Integrator Roundtable: The benefits and challenges of selling hosted, managed security services

Hosted and managed security services, be it access control or video surveillance, have been around for a number of years. Although there are differences between managed offerings (systems operated and maintained by a third-party provider) and hosted services (leased infrastructure controlled by the customer), they both offer tremendous advantages to end users and security integrators.

One of the primary benefits of either a managed or hosted access control or video platform is that it enables end users to reduce the footprint of their security infrastructure, such as the numerous servers and recorders that are typically required to run a large-scale security system. It also simplifies the service and maintenance process for users, shifting the burden of things like software updates to the service provider.

For integrators, hosted and managed services provides them with an opportunity to establish a recurring revenue model. Of course, there are still a number of challenges involved in providing these services, not the least of which can include reassuring skeptical customers of the security of managed and hosted platforms given the ever-increasing number of high-profile data breaches. SIW recently caught up with executives from several systems integration firms across the country to get their take on the current landscape of hosted and managed security offerings.

 

SIW-STE: How has technology evolved in the hosted and managed security services space and how have end users come to embrace it?

Chris Wetzel, executive vice president and founder, Intertech Security: End users are getting much more comfortable with a hosted platform, whether it is access or video. It allows end users to take a system and have a lot of the same functionality that you would have with an enterprise solution. They can also move into that platform starting from scratch with their first card reader having the functionality. As the system grows, they have the flexibility to manage that platform in-house. With this approach end users haven’t lost any of their investment and they still have all of the functionality they want. If they are trying to figure out how to migrate from an existing system away from it, the hosted platform might give them a way to migrate using this different technology on an enterprise platform. Over time they can then assess the approach they want to take to replace their existing system by having some exposure on a small scale without a lot of cost on a hosted or managed application.

Brad Wilson, president and COO, RFI Communications & Security Systems: I think the end users are pretty savvy today. End users are used to trusting the cloud and depending on those types of support services. They are also very aware, especially as younger professionals move into our industry, that there are a lot of disparate systems out there. All of sudden they’ve got this security network or systems to deal with and they’re really looking for convenience and simplification and we, as an industry, tend to make things very hard and complicated.

John Nowak, senior vice president, VTI Security: I would agree that these types of services are a more readily acceptable business model today than they were a few years ago, but they’re still kind of a challenge on the sales front, discussing the business value and showing the customers exactly how these services raise profits and lower costs. Coming from the advanced integration side of the business, we see some of these services fall down at a certain level, so there are some things that you just can’t accomplish in a cloud environment today that I’m sure will be addressed as products and solutions evolve in the future – making these things easier and more readily attainable off of a network device.

 

SIW-STE: Are there still those who are a little leery about using hosted or managed services and what are some of their chief concerns?

Wetzel: The network connectivity, so opening up ports and giving us access onto a network can be a concern. Customers are concerned about how well we can secure the network with the right firewall to make sure that only certain ports are open. This sometimes can be a challenge and can take a little while to get comfortable with the approach. At times, we’ll put a separate DSL line in to communicate, so we’re not on their network but still give them what they are looking for with a hosted system. The other concern is where is the information going? Where is it stored? Is it on the cloud somewhere? That’s not an issue because it is in a secured environment in our central station with everything locked down.

Wilson: Identity and authentication because everyone hears about security penetrations and hacks. Some of these are operational risks and some are organizational risks and that’s how I’ve always classified them. Operationally, this could be bad and someone could take this or take that – trade secrets, etc.. On the organizational side, you get into a penetration where someone has hacked through R&D or credit cards and you start that whole financial element and no one is immune from that. That drops the value of a company significantly or could and it kind of burns into peoples’ brains.

 

SIW-STE: Do you believe that the industry still needs to do a better job of educating the market or do end users pretty much understand these offerings now?

Wetzel: My guess is there are a lot of companies in the security industry that aren’t offering these services and there are a lot of customers, end users that aren’t educated on it primarily because their security system providers do not offer the solution. We feel it is an advantage to our clients and our customers because we give them an option. We are taking the time to educate them on a breadth of access control and surveillance solutions available in the market. There are still a large percentage of integrators and end users that are not educated on the use of this technology and service.

Nowak: I think there is always a place for education, especially in this area. If I’m hosting video or I’m able to pull video from the cloud at two-frames-per-second in VGA quality, that’s not exactly usable video from a security perspective in a lot of cases, so you typically have to augment that with onsite servers if you want forensic information you can pull from an incident. There’s a lot of education that needs to go on and it’s about expectations. If my expectations are that I’m going to be getting a certain level of quality of video and, through my cloud services, I’m somehow falling short of that then that’s an expectation and it goes back to that frontend conversation and education to not only to the end client community, but also those managed service providers.

 

SIW-STE: Are the traditional benefits of these services still the biggest selling point to customers or are there additional advantages that have caught on in recent years?

Wetzel: From an access control standpoint, those benefits are still in place. Some of the new benefits are they don’t need the hardware. If I have somebody trained who is the one person responsible for the system and that person is not available – either on vacation or it’s an off hour – then we’ve got the ability to make that change, add a card or delete a card in-house and ensure it’s done in a timely manner. That’s a huge advantage. We have the ability to manage badging remotely and provide credentials with a photo, the company logo and name without the customer having to make the investment in the software and printer.

From a video side, with better quality imaging thanks to megapixel technology and video analytics, we’re offering services that we couldn’t offer before because the camera is much more intelligent and is providing us much more reliable information that we can respond to.

Wilson: If you’re in that space and you’re working in that space, there are many more value propositions and takeaways and part of that is, as you get into more of a XML and somewhat open APIs, I can really start to talk to other types of systems and that’s a great takeaway. All these things are possible and they all come at a cost and value and there’s a cost-value price proposition that goes on there.

 

SIW-STE: What kind of impact have hosted and managed services had on your business as a security integrator?

Wetzel: It’s been a positive impact because it has allowed us to continue to grow our recurring revenue and our service model. As with any integrator, the more you can grow that side of your business and become less dependent on the project revenue, the more stable your organization becomes.

Wilson: It’s allowed us to go into different markets that we typically don’t go into in terms of that medium commercial market. Saying all of that, it starts to drive more recurring revenue which is the glaring, no-brainer answer.

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