Here’s the good news: Not a single person interviewed for this article said business was flat or declined in 2016, or expected it to do so in 2017. In fact, many reported double-digit growth and a continued strong business outlook, both residentially and commercially.

Security dealer Wayne Boggs, president of Richmond Alarm Company, Midlothian, Va., described 2016 as “quite a bit better than 2015. I wouldn’t be surprised if it was in the range of 20 percent growth.”

Another metric that supports that 2016 was a very good year comes from the Electronic Security Association. “ESA members report that their businesses on average spent approximately 19 percent more on products/solutions in 2016 versus 2015,” says Angela White, ESA president and executive vice president of Central 1 Security Inc., Brookfield, Wis. “2016 was an incredible year. I’m not sure that I was prepared for how strong the year would be. The market is growing and there are tremendous opportunities to capitalize upon that at every turn.”

SDM’s own research, the 2017 Industry Forecast, conducted in November 2016, also reveals a positive metric in the intrusion (burglar) alarm category. By share of total revenue, burglar alarms comprised 30 percent, a 6 percentage point increase over the previous study. (See chart, this page.)

Some of the growth in 2016, particularly on the residential side, could be attributed to the 2G sunset, which had a December 31, 2016, official deadline (although many, if not most, towers are still running and dealers continued to finish up upgrades into the new year).

“The transition from old to new technology is contributing to growth. IP and cellular communication adoption continues to grow as dealers upgrade existing systems to replace telephone line communications,” says Paul Garms, director, regional marketing — intrusion, at Bosch Security Systems Inc., Fairport, N.Y.

For companies that specialize in the communication path side of the business, the general view is that new offerings, technology and partnerships will only continue the momentum.

“2016 was all around a better year for Telguard,” says Shawn Welsh, senior vice president of product line management and marketing, Telguard, Atlanta. “It would have been really disappointing had it not been a better year. But I expect 2017 to still be pretty good. The trends that drive our particular segment of the industry aren’t changing.”

These trends include evolving consumer needs, wants and desires, and the lightning-speed changes in consumer technologies that benefit those consumers both on their own and — more importantly for the security industry — as an adjunct to a security system.

 “The consumer we are targeting today is not a person driving a ‘Model T’ anymore,” says Keith Jentoft, integration team, Videofied (a Honeywell Security and Fire company), Melville, N.Y. “They have changed even from three or four years ago. They want the smartphone to be their command center.

“Consumers are changing and the entry of these other ecosystems that are over and above security is opening up doors we never had access to before,” Jentoft says.

Boggs thinks the two greatest changes he has seen in recent years are the communication paths going from POTS to cellular (and eventually to Wi-Fi and Internet), and connected services via smartphone. “Ninety-five percent of the residential work we do today is cellular communications and remote services.”

Garms at Bosch says the use of cloud-based connectivity to systems is making it faster and easier to connect for remote programming and for end-user app connectivity. “This can eliminate the need to change customer router settings, firewall results or to use DNS for remote access. Dealers can now choose whether to connect direct to control panels or to use cloud-based connectivity, whichever method best meets the needs and requirements of each end customer.”

It is impossible to talk about residential security today without noting the impact that interactive services and increasingly full home automation are having on the industry as a whole.

In fact, a just released study from research firm Strategy Analytics, “Smart Home: Disrupting the Security Industry,” explains that the current residential security model in the U.S. is undergoing major change. According to the report, “the traditional, one-way security systems are giving way to innovative solutions that meld remote monitoring and control as well as automation capabilities with notifications of security breaches and events homeowners want to be alerted about. These innovations are creating new options for consumers and driving changes in the way monitoring services and first responders react to emergencies.”

Dave Mayne, vice president, Resolution Products Inc., Hudson, Wis., says, “We were up in our core business, which is really the security dealer business, over 25 percent. We had really pretty strong growth across all of our product families, which are almost exclusively intrusion-related. But interactive was about 10 percent heavier than the other segments.”

Another major trend this year was that both in the residential and commercial sectors, service and RMR-based solutions increased.

“The trend continues to be towards RMR-based solutions and less upfront revenue,” says current CSAA president Pam Petrow, president and CEO, Vector Security, Warrendale, Pa. (SDM’s 2015 Dealer of the Year). “Whether it is in residential installations or commercial projects, this bodes well for cloud-based solutions, which are gaining acceptance…. Overall, for Vector Security, 2016 was positive. Home automation and, commercially, video continued to fuel growth.”

Steve Schmit, engineering manager – alarm certificate services with UL’s Building and Life Safety Technologies division, Northbrook, Ill., also notes this trend. “We are seeing the industry approach the market with services. Technology is such that users can interact with the security system in ways that weren’t possible before, which opens up all kinds of opportunities. We see folks not only introducing new security type services such as video, but that same pipeline enables your security system to help out with things like personal emergency response and home automation sorts of things.”

This is exactly what led East Hartford, Conn.-based dealer Faraz Rehman, vice president of information services, Associated Security Corp. (featured on this month’s cover) to call 2016 a “great” year. “We brought in a lot of new technology with the recurring model. Monitoring is what keeps our industry going and with home automation being integrated with alarms we have more chances to profit from that and more services we can give out to our clients. More than ever we see alarm systems integrated with cameras in the home. All these services are coming together that we couldn’t do before. 2016 really pushed the envelope for integration, I believe.”

Rehman, like a growing number of his residential dealer peers, has started calling his business a “residential integrator” because of the growing complexity of Internet of Things (residentially often referred to as smart or connected home) that are increasingly included in a residential security system. “We are in the smart device technology now. Everything has to be app-operated. In that scene we do end up working with a higher tier of clients that look for that marriage between systems. They are looking for customization. They don’t want a gold, silver or bronze package. They want something different than the Jones across the street.”

“With change comes opportunity,” Schmit says. “As people look at the new stuff that is out there and figure out what it can and can’t do, the ability for the dealer to get into the homes has never been greater. As a homeowner or small business owner, you can’t turn on the computer or TV anymore without seeing promises of great things in the future.”