Volume 84

Volume 84 | December 9, 2024

The security industry is experiencing significant capital influxes driven by heightened public safety concerns and the ongoing transformation from a hardware-focused to a software-centric industry. This shift reflects broader market dynamics where investors are increasingly attracted to physical security companies demonstrating strong growth potential through digital transformation.

Several key factors influence market movements in the security industry. During economic (global?) uncertainty, the industry often benefits from its defensive characteristics, as security remains a priority for the public and private sectors. Meanwhile, technological advancement, particularly in mobile, AI, and cloud computing, creates new investment opportunities as traditional access control and broader security solutions evolve into sophisticated, integrated platforms (see more below).

Macroeconomic conditions, regulatory changes, and technological innovation will likely continue to shape investment patterns in security. 

Companies that successfully navigate the transition from traditional hardware to software-based solutions while maintaining strong fundamentals and adapting to changing market conditions are positioned to attract significant investor interest.

That or new entrants will garner the capital.

The access control industry is entering a transformative phase marked by significant market consolidation and strategic repositioning. Capital-loaded companies increasingly pursue mergers and acquisitions to strengthen their market presence and achieve operational efficiencies (and paper over lack of organic growth).

This consolidation wave is driven by the industry's maturation and the need for scale in an increasingly competitive landscape. Larger organizations actively acquire smaller, innovative companies to expand their technological capabilities and market reach.

The trend toward consolidation is particularly evident in the positioning for public offerings, where companies are strategically combining assets to achieve optimal valuations. A handful of companies will position themselves to go public this year. This movement mirrors similar patterns in other technology-driven sectors during their growth phases.

The access control and broader security industry is witnessing a fundamental shift toward integrated platforms, focusing on identity management and reducing system fragmentation. This evolution is driven by end-user demand, the increasing adoption of software solutions, and the need to address years of legacy system challenges. 

Modern security platforms are emerging as comprehensive solutions, whether as Global Security Operations Centers (GSOC), Physical Identity and Access Management (PIAM) systems, or advanced access control platforms. These solutions emphasize unified user experiences and seamless integration capabilities. They are all on a trajectory to be the same. 

The trend toward platform aggregation will revolutionize how organizations manage their security infrastructure. AI-powered tools are crucial in this transformation, enabling more intelligent and automated operational decisions while maintaining the flexibility to incorporate best-of-breed solutions. 

Speaking of best-in-breed solutions, watching companies position themselves as all-in-one, and those that are best-in-breed will be fun. Either way, they are all going after the same opportunity.

A significant shift is occurring in the access control and broader security industry as providers expand their focus to include small and medium-sized businesses (SMBs). This strategic pivot is driven by market saturation in the enterprise segment and the growing technological sophistication of smaller organizations.

The evolution of cloud computing and SaaS solutions has made enterprise-grade security capabilities more accessible to SMBs. These technological advancements, combined with more affordable pricing models and simplified implementation processes, are breaking down traditional barriers to adoption.

Success in the SMB market requires a fundamentally different approach to product development, marketing, and support. Companies are adapting by offering scalable solutions, self-service capabilities, and digital-first engagement models that align with SMB needs and resources. Many will try to do this, but few incumbents will have permission to spend the money to do it properly, nor will they desire to aggravate their dealer or distribution base, hence the real opportunity for externally funded start-ups to find success in this market. However, small companies needing more capital face significant challenges in developing and marketing these solutions, often requiring strategic partnerships or innovative funding models to compete in this market.

B2B influencer marketing will emerge as a powerful force in the security industry, transforming how companies communicate with their target audiences. This shift is driven by the growing importance of authentic, expert-led content and the evolution of professional social media platforms. This external trend will impact our industry.

Although some still rely on magazines, LinkedIn will become the primary platform for industry thought leadership, where security professionals and executives build personal brands and share expertise. This approach successfully combines technical knowledge with relatable, human-centric storytelling.

The impact of B2B influencers extends beyond traditional marketing metrics, creating new channels for industry education, peer-to-peer learning, and community building. This trend will grow as platforms enhance their professional content creation and distribution capabilities. The rise of B2B influencers is not just a marketing trend but a cultural shift, influencing how people learn, share knowledge, and build relationships.

This inevitable trend is exponential, and those who do not prioritize it today will feel the pain later when they try to do it. I recommend being on time for this party.

Important, interesting, and probably impactful in 2025; it just did not make my top 5.

1. "Agentic" interfaces will be the new "we got wallet" sales pitch for 2025. They will transform the way all stakeholders work with our systems.  

2. Commercial market conditions remain inconsistent and volatile. This has an impact on our industry, but to what extent? 

3. Collaboration reigns supreme, even among traditional competitors. Who will lean into this?

4. Small companies needing more capital face significant challenges. They already are.

5. Hybrid vs cloud. Can we get here already?

6. Digital wallet adoption is growing but needs to be more utilized. We need to go behind putting a card on the phone. See Brief 83 for more. 

7. Enterprise software companies continue to gain prominence. Will this be the year when Microsoft, Salesforce, and others come in full force? 

8. A major industry player will be sold—for example, dormakaba. 

9. Traditional institutions face challenges: ASIS, GSX. Something has to change.

10. Loss of generational talent and institutional knowledge. We must pass the baton, and new leaders must step up.