Content based on presentation by Israel Gogol, Group Manager (Media and Overseas Sales), asmag.com, for a recent a&s Adria webinar.
The path to the next normal is uncertain and will for sure be different for each country, sector and company. I would like to point to a few changes that are likely to stay and impact how we do business in the security industry. In this sense, the COVID-19 crisis can be used as a change catalyst to increase digitization of services and change to existing business models.
How will this impact the security industry? What changes can we expect?
Covid-related changes can be broadly divided into two: features we will see in products, and also -- and this is where Covid will initialize the most change -- how we do business.
- The most obvious will be contactless systems. This feature will move from being a “nice-to-have” to a standard feature. Buyers would like to be prepared for future scenarios like pandemics that will limit contact.
- Faster and increased adoption of cloud technology . The lockdown and limited travel highlighted one of the key benefits of cloud systems – the ability to control and monitor systems from off-premises. For example it is possible to deploy updates across a system all at once, without service calls to sites.
- Remote viewing: access to real-time, mobile data has proved highly valuable and in demand. This feature is not new, but I believe the demand to be able to view and manage remotely will increase significantly after Covid.
An important point is here is that the change will be on how we do business, rather than changing our business.
- Financial constraints of clients : due to lack of funds from buyers, we will see a shift to opex models to cut costs. Security vendors will need to move to a recurring revenue or subscription model, or find ways to lower the up-front fees to reduce customers’ near-term outflows.
- Impact on channel structure and sourcing: Over the last 40 years, the global value chain expanded dramatically to the east. Production has shifted to relatively low cost of labor emerging economies. This was made possible and supported by better and cheaper communication and transportation costs. However, the damage to supply chains will lead countries and companies to reduce their reliance on overseas manufacturing. There will be an increase in local sourcing and manufacturing close to the buyer. This can also be a new business opportunity for many SMEs that are now closer to the buyers and can answer a pressing need for products.
- Increased digital presence: Digitalization doesn’t mean only having a website. Companies must reimagine customer journeys, relying on their digitial platforms to educate the client. Since digitally-enabled sales interactions are now more important than traditional sales interactions, companies will need to rethink their approach to their online presence: from how to introduce their products, how to collect leads and manage them during the sale process. Demonstrations, training and other activities usually done face-to-face will have to switch online. Suppliers need to focus on education, not promotion for successful results.
The security industry will not disappear as a result of Covid19. If anything, recent developments have shown that manufacturers are agile and quick to respond to new requirements. The need for security remains but lack of liquidity and new projects might impact demand and unforeseen events like lockdowns will push it to change, but some of these changes might be for the better.