More Cameras and Equipment Equal Less Revenue?

One of the biggest frustrations that our CCTV and access control systems integration company faced in our 40-plus years of business was, believe it or not, CCTV and access control.

While our company made solid profit on equipment leasing and yearly maintenance agreements, we watched tearfully as the equipment-only price of a system with 20 color cameras, recorder and monitor went from approximately $30,000 in 1990 to $10,000 in 2003. Quality color cameras and server-based recording are even less expensive in 2011 and the price of access control readers, control panels and software has dropped in similar proportion. For those of us watching the football game on our home HD flat screens, the ongoing price reduction in electronics equipment is a blessing. For those selling electronic and computer-based security systems equipment, those reductions require us to find double the number of customers to generate the same amount of revenue.

Today's cameras and access control readers are extremely reliable and their low prices allow end-users to view them as "throw away" devices. Thus, it became more difficult to sell full service maintenance agreements to many of our markets.

Faced with this dilemma, our company looked to provide and service systems that were complimentary to our existing offerings. As many of our customers deployed access control readers in their parking areas, we began to gravitate to providing and servicing barrier gate arm controllers. We immediately found that our gate customers were willing to pay a premium for prompt, reliable service...because the loudest complaints will come from those who have to wait in their cars to enter or exit a parking area. When you expand your product offering, this can be a very profitable market segment.

The challenges include: training technicians on barrier gate controllers and vehicle detection devices and assembling and maintaining proper spare parts inventory. The benefits: increased service and ongoing maintenance revenue; additions to our building access control systems at our customers' parking areas; more relevance to our customers' daily "lives" and high dollar barrier gate controller sales. For example, one controller, with ancillary equipment is the same price as 20 indoor proximity card readers.

One of the biggest selling points to prospective home buyers in a gated community is security. Everything from the vehicle control gates to the manned guard facilities at the entrances is designed to provide the homeowner with a greater sense of well being and protection.

Partnering for the gated market

In the 80s and 90s our company's CCTV and access control systems integration sales to gated communities increased proportionately with the growth of upscale housing. We installed CCTV at their vehicle entrances, recreation and social areas. We always reminded these customers of the benefits of adding access control to the common areas and gates. The response often went something like: "we do need electronic access control for vehicles, and we'd like the company that installs our decorator swing (or slide) gates to also provide the electronic controls for those gates." That often signaled the end of our access control sale, because the gate provider would be contracted for all items. The gate access software could also control the few common area doors that the community wished to control.

The obvious solution in the "early days" was to form partnerships with the gate providers. Our company did not have the capability to design and install the infrastructure for large swing/slide gates. This includes such tasks as concrete cuts, concrete base installation for controllers and buried vehicle detection loops. We introduced ourselves to the gate contractors, and, for a time, enjoyed profitable working relationships. Much of our partnering success in that market came to an end when the gate providers realized that, they too, could find the purchasing channel for access control and CCTV and that the relatively simple electronic security systems required by gated communities were relatively easy to install.

Many of the newer and/or larger upscale developments are deploying some sort of resident and visitor control software. These systems perform a multitude of functions, a few of which are control of homeowner, visitor and contractor access and life safety response tracking. Some of the notable systems in this market are produced by Quick Pass and CapSure. Traditional electronic security integrators may wish to consider these products, as they are all designed to integrate with the CCTV and access control devices. It is important to note, however, that traditional reseller relationships are not always available and these manufacturers may sell to and support the end-user directly. Look to be a subcontractor to provide/install CCTV cameras and all items related to door access control.

The challenges are the restricted market channel for these community access software products; training technicians on new system software; and competition from swing and slide gate operator contractors. The benefits include: better profit margins when contracted as part of the decorator gate system; penetration in a lucrative and growing market segment; and greater opportunity for ongoing maintenance revenues.

The BIG numbers in parking revenue sales

Our CCTV and electronic access integration departments searched for additions to our product and service offerings that would offset the drastic declines in product pricing. We moved ourselves "into the garage" and began the installation and service of barrier gate arm controllers for vehicle access control. We had tremendous success introducing long range RFID readers (manufactured by TransCore) to the vehicle entrances, as they were easily integrated into our existing access control systems.

In many commercial office properties, non-tenants are charged a fee to park in the restricted lots. The equipment used in these revenue parking systems includes ticket dispensers, payment processing stations and fee computers. Many of the vehicle control gates that we serviced for access control were also connected to our customer's revenue devices, and it wasn't long before our "gate" customers were asking us to provide the same prompt attention to their revenue systems. Since 90 percent of the gate operators were manufactured by the same companies that offer the revenue parking equipment, we began a fast education to the money side of the parking industry. Notable providers in this market include Amano, Federal APD, Zeag and Magnetic/T2.

Revenue parking requires a whole new skill-set. Some of these are outlined in the challenges listed in this story. Learning the mechanics of all of the moving parts within ticket dispensers and cash machines is tough enough. Harder still is becoming adept at programming rate structures and understanding all of the issues surrounding credit card acceptance and payment card industry compliance.

The BIG payoff for your efforts

For the substantial investment in educating your sales and technical groups, you will find that revenue from a single parking system sale will often quadruple the income from one large CCTV or access control specification. We also learned that the sales cycle for parking equipment could be three to five weeks, versus six to eighteen months for an electronic security solution.

Entering the revenue parking systems market is not a decision to be made lightly. As with all good things, it will provide a series of setbacks along the path to greater profit rewards.

The challenges include: new equipment which requires new technical training; new markets which require new sales training; a considerable investment in both respects; and equipment failures usually mean that your customer is losing money every hour and the pressure on service techs will be intense. The benefits are best illustrated in this pricing example, all excluding software and installation labor:

Equipment for access control at one door: $ 800
Equipment for vehicle gate at one traffic lane: $3,000
Equipment for one ticket dispenser: $5,500
Equipment for one fee computer: $5,900

The parking vertical market is not as driven by price and has a shorter sales cycle. It's a growing market and presents many opportunities to systems integrators. For those who might not have the staff or money to go about it alone, it's worthwhile to investigate companies to consider partnerships.

Must Haves for the Vertical

- Quick throughput at offices, high rises and parking especially coupled with access control and biometrics
- Virtual doormen for package delivery and overall protection at the premises; IP intercoms, two-way audio; sound systems
- Video integration with access control and remote monitoring/guarding
- Energy savings and occupancy sensors as well as advanced lighting controls
- Fire systems with quick response and mass communications and stellar campus wide emergency notification to smartphones, PDAs and connected LED displays
- Instant badging and temporary credentialing
- Physical security and logical control to add value and business efficiencies
- Perks for lease holders and property managers like high-speed Internet, wireless, clouds and other technologies
- Interactive video and alerts piped to smartphones and other Internet connections
- Emergency evacuation and egress plans
- Migration paths from analog to IP
- Strong future-forward network infrastructures
- Lighting controls and a move to net zero energy buildings

Neal Marcus is the owner of Long Range Solutions LLC, a company focused on helping manufacturers and integrators grow their business through the sales of CCTV, pedestrian and vehicle access and revenue parking systems. He's a veteran of the security industry, having served at Securus, now HBE Colorado, and was one of the founding members of the PSA Security Network. He can be reached at neal@longrs.com.

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