Volume 13 | April 10, 2023
Welcome to Volume 13 of the Access Control Executive Brief titled "ISC West Not So Obvious Observations."
Fresh off the ISC West show, we brought The Lounge back bigger and better. The response was amazing (data to come shortly). It indeed was an interactive networking and meeting space used by the community. Thank you to all who were there or supported it in spirit. I would change plenty and plan to continue to improve it, but the response was overwhelmingly positive. I am working to bring it to GSX, and we will do it again at ISC West, maybe East. More to come.
Special thank you FieldHub Inc, HID, Torus, Kwikset, We The Dreamer, Moms in Security Global Outreach, PSA Security Network, Brivo, Active Witness, Soloinsight (CloudGate Platform), SS&Si Dealer Network, sesamsec GmbH, Advanced Data Risk Management , Geokey, LiftMaster, Wicket, Volt AI, Digital Barriers, Orion Entrance Control, and Geokey for sponsoring and the partnership!
During and after ISC West, two announcements were made that I want to highlight here as they positively impacted you, the community, and me.
First, the Access Control Executive Brief is an Official Partner of the Security Innovation Hub! I will work with the Security Innovation Hub to make access control and smart lock educational content, programs, and insights accessible, relevant, and informative. We share a collaborative mission to advance security to tackle emerging threats and challenges in security through exclusive programming, live labs, co-working, and a security think-tank. Learn more by following this page and visiting securityinnovationhub.com.
Second, I am launching an annual and exclusive Access Control Summit. It will be held on 9/28, with a reception the night before and all-day programming centered around where access control and smart locks are today and in the future. More to come.
A couple of other reminders of upcoming IRL opportunities to get together a community:
-
The Security Event: On April 25th and 26th I will be partnering with LenelS2, Sentry Interactive, Tapkey, and WaveLynx on the show floor and putting on The Access Control Executive Brief Theatre. We will be activating three days of thought leadership, use case presentations and discussions all centered around access control and smart locks.
-
CREtech London: Along with iLOQ, Torus, ZKTECO USA, HID, SwiftConnect, Rapid Global, HqO, Eagle Eye Networks, Metra and LenelS2 we are creating The Access Control Village to demonstrate what today and tomorrow looks like for the global real estate market on May 10th and 11th. Please join us and also come to CREtech to get more involved in the proptech community.
I hope you enjoy the Brief, and I am excited to get on Slack with you and discuss it!
Thank you,
PS: I am sure some of you may forward this on but please do so sparingly and encourage others to sign up here. Thank you!
ISC West Not So Obvious Observations
I posted recently in the Access Control Executive Brief Slack group my quick hits on ISC West observations. However, I wanted to take the time through this Brief to dig deeper into what I saw as global trends impacting the access control and smart lock industry. Here are my thoughts on some of the not-so-obvious ideas, opinions, and views of ISC West 2023 that indicate a broader transformation happening in the global access control and smart lock industry.
We have reached the end of the pure "cloud-based access control system" era.
It is painful to watch large organizations tell an early 2000s story. When ACRE acquired Feenics and Motorolla acquired Openpath, we saw the market move on from "cloud-based access control systems vs. on-prem" messaging. Where has it moved? AI and mobile wallets. But, there was a sneaky message that is far more relevant, and that was "hybrid" or "users choice - we got what you need. Let's discuss what it does and how we are the right solution for you." These two messages are far more relevant.
If I had to pick one, I'd pick “users choice - we got what you need. Let's discuss what it does and how we are the right solution for you." Hopefully, we have moved to a point where we talk about what value our systems bring versus the architecture they use. Who did an excellent job of this? ACRE and Brivo. Who has work to do? All of the legacy players but I would start with Paxton, JCI, and AMAG.
Why do we struggle to move beyond the year 2000 messaging? Two reasons. First, the companies have over-indexed to worry about alienating their end users and integrators. And second, there is no brand strategy at most of these companies. Marketing is seen as a product or sales function and usually gets the red pen treatment from a CEO with no marketing background or skills. That is code for hire talent and letting the talent do their job. North America is way behind Europe on this. More on that below.
Platforms, Applications, and Middleware for commercial real estate, tenants, and the enterprise (but not multifamily):
Note, I didn't use the word "system." Platforms, Applications, and Middleware did not exist last ISC West. This year we saw the introduction of new companies, like Genea and Wavelynx, and older companies, Alert Enterprise, reinventing themselves. There is a clear shift in power structures, how systems function and flow, and how we make money as an industry.
If the phase change our industry is in the midst of could be manifested into real life, it would look like Cohesion showcasing its product in the LenelS2 booth. Why? Historically all access control systems, such as LenelS2, were considered "the" platform for all security products to flow to the market. Every lock, reader, visitor management system, etc., would look to integrate their product through the access control system. The legacy access control systems have been THE conduit, let's call it THE channel, for how products and services got to end users. Sure, integrators were the last mile, but it all started with the physical access control systems. And when it came to verticals, it didn't matter.
