The Self-Contained Market

Were the ‘good old days’ really as good as we remember them?

• By Al Lizza
• May 01, 2011

When most people refer to the “good old days” they’re usually trying to fondly recall a period when things were far simpler, worries were not as rampant and daily life went on virtually unimpeded.

So that begs the question: Was there ever really such a thing as the good old days in the home security products industry?

It’s a fair question. That’s because back in the good old days -- or the bad old days, depending on how you look at it -- security was an island unto itself in the home. In other words, it did two things: secure a home or building against intruders and detect fire, and it was judged only in terms of those things. In a best-case scenario from the customer’s perspective, it amounted to an insurance policy that one hoped would never be needed.

A lot has changed since those days. One of the major changes in the last several years has been security technology in general breaking out of its silo and becoming associated with more value-added services, making it a bigger part of daily life. Naturally, this expansion has led to increased business opportunities for security dealers and integrators.

Self-contained systems -- all-in-one systems that include the panel, advanced communication and keypad -- have played a key role in driving this change. This is largely because many advanced technological capabilities have increasingly been incorporated into these systems, which has made it more cost-effective for dealers to offer these capabilities and increase their adoption rates. Today, device manufacturers are seeing many growth opportunities in the self-contained market as more of these capabilities -- such as integrating security with HVAC, lighting and other home automation systems -- are continuing to be plugged into self-contained systems.

This isn’t to say that the self-contained market hasn’t posed some challenges to installers. New advances in touchscreen technologies and other areas, however, could very well be just what the market needs to further embrace this trend and bring the added value and recurring monthly revenue (RMR) to dealer accounts.

The Secret of Self-contained’s Success
Since their inception in the early 1990s, self-contained alarm systems have been built around three core guidelines that have set them apart from the rest of the security market:

1. They needed to be as easy to sell as possible. Features that offer more than just security were added to help increase closing ratios and provide the ability for these devices to become high volume.

2. Their platforms had to be able to generate and maintain RMR. This led to the inclusion of features such as two-way voice and other value-added services from a monitoring position.

3. They had to be very fast and simple to install. The faster the dealer can install the system, the more installations he can complete in a day. The end result was consumers getting features that offered a much higher level of value than some standard security systems. Examples of these features included two-way voice, voice prompting, family message centers and others.

In addition to benefiting consumers, this also provided great value to dealers because these systems were capable of generating additional RMR and more sales, thus growing their businesses more effectively.

The key enabling technology for the self-contained market came with the emergence and subsequent proliferation of reliable wireless. Since dealers and integrators didn’t have to worry about installing wires, they put up sensors quickly and easily without the installation time and expertise needed for installing hardwired sensors. This also benefited the end users who didn’t have to worry about installers drilling holes into their walls and damaging any aesthetics.

In short, all of these types of benefits were geared toward helping the dealer lower the cost of acquiring and keeping new customers, and maximizing RMR.

Today, manufacturers who make self-contained systems are still focused on tackling the three objectives, only now at a much higher level.

Catering to Dealers and Installers
Over the years, numerous technological advancements have been added to security systems to help improve the end-user experience. Manufacturers’ motivation for doing this was the prospect of helping their dealers increase sales and reduce attrition. As a logical progression, though, manufacturers are taking these steps a bit further by using them to improve the installation process for the dealer.

In the self-contained market, a bigger proliferation in touchscreen displays is one example of this trend. For consumers, it represents an example of hightech devices that they have grown increasingly comfortable with (not to mention have come to expect). These technologies add to the sophistication factor yet manage to simplify operation.

Because older system enhancements were geared toward consumers, though, the installers were often left to fend for themselves. Examples of this include linear programming methods that sometimes kept installers on site for inordinate amounts of time. Forced to memorize cryptic codes and program the system using a small, dim, text-based display, additional installation time was required.

By contrast, today’s self-contained systems such as Honeywell’s new LYNX Touch offer features that help the installer complete his job faster. Using touchscreen interfaces, for example, brings just as much value to the installer as it does the end user. Not only do the graphics simplify the overall setup, they also can drastically reduce installation errors, which can turn into a big money saver for the dealer.

Consider this: When programming the system, installers typically must set up zones and specify the type of protection within that zone. Setting up these zones usually involves working through a set of questions. In the bad old days, programmers were simply forced to work through one question at a time, whether it was actually relevant or not. Then, there was the process of remembering what each cryptic code stood for and entering it into the system.

Today, though, each of these questions is on one screen and allows the programmer to more easily navigate, literally with the touch of a finger.

Drop-down menus and graphic boxes have helped to add more context to programming functions, making for a more intuitive process. If an installer is programming a zone for a carbon monoxide (CO) detector, for example, the display will provide programming options for only an appropriate CO detector, reducing the likelihood of a manual error on the part of the installer.

Another side benefit of this technology is the ability to more effectively train staff. It’s much easier, for example, to bring a new installer up to speed with a graphic touchscreen keypad than having him sift through pages of manuals to learn proper coding. Of course, this also means it’s much easier for the dealer to train the end user as well.

Finally, today’s self-contained systems manufacturers are taking a valuable, physical lesson from the PC: room for growth. For example, LYNX Touch features designed expansion slots inside the plastic enclosure that provide the ability to plug in additional modules as needs change. This means that when new technology debuts, it’s far easier to replace the board than the entire unit.

It’s a subtle point, but it is also a distinctive innovation of the modern selfcontained system that allows vendors to add further enhancements without having to replace the product already hanging on the wall.

The Path Forward
If there’s one key self-contained system guideline that has strongly resonated through the rest of the security industry, it’s the concept of providing features that go above and beyond just offering security, per se.

One of the hottest trends in this space is energy management. That is, by integrating security with home automation, homeowners can very well realize savings that make up for the cost of the overall system.

A homeowner, for instance, can program an automated system to lower the thermostat whenever he or she arms the security panel upon leaving the house every day. Or, if the homeowner can access the system using a Webenabled device, he or she also can control lighting, locks and surveillance as appropriate.

These are functions that certainly appeal to the modern, tech-savvy homeowner.

But they also speak to a bigger picture: the self-contained space has done a good job of not locking itself into a particular technology -- in this case, security.

In general, this has been a good strategy because technology is constantly changing, and the market has put itself in a position that allows it to grow and evolve with consumer needs. This gives the dealer the ability to add what he needs to acquire and retain customers.

This is an important concept because security is inevitably going to need to interact with other intelligent functions within the home such as HVAC, lighting, locks, etc. And it will need to do so in a way that is simple for both the installer to install and configure, and the homeowner to use if it’s to be successful. For an installer, this means the ability to set up the system without needing an engineer involved in the process.

As a result of all of this, today’s security dealer must be able to talk about the security system in the home as a value-added service similar to what the homeowner has grown accustomed to in other areas of his/her life.

Today’s homeowners are accustomed to having their information delivered when and how they want it. Security technology, therefore, must also meet this demand. When it does, it will become far more than an insurance policy that may never get used.

Those remote services solutions that control security systems and provide event notification via e-mail are here today, and they will continue to provide value to the end user while they lower attrition rates for dealers.

The good news is that today’s successful security dealers understand and are embracing this concept. By adding value-added remote services to their portfolios, they increase the likelihood that a homeowner will consistently use the system on a daily basis. That improves the overall value of the account for the dealer.

Before too long, maybe then we’ll officially be able to remember this time as the good old days.

This article originally appeared in the May 2011 issue of Security Today.