VARs Look at Business Growth as Big Brother Goes Digital

Imagine yourself at one of Hawaii's largest resorts lounging by the pool, browsing through the shops, sitting down for a fine meal, taking moonlit walks along the beach. Can't you just picture it?

Thanks to some recent technological developments, so can the resort's entire security staff. No longer reserved for airtight military outposts or cloak-and-dagger surveillance operations, physical-security technology is converging with traditional IT security, enabling the creation of systems designed to make everyday people as closely monitored and protected as a cache of weapons-grade plutonium or a vault full of diamonds.

That's why when this particular Hawaiian resort-which chose to remain unidentified-wanted to upgrade its security system, it called on Extreme CCTV, maker of Night Vision infrared surveillance systems. The British Columbia-based company develops digital video technologies that are powerful enough to see through rain, snow or fog at distances of up to five miles and can read license plates from just as far away. These applications don't come into play much at a typical resort, but they do bring considerable peace of mind.

"After we finished installing, we had a military group come in to review it," says Bryan Montgomery, business development manager at Extreme CCTV. "They told us it was second-to-none and compared favorably to the security solutions the U.S. military has installed at its bases."

Such high-level security may seem like overkill to some, but that's where we're headed. Big Brother is indeed going digital. IP-based security solutions and technologies, such as digital video, smart cards, biometrics and behavior-recognition software that are used for both physical and logical (computer) security, are maturing. The result: Vendors and VARs that can assist in the convergence of these technologies could be looking at a huge market opportunity.

According to Steve Hunt, president of Chicago-based security consulting firm 4A International, the entire physical-security industry is worth about $120 billion, half of which is spent on guard services. The rest is split among technologies that track event and identity management and services such as alarm and environmental monitoring. "There's a tremendous opportunity for IT resellers in these areas, because what customers need are systems that collect information from lots of sources and aggregate, correlate and analyze it," Hunt says.

Traditional IT vendors are beginning to recognize the trend and are making deals to get into the game. One recent example was Cisco Systems' purchase of video-surveillance hardware and software vendor SyPixx. At Cisco's Partner Summit, CEO John Chambers said he expects the physical and IT security worlds to converge around data centers and communications systems. "In Chambers' 'Cisco-speak,' that means he expects it to eventually be a $1 billion annual business for his company," Hunt says.

Digital Video: Seeing Is Believing

The most obvious convergence point is video surveillance and IP networks. Other potential crossover applications include mating building access with computer logins, linking RFID price scanners or phone systems to a network, protecting data centers and using video surveillance to gather marketing data.

"Video surveillance itself will become a commodity over time, but by staying ahead of the curve and using the technological innovation to drive services, resellers can create new profits," says Tim Palmquist, an account manager at ISG Technology, an IT integrator in Salina, Kan.

Digital-video surveillance emerged first as a logical extension of digital still photography, eliminating the need for security personnel to record and store VHS tapes. When combined with behavior-recognition software from vendors such as Cernium, it dramatically increases a security staff's productivity. The software learns the background of the image being monitored and cues security personnel if something is amiss-someone lurking outside a school dormitory or in a parking lot, for example.

"This allows multitasking by video operators so they can be more efficient instead of just sitting in front of a screen," says David Reed, vice president of business development at Electro Specialty Systems (ESS), a San Diego-based systems integrator.

There's a wide range of potential customers for this IP-based physical security. There's an obvious demand for military bases, airports or train terminals and retail outlets. But the technology also has great appeal at universities, hospitals, corporate campuses and amusement parks. Basically, any organization that has a physical space to secure is a prospect.

"We did an installation at Sea World in San Diego; they were having problems with people coming up on the beach and wanting to swim with Shamu," says Phil Robertson, vice president of corporate development at Cernium. "We're now seeing more and more of the physical-security budget coming from IT groups."

ESS also deploys card readers and ID badges that are integrated with networked systems. Those technologies allow for a more sophisticated level of monitoring, preventing things like people swiping an access card and then passing it back to someone else, or "tailgating"-someone trying to enter a building right behind a legitimate employee. ESS and others are beginning to get into wireless-security installations, as well, for organizations that have remote sites to monitor and don't want pay for the cost of laying physical cabling to the sites (see "Lay of the Land," below).