You brought that same system to airports, commercial real estate, and coffee shops - you just used more or less of the same system. While this may still be true in the high-security market, it is no longer valid for many verticals and the mainstream market.
We will continue to see three things happen.
First, legacy systems will have platforms, applications, and middleware sitting on top of them, adding more value than the single value proposition legacy access control has historically brought.
Second, we will see platforms, applications, and middleware garner more value and lead the sales process with more end users.
And third, we will see legacy access control providers deny this is relevant as it threatens their businesses.
Side note, at ISC West we had a table full of integrators from all over North America asking for help in identifying the best application or platform to sit on top of their legacy access control systems.
And as a bonus, this market shift will drive a good amount of M&A opportunities as legacy access control systems look to stay relevant while others run out of runway and need a new home to be relevant.
So what should we do?
First, we need to define these properly and use the proper nomenclature. This shift is a seismic shift, and it must be appropriately labeled.
Second, we need to stop being opportunistic, take a breath, and roll this out properly. And it needs to start with the platforms, applications, and middleware companies defining the market. There is a refactoring of norms, and we are beginning to be put in the "yes" position with customers. Still, we are so eager to "win" that we are confusing the market by lacking definitions and clear scopes of work to show how platforms, applications, middleware companies, and access control systems differ and add value.
Need an example? Look no further than digital wallets. Need another example? Tell me the difference right now between Soloinsight, SwiftConnect, Oloid, Smart Spaces, and Sharry. I know there is a difference, but explain it to me in an elevator pitch.
Are integrators still essential?
Not too long ago, we were celebrating and, frankly, dependent on our integrators as the lifeblood of our ability to do...anything. As we all know, during the pandemic, we, as an industry, fought to have security labeled as an "essential business." Ultimately, security was categorized as a community-based government operation and an essential function. It became evident that the government and business owners were concerned about their closed facilities and feared increased criminal activity while most of us stayed at home.
And in the end, I am excited to say... nothing. Nothing changed, and nothing happened.
We quickly reverted right back to traditional norms. At ISC West, it was clear that "we" missed an opportunity. The essential integrators stopped using that label and never took full advantage. And manufacturers? They went back to a binary discussion. Manufacturers returned to defending their desire to go direct to end users or celebrated how they don't go direct.
What should have happened? As integrators, there should be far more chest pounding on just how important you are, and you should have reset expectations with your manufacturers. And manufacturers? It would help if you introduced new programs, eliminated those that were not essential, and created new marketing campaigns celebrating your essential partners.
Think about it. Imagine for a moment that you are back at ISC West. You handed out hand-written thank you cards to all the essential integrators walking the show floor during the show, and as a booth, everyone was there to say a simple "thank you." Now, continue to imagine it is Wednesday night of the show, and you are holding a celebration thanking all the essential integrators that kept your business afloat when you couldn't leave your living room. Would you have had an appreciated integrator turnout? I believe so.
Can you cut through the "cloud" and "mobile wallet" noise at the show? 100% yes, but you need an authentic and interesting story.
Sure, it would be hard for your product manager in charge of your panic bar business to understand why "their" hardware isn't getting the booth love it has gotten for the past 30 years, but I am happy to bet my house the appreciation of thanking the essential workers of our industry would have resonated more than an opportunistic message capitalizing on school shootings.
ISC West gave a clear view of who is focused on keeping existing customers and integrators (code for incremental growth) and who is focused on that and growing their business (code for exponential growth).
You are more than capable of doing both. It comes down to incentives. As an example, Motorola vs. acre or LenelS2 vs. Genetec. The messaging, brand management, and product positioning within the booths were very telling. These decisions are both a strategy, just like doing something and doing nothing.
I lean more towards exponential and tested my "incentive theory" when I visited different booths. Many CEOs agree when you talk 1:1. Until our industry incentives change, we will continue to see conservative and measured growth.
The NFC experience.
We used it at The Lounge, and it is a great experience to tap and go. Bluetooth has its hands full as it will be tough to compete with when someone experiences it. Biggest reason? Once it's loaded, it's not buggy and works—every time.
Unlike the experience I had at the Venetian when I used the hotel's "mobile app" experience. I followed all the rules and the process. I was careful to make sure I did. I downloaded the app, waited for the digital key, walked to my assigned room, brought my phone (with no cover) to the lock, and ... nothing. It didn't work. Fifteen minutes later, and after 400 tries to make it work, a maintenance person who was nice enough to use his card to let me in walked by. I dropped my stuff off in my room, went downstairs, and got some room keys...in the analog form of a card.
