and that has carried over to the present time in industry thinking. But not in customer thinking.
Technology is advancing so fast with both consumer and business products, and technology is everywhere today, so the expectations of customers are being set outside of the security industry. The technologies that customers interact with every day are setting their expectations.
Customer expectations will continue to climb. Think about it—the auto industry has given us self-parking cars and even self-driving cars now. But where is security’s self-parking car? We don’t have anything that innovative.
SIW: ISC West is upon us, how is this paper relevant to vendors appearing at ISC?
Bernard: It will definitely change the way companies listen to customers, and what they say in response at the booth. It will also change what they ask them about. As they walk the floor, they will be able to tell what new companies and products to take much more seriously, from a competitor perspective. We’ve given a big discount on the report before the show, to encourage vendors to get the report beforehand.
SIW: When I first spoke with you, I got a sense of urgency that you had about this report? Why am I sensing that?
Bernard: If the security industry doesn’t start producing more innovative products, companies from outside the industry will. That’s happened already. Most people don’t realize it, but many of today’s leading companies actually came from the IT sector or telecommunications. Axis Communications, Lenel Systems, Commend USA, Milestone, Brivo, EagleEye Networks—these companies are technology leaders, and all of them were IT companies or their founders were from IT. Unless industry companies make the changes outlined in the report, outside companies will come in again.
SIW: I didn’t realize that so many leading companies came out of the IT space. But what does that have to do with the urgency of the situation?
Bernard: Right now security industry companies are in the same position that Microsoft was in in 1995, when it wasn’t prepared for the Internet explosion. Believe it or not, they didn’t really expect it to amount to much—and by the way, that’s documented in the first edition of Bill Gates first book, “The Road Ahead”—and when they realized in early 1996 that the Internet had reached critical mass in terms of growth, Gates turned Microsoft into an Internet-focused company in a matter of only months. It was an all-out effort, a huge transformation. But they didn’t see the Internet explosion that was coming until it was almost upon them.
Security industry companies are in the same situation right now. They don’t see it coming. Industry companies will be scrambling to catch up, much like Microsoft did. The full story on this is in the report. But a main point is that by not using information technology to truly innovate, and by only incrementally making product improvements, that opens the door to outside innovation.
Here is an example of what that could mean for parts of the industry. Eight years ago the iPhone was brand new. It had no market share. Today the iPhone captures 94% of the profits in the smartphone market. Not 94% of the sales, but 94% of all smartphone profits. The other phone companies make a pittance on their phones compared to Apple. Apple came from outside the phone industry. Now all of their competitors—all of them—are making tiny profits or are losing money.
The urgency is that right now it’s a perfect storm situation for the security industry. Rapidly escalating customer expectations. Very low rate of innovation. Those are perfect market conditions for an outside company to come in with an innovation, and "pull an iPhone." Only it won’t take eight years, because the pace of new technology adoption is faster now than when the iPhone was first introduced.
SIW: The report has been described by veterans in the industry as "groundbreaking." Why are they describing it that way?
Bernard: This is the first time that anyone has provided hard evidence of what is about to happen to the security industry, and when. And it’s not something that they are expecting. When you look at the facts in the report, you can see the big change that is coming. All of what I’m saying today is documented in the report.
SIW: What do you hope manufacturers take away from reading this report?
Bernard: First of all, it will put the actual situation their companies are in, in complete focus. It will also enable them to see where they are in relation to technology trends, and whether important trends favor their products and business models—or undermine them.
Most important of all though, is the information about what today’s customers value most above all else. That’s changed from the 10 or 15 years ago. And it will affect how they interact with customers, and how they design their products. It’s still a secret that not many people are aware of.