Physical Fitness Challenge

What all these technologies have in common is that once the data is collected, it's delivered and shared across a simple Ethernet connection, just as with any other network. "Different levels of security have different levels of integration; access-control systems typically are integrated through the WAN and back to the network host," Reed says. The addition of a physical component to a logical security installation can also provide additional revenue.

"Customers are looking for someone who can import a physical-security component to their network and include it in their standard data correlation and reporting," Hunt says. "Every customer site will include at least some customization, so you can add extra costs for those services."

One way for IT security folks to ramp up their skillsets is to partner with physical-security resellers such as Convergint Technologies. Based in Schaumburg, Ill., Convergint has put most of its 380 employees through a network-certification program to ensure they know the IP basics. The company tries to partner with traditional IT solution providers on its converged projects.

Tony Vasco, vice president of Convergint's security division, estimates that about one-quarter of the company's project proposals are completely IP-based, up from about 10 percent a year ago. "In the past few years, a lot has happened with video," he says. "It's more than just installing cameras, because it's all digital, and people need network-management tools for that."

By getting Convergint's employees versed in the basics of networking, the company is trying to bridge the gap that might prevent a sale. "It takes about three seconds for an IT guy to say, 'You don't understand the technology' and write you off," Vasco says. "Our goal is to get enough of an understanding of the IT side of the business so that we're an appealing partner."

Unfortunately, this ramping up of skills doesn't always go both ways, and traditional IT resellers may find themselves on the outside if they don't also take the time to learn the physical side.

"We propose our projects from a business perspective, not just because the technology allows it to be done. The CEOs and CFOs will only move forward if you can make that case to them," says David Ruhlen, Convergint's business-development manager.

This is where solution providers such as ISG will have a leg up on those who simply demonstrate how cool a new converged technology is. "We were traditionally a logical security company and got into the physical side a couple of years ago," Palmquist says. Training people on vendors' products resulted in $3 million annually coming directly from the physical-security engagements, he adds. Palmquist says that the training, coupled with ISG's IP background, will make the company tough to beat as convergence gains more traction.

Teaming For Market Power

BroadWare, a developer of IP-based security systems, is trying to join physical and logical solution providers as a way to bring converged security into a broader market.

"We see ourselves as the bridge that IT people can climb over to get into the physical-security space and be the service provider for the physical infrastructure," says Matt Graham, BroadWare's vice president of professional services.

That's precisely what Convergint wants-partnerships that help close deals. "We're not seeing a lot of systems integrators putting the effort in, because it's an expensive proposition," Vasco says. "It's better to do it this way [by partnering] rather than try to be Superman and do it all yourself."

The source of many of these partnerships is, surprisingly, the customer. End users working with an IT integrator will steer the integrator toward physical-security providers.

"One trick is to sell the new technology to your existing customers," Hunt says. "IT integrators generally won't have much success selling to physical-security directors, but they do know how to sell to CEOs, CFOs and CIOs."

Bill Crowell, the former deputy director of the National Security Administration (NSA) and now an independent security consultant, says that demonstrating the ROI of converged security to these corporate officers will make it that much easier to get a deal done. "The technology available now allows security employees to do a much more effective job and be more involved in prevention," he says.

Even with C-level support, Extreme CCTV's Montgomery says the addition of physical-security components to an IP network sometimes meets with resistance from unexpected sources.

"IT groups see convergence as a threat; they don't want additional systems on their networks," he says.

So, is an IP-physical-security boom coming? Many seem to think so, and only those who are prepared today will be the ones to cash in on tomorrow's physical-security fortunes.

"What's important to understand is that within five years, the systems on which physical security rely will be software-developed by IT companies," Palmquist says. "And within three years, the market will be thrown open to many."

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Let's Get Physical

Traditional IT vendors and distributors are delving into the physical-security space. Here's how a sampling of IT companies are getting physical.

ActivCard: Smart cards, USB tokens

Cisco Systems: Video surveillance, access control, smart cards

Fujitsu: Biometrics

HID: Contactless RFID cards

IBM: Access control, biometrics

Ingram Micro: Perimeter protection, intrusion prevention

Microsoft: Smart cards

Oracle: Smart cards, access control, data-center protection

RSA Security: USB tokens, smart cards

Sun Microsystems: Access control, smart cards

ScanSource: Digital video, access-control systems

Tech Data: IP-based monitoring

Read case studies on how solution providers are converging physical and IT-security technologies at www.varbusiness.com.

Copyright 2006 CMP Media LLC. All rights reserved.

[VarBusiness -- 04/18/06]

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