Disappointed? Yes. Would I have had that same experience if my card had been in my phone wallet? No, I do not. Why? Because I experienced what many of you experienced when you got to The Lounge. I tapped, and I went. No problems. "But Lee, the Bluetooth version for your room was more secure?" Was it? I don't think so. I think it was a shining example of how user experience matters. Will I use the app again? No. I won't. I'll wait with the 100 other people to get a room key.
And while I have you, if ISC West showed anything, we have reached the mobile tipping point. Assume everyone has it and everyone is marketing it. So my question is, "What will you do about it?" My suggestion? Start talking about the value it creates. And if you don't have it as part of your product offering? Good luck.
This talk about mobile ubiquity leads me to my next observation. We believe we can take new tech and drop some "ai on it" or "iterate mobile credentials into it," and we've done our job.
Part of our problem as an industry is that we think the products of the past bind us to the future. While historically correct, this digital transformation that we are on is different.
Leaders in our industry are at crossroads. To a person they know they need to change. But to what degree and to what extent? Thats the hard questions that need to be answered. As a "pundit," it is easy for me to give my opinion on what you should do, but as a "leader," this is why they/you get paid the big bucks. So lead. Make those hard decisions. Kill some products. Reorg your org. Buy some companies. Sell your company. Do something.
If ISC West showed us anything, it showed that there are many companies either formed already or in the process of being created that are software, mobile, cloud, and user experience first. Does it mean that legacy companies are doomed? No, as this is a story of when not if. For some, the answer is no, as there is a vibrant 6-10% growth opportunity in the high-security market, and plenty of firms will eat the lion's share of that market. But for how long will this last?
Integrations and the need for programs.
It will be interesting to see how and where companies differentiate since everyone is working with everyone and, in some cases, doing the same things. I still don't know of many business integrations, as we heavily rely on our technical integrations to differentiate.
Still, at some point, the market will determine the favorites, forcing some feature companies to go out of business or result in M&A and for some of the public companies, result in seeing a decline in share value as it becomes hard to rationalize how the next ten years will be similar to the last 10. In some respects, this is a new business opportunity and an excuse for legacy companies to start demanding their cut in the upside of doing these integrations.
It will also begin to pressure some of the Platforms, Applications, and Middleware companies because the market will not accept stacking costs. We need new business models and programs.
Community.
Is it me, or did ISC West feel like a backyard BBQ or town fair where everyone went to see and be seen? It celebrated the broader sense of community our industry has and needs. It will be interesting to see how RX and SIA capture this momentum and what they do with it. They, too, need to change and attack the desire for more community.
This heightened sense and desire for community is an excellent example of the non-technical impacts of the pandemic. For instance, COVID moved many of us onto social media sites like LinkedIn. We created relationships that were hard to foster when we only got together 1, maybe 2, times a year to see each other in person. Many of us started meaningful relationships with people in the industry and were excited to see each other in person. This change is super exciting and will further impact recruitment and partnerships in our industry, as an example.
Marketing is still an afterthought, and we have too many product managers pretending to be marketers.
It was very apparent and saddened me deeply. Way too many booths promote "we got cloud" or "we got mobile." Very few are talking about value creation, verticals, and providing insights into where the market is going. You see some, but it seems easy to differentiate and tell a story better.
If sound like I am repeating myself, trust your instincts. I'll stop when you start.
Locks.
What value do the incumbent lock manufacturers bring? Hard to say when all they do is play defense and mask it by calling it "smart" or "innovative." Clearly, the electronic ("smart") lock industry will succeed and fail based on the platforms and applications they work with. They will not control their growth as they can when the market is only mechanical or motorized. I'm also not convinced those with their own software will see the growth they think they will. Sure, there will be pockets (especially for those deep into verticals - I highly recommend doing what was done in Hospitality and is now starting in verticals like Multifamily). The incumbents have not done enough regarding how they make money to see true long-term success. They are too reliant on the hardware, and it's getting very crowded, and there will be margin pressures on top of the current market dynamic pressures.
Plus, why would someone pay a premium for a product that does not deliver the promised value? Remember the DVD and CD market? I know some of you do. Welcome to our industry's version of that. So what should they do? As stated above, go deep into verticals (buy Prempoint or Homebase.ai) and, at the same time, create partner programs that incentivize the apps and platforms to show some favoritism and differentiation.
An excellent example of who is moving in the right direction is dormakaba. I just wish they would be more aggressive with it. Sometimes it is easier to highlight what not to do: stop making a smart lock a lock.
Who benefits most from the market shifts? Stock up for all the lock OEMs who have been behind the curtain and are now center stage.
M&A and Consolidation.
Get ready. It's coming. You must recognize the amount of chatter, the inbound requests to talk about the industry, the quantities of dry powder, and the number of companies that need money for growth or an exit.
What should you do? Jump into the pool while the water is warm.
