Is it the economy?

Thursday, January 1, 2009

For the first time in the three-plus years I’ve been editor of this publication, our front page is dominated by bad news. It remains to be seen as to whether the Steelbox shuttering and NetVersant Chapter 11 filing are merely normal bumps in the road or a bellwether for an increasingly rough row to hoe for a security industry that has often told me it is “recession proof,” or, at least, “recession resilient.”

I’ve only seen the good times. People who’ve been around the block far more often than I say recessions are no big deal: When times are bad, more people want to protect their property because crime increases.

Sounds good for the alarm guys. What about the integrators who often rely on new construction? What about the makers of new and advanced technology, who depend on early adopters and those with the extra cash lying around to invest in the future?

There’s no question they’re going to find the coming months hard.

Will we see, as many predict, a culling of the herd? I’d say, yes. But, if you’ll remember, I thought a culling was necessary after walking the floor of ISC West, back in April, when things weren’t nearly as bleak. There are simply too many players - IP camera makers, analytics developers, access control manufacturers, systems integrators, etc. - for the market to support.

In good times, those extraneous players might survive on low-hanging fruit and risk-taking venture capitalists. In tough times like these, companies that can’t differentiate themselves, account for every dime coming in and going out, address customer needs, and provide the best possible service are going to see themselves fighting losing battles with creditors and the marketplace.

Is that what happened to NetVersant and Steelbox? By all accounts, yes and no. NetVersant appears to have been unable to accurately predict the cost of jobs. Is that because gas prices and health care costs and materials costs suddenly ballooned? Maybe so. Or maybe it’s because the company got overly aggressive in its bidding in a quest for growth.

Steelbox appears to have been unable to make enough sales to support its operations. Is that because the economy has slowed new building projects and slimmed budgets?

Maybe so. Or maybe the business plan was just flawed from the start and would have failed in the best of times.

To state the obvious: Now is the time to take stock. Is your service as good as you say it is? Is each person in your organization performing to expectations? Are you maximizing the revenues, and margins, generated by each job you win?

It’s easy to blame the economy, but sometimes the blame lies within your organization.