The electronic security segment today includes more than 22,000 companies, such as alarm systems, TV closed circuit, automatic doors and gates, vehicle tracking, biometric identification devices, among other segments. Its revenue in 2016 amounted to R$ 6 billion, with a 5% growth y.o.y. The scenario in terms of economic representativeness tends to be in the range of R$ 6 billion to R$ 7 billion over the next two to five years due to present crisis and slow recovery of the economy, nevertheless consolidation and changes in legislation will turn into a total very different market in 2020.
The moment is to take a decision: survive, grow or die.
Due to changes in legislation and advances in technology, we will have consolidation in large security and electronic monitoring companies, in vast majority of them multinationals. We will have companies sharing infrastructure, therefore costs with a network of smaller companies that will have the relationship with the client and will enjoy this infrastructure shared. Smaller companies will shift focus to sales service and relationship and will be plugged into companies that will have shared infrastructure at efficient costs efficient. There will be no smaller companies with limited micro-region positioning any longer.
Electronic monitoring companies that decide to survive will be operating in the market in the coming years as final client relationship companies and will develop relationship excellence. Infrastructure will have sharing platform companies. The Market will have different players and way how to do business.
The following impact factors should be considered for decision-making regarding the strategic positioning of electronic monitoring companies:
- Entry into force of Law 4238/12 Statute of Private Security and Security in Financial Institutions in the final step of approval in the Senatel;
- State-of-the-art technology that will require constant and voluminous investments and appropriate cost models;
- Scalability of the business, be a business with appropriate scale.
Law 4238/12 under final approval
Federal Law 4238/12 was approved by the Chamber of Deputies on November 29, 2016 and is pending approval by the Senate. Also known as the Private Security Statute will regulate the private security companies, value transport and security in banks.
One of the changes that have significantly impacted electronic monitoring companies, and other security companies, is the minimum capital requirement. The minimum capital requirement varies from type of security service, in the case of electronic monitoring companies will have to have minimum capital of R$ 200,000.00, with additional capital requirement for those that provide more than one authorized service.
The companies will also have to have financial provision, capital reserve or insurance-guarantee to support labor, tax, social security and civil liability obligations.
Authorization of operation with renewal every 5 years, requiring greater professionalisation. Inspection as well is an element that will also impact the repositioning of electronic monitoring companies.
State of Art Technology
It is not news to anyone that the competition, in the most diverse sectors of the economy, is quite fierce. In the private security market is no different.
State-of-the-art technology will be increasingly at the service of peace and security with integrated security systems. Integrated services mean that security equipment will have resources that will generate management information such as the cameras in the commercial establishments will inform peak times, number of people moving in the established hours, moving of products among other information, which information will allow to analyse the behavior of customers.
Infrared radio and internet commands that allow you to control from anywhere. Internet of things connected with security systems. Everything will generate data that will be stored and for use and generation of better solutions. Nowadays, for example, already more than 60 million Brazilians are users of identity recognition systems via biometrics.
So the critical success factor is who gets to have to have capital for continuous investments in cutting-edge technology.
Also it is not new that to maintain the acquisition of new clients and the
maintenance of the active clients it is necessary capital investment. It is no wonder that large multinational groups have positioned themselves buying companies in Brazil and large local groups have bought portfolios and repositioned themselves. The name of the game rule is scale.
The positioning map of the electronic monitoring Market
Due to the legal requirements that will take 3 to 5 years to be implemented, the rapid evolution of state-of-the-art technology, and the rule for cost efficiency is scale, we believe that the market will have a new map of positioning:
WIN- WIN MODEL:
Consolidate, multinational and large local companies, will offer large range of products will have large customers multinational and Brazilian customers.
Infrastructure platform companies that will share technology and services, will supply smaller companies that will have the relationship with final clients.
There is in the market an additional 5 million commercial, residential and potential businesses that will demand electronic monitoring. There are changes in the agenda that will impact the strategic positioning of the players in this market. Customers will have adequate solutions, products and services appropriate to competitive costs and excellence of quality and service.
HH Inteligencia in partnership with SIM Security is working on repositioning companies in this win-win model, connecting local monitoring companies with the SIM Security platform through shared cost studies and models designed so that each local monitoring company can be part of this changing and challenging market. We have a solution and willingness to adjust the models so that everyone wins.