A few short years ago, the idea of hosting sensitive financial information in the cloud was unthinkable. Today, more than half of all smartphone owners use the cloud to manage their bank accounts — not to mention their social and professional data.
By now, the cloud has also drifted into to the security industry, creating more disruption; but more importantly, opportunity for recurring monthly revenue (RMR) for dealers.
In the past, the business model was pretty simple: a dealer sold a system based on installation and equipment costs and marked it up. Now, in order to compete in a market whiplashed by DIY and digital on-the-go trends, dealers are forced to push the refresh button on old business models to offer monthly or annual service fees.
Arguably the most important emerging service is cloud-based Video Surveillance as a Service (VSaaS), or cloud-based video monitoring via a third-party operator — whether it is a dealer or a manufacturer. VSaaS is expected to grow at a compound annual growth rate of more than 18 percent until 2020, driven mostly by increasing video quality (such as high-definition IP cameras), decreasing costs and shifting customer lifestyle trends.
The quicker dealers can learn how to adopt and capitalize on cloud-based VSaaS, the quicker they can thrive in the modern video market, and perhaps the security market overall. However, going from installing cameras to selling cloud-based VSaaS is not simply a matter of swapping supplies and rearranging numbers on a balance sheet. Making the switch over to the VSaaS model requires an entirely new mindset and some creative thinking.
Understanding the Value of VSaaS
For dealers, the first step to adopting cloud-based VSaaS is to understand its value and communicate it effectively to end-users, perhaps drawing on previous experience with Access Control as a Service (ACaaS), which has been around far longer than VSaaS. Regardless, it’s important to understand that for the end-user, the value of VSaaS is getting data quickly and proactively. In the cultural wake of smartphones, customers are wired to look for ease-of-use, automation and customization, and expect information to be available 24/7 from anywhere.
Today’s cloud-hosted VSaaS systems are able to meet these demands by delivering meaningful, tailor-made data in an intuitive package. They can capture footage that can be accessed from any connected device and push out notifications that can be programmed to the end-user’s preferences and schedule. This alone saves the time it normally takes to comb through heaps of irrelevant data from more traditional monitoring systems.
Because of the heightened efficiency they offer, remote access and custom push notifications are especially useful for end-users managing several locations — such as retail and commercial businesses or campuses — or those having to comply with strict regulations, such as government facilities.
The most effective cloud-hosted VSaaS systems offer a single sign-on and master dashboard, which prevents end-users from having to sign into different facilities — ultimately enabling them to compare analytics, identify issues faster across multiple sites and reduce operational expenses.
From a critical security standpoint, hosted VSaaS systems can help detect problems before they happen. When asked, “When was the last time you looked at your system?” end-users almost always reply after an alarm event, such as a theft or car accident in the parking lot. Often, only then do they notice something wrong with the system, such as a failed hard drive or an out-of-focus camera lens. At that point, it’s too late to fix. VSaaS offers the ability to catch these flaws before they happen, leading to an overall higher-performing system and improved peace-of-mind.
At a higher level, many cloud-based VSaaS systems are championing the Internet of Things phenomenon by reaching new levels of integration with other systems, such as access control and visitor management. These integrated systems are currently available on the market, and can multiply the cost and time savings associated with cloud-based monitoring. Furthermore, VSaaS is currently set for rapid integration with intrusion, building automation and energy management, among other areas. This leads to endless exciting possibilities for the connected building, especially when it comes to managing sophisticated data and analytics all in one place.
Perhaps the largest obstacle to adopting and selling cloud-based VSaaS solutions is the misconception that it is perceived as not secure or trustworthy. Many customers still fear cyber risk in moving over to a cloud system, but the landscape is improving rapidly with secure data-encrypted firewalls offered by trusted networks and partners. In addition, cloud-based servers offer full redundancy and scalability, so failure is arguably less risky than traditional monitoring systems. For example, in the highly unlikely case that a customer loses information, recording devices will still maintain the information and continue to operate as usual.
Finding Creative Ways to Increase RMR
How does a dealer incorporate cloud-based VSaaS into their business model? In the old regime, dealers could rely on up-front fees for installations and equipment. Now, a dealer has to be flexible and willing to disrupt the status quo. They might consider offering a lower price at the onset, and spreading their revenue over the length of a contract. Although the dealer may carry the burden of less short-term cash flow, VSaaS offers several opportunities to make more money long-term.
For David Manento, president of Pennsylvania-based Royal Security Services, new RMR opportunities came in the form of offering tools to support cloud-hosted video and access control, such as cloud storage fees and dynamic IP address services. “We’ve found that customers greatly value remote access to video footage and images,” Manento says. “They seem to have no issue paying small monthly fees to support on-the-go capabilities enabled by the cloud.”
Perhaps the strongest and most stable path to increased RMR in this space is offering a hosted VSaaS solution from a trusted manufacturer, and building the hosting fees into end-user contracts. As noted previously, today’s cloud-hosted VSaaS solutions offer quick, proactive data for end-users to more-effectively monitor the security of their facilities; and, they integrate more intuitively with other features than ever. But hosted solutions also benefit the dealer by lifting operational burdens related to set-up and maintenance. With no software to install, no PCs to maintain and upgrade, and no risk for compatibility issues, dealers can install and support a system in a fraction of the time it used to take.
“Hosted solutions are much more sleek and user-friendly than they used to be,” Manento says. “I don’t need an instruction manual anymore. They offer clean design, automatic software updates, and single log-ins, saving a lot of time and hassle.”
Finally, VSaaS offers the more subtle and aspirational possibilities that come with its openness. Whether it’s a blessing or a curse, the open cloud dissolves all proprietary barriers, forcing the industry to improve standards across the board and focus on recurring services rather than product competition. With security and automation systems working together more seamlessly than ever thanks to the cloud, the VSaaS growth trajectory could extend long after 2020.
John Smith is Senior Marketing Manager for Honeywell Security. Request more info about the company at www.securityinfowatch.com/10213896.
