Special Report: Hosted Services- 10 Steps to Hosted Profits

Managed video services will have RMR falling from the clouds

The world of hosted video has changed. A company using a hosted service can pocket an extra $15 in recurring monthly revenue (RMR) by offering a service that requires little change to the hardware sold but a lot of change in the software in the sales team’s heads.

“You have to change your thinking from a product sale to a service with an RMR stream,” said Bob Ryan, senior vice president Sales and Marketing for systems integrator ASG Security based in Beltsville, Md. He added that the biggest mistake dealers make is trying to make big bucks on the equipment. ASG subsidizes the equipment installation and profits on the RMR. For commercial accounts, they strive for a five-year contract. Others see a three-year minimum.

“Deciding to enter the hosted video space is more involved than simply taking on a new product — it is really an entrepreneurial activity within an established business,” said Brian Lohse, vice president of Secure-i, Des Plaines, Ill., which offers customers an on-demand video surveillance service.

“It’s a different world than it was one or two years ago,” said Larry Folsom, president of American Video and Security Ltd. and co-founder of I-View Now, a cloud-based central station video verification company in Las Vegas. “It is a cultural change for your company and my sales people are on a journey.”

That journey includes building RMR by changing the dealership’s mindset from selling a $40 a month burglar alarm to offering clients a full suite of rich services. Here is the roadmap:


1. Hosted Service or Solo? Decide if you have the cash and the personnel to offer video on your own — which is unlikely — or whether you want to go out on the cloud. Economies of scale will typically make it vastly more cost-effective for a security firm to use a hosted service. “The scales have tipped on cost,” Folsom said, noting that, given the existing infrastructure, nobody today would try to provide their own cell service and towers.

“Currently there are no ‘off-the-shelf’ solutions that an integrator/alarm company can easily implement on their own servers,” Lohse said. Building and maintaining a commercial grade platform for hosted video requires a full-time staff of software engineers, database administrators, virtualization and infrastructure specialists. “That is prohibitive from a cost/time standpoint for a traditional security company,” he added.


2. Reach Out to Peers. Talk to other dealers, confer with manufacturers, read SD&I and other trade journals. A couple of years ago, hosted video was just short of science fiction — today, it is relatively commonplace. “Don’t fall into the trap of thinking you can just simply add this to the product lineup and have it magically grow into a business,” Lohse said. “It takes hard work and energy to build a program from scratch.”


3. Look at Equipment Needs. A dealer will need to use compatible video equipment at the customer’s premises; however, once video is pulled to the cloud, it is stored there until it needs to be played back at a central station or customer facility. “The beautiful part with the cloud is that you simply provision cameras and connect them through the customer’s Internet connection,” Ryan said. However, he added, it is key to go with an experienced partner that offers a proven, reliable platform.


4. Build a Compelling Pitch. Showing clients what hosted video will do is the first step. An iPad and a hotspot will give the buyer a sense of how security video works. Most customers will end up telling your salesperson how they want to manage the network with their mobile device. Ryan said the interfaces they use are no more complex than an app you would download from the Internet. Most interfaces have only a couple of tabs: settings, notifications and views. Let the system sell itself.


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