I believe in coincidences, but when something happens to me at least three times, that is a trend.
Recently after giving a presentation, I was asked: "You mentioned the move towards vertically integrated solution companies. Do you also see a change from "bespoke" solutions combining multiple manufacturers' products toward more of a walled garden approach? How does that impact the manufacturers, integrators, and end-users?"
Then unrelated, I was asked, "What are your thoughts on Verkada? They don't use an ONVIF camera, and customers don't realize how proprietary they are until they're locked in. I want our industry to be more IoT focused."
Sometime later, I was asked if I would write an article "on the evolving convergence of physical and cybersecurity as it relates to end devices and security IoT devices? You can discuss interoperability and open platforms that have emerged as the convergence advances, along with how end-users are benefiting from the ongoing convergence."
Different questions and 100 various rabbit hole opportunities to go down. But they are all floating around the same topic: open vs. closed. Context does matter here, and this is where things get confusing and possibly interesting. As an industry, we tend to be very binary and have discussions like these with broad brush strokes. Things are either good or bad. They are either closed or open. They are either a standard or not.
But it is more complicated than that, and this is where words also matter.
I am interested in and specific to this article (my rabbit hole) is the open or closed platform's discussion. And I am mostly interested in the business models' impacts versus the technical talks (APIs).
Here are some of the "open versus closed" business models that are becoming more prevalent in our industry and what I think it all means.
Every (at least the ones that will matter long term) security software system (access control, video, alarm, etc.) has the opportunity to be and is moving to an operation platform in verticals like enterprise, multi-family and small to medium businesses.
This shift has massive implications.
As the industry goes mainstream and more software-centric (versus hardware-centric), the user interface specificity and broader system abilities will become more critical and expected by the end-user.
In short, the end-user wants a platform, not 100 software tools that do one thing.
Sorry, but the safety-only value proposition does not hold enough water anymore. The majority of our industry will get bespoke based on the vertical that the manufacturer focuses on and will look to become a platform.
Since our industry has been primarily focused on the high-security market and the overall lack of interest by a lot of the C-suite players at our customers, the expectation of being focused there and only there has allowed us to stay myopic on the security value creation and be more of a tool for a specific use case than a platform. As verticals become more demanding, increased visibility due to coronavirus, and proliferation of other software systems, expectations that systems do more will grow.
Coupled with the business awareness of manufacturers that they want and can get more dollars per customer (like Salesforce does), systems will start to feel and look more wall gardened but in fact, what they are becoming is more of a platform.
This move to a platform will have impacts such as:
- Software companies will bring their own hardware solutions to market and deeply couple them with their software experiences. They all will provide third-party hardware to work with their system, but the priority will shift to their products. For incumbents and for a short window of time, having the integrations of third-party products done will be a differentiator, but do not expect to see many more integrations done as they are expensive, creating a low return on investment. Companies are also getting a better understanding of adequately using their internal resources on their systems versus someone else. These wall gardened systems will give the perception of being open by providing open, well-documented APIs for system-to-system software integrations.
- The vertical integration of software systems and lack of prioritizing resources to do third-party integrations will have two forcing functions:
- Traditional hardware manufacturers, too, will vertically integrate and offer more software solutions. You will see lock companies, reader manufacturers, router companies, and such provide their access control, visitor management, video, alarm, etc., software solutions. Hardware companies being in the software game have already happened. It will just become more apparent. But here is an unspoken truth and something to watch: most hardware companies make terrible software. Maybe the software companies will be better at making hardware? Probably not, but this is why OEM manufacturers will always have a place.
- Hardware manufacturers will prioritize using standards to make it easier for software companies to integrate their hardware, whereas before, they did not care or prioritize it. Standards will be part of their sales pitch to the software companies ("We are using OSDP to make it easier for you."), and the software companies will start to make it a priority ("We are only going to use OSDP devices, so come back to me when you support it."). They will need to reduce the burn and make it easier for software companies to do the work. This will be good for the industry and the standards bodies. What I find interesting here will be where the standards come from. As more Megatechs get involved in our industry, and our industry gets more mainstream, who drives these standards will start to be more critical. For example, look no further than UWB.
But in the end, even with the adoption of standards, point-to-point integrations, both for hardware and software, will become less imminent in our industry. The point-to-point integration processes, documentation, and way they were managed and done have become our industry's standard operating procedure. And for those of us who have done it or managed it, it sucks. In aggregate, point-to-point integrations come with long timelines. They are expensive, with a small return on investment. They typically all look the same and create little incremental customer value. And the maintenance of these point-to-point integrations is unwieldy.
Put all that together, and you start to see why our industry will go the way of many other industries and start to adopt more APIs.
And all of this leads me to one massive business opportunity.
The adoption of more APIs, the pushing down of integration work away from the manufacturers, and more companies looking to become a platform will create the need for a new breed of system integrators. Like other industries, we will call this new breed of integrator an ISV (independent software vendor). Unlike our traditional industry system integrator, ISVs make and sell software products (in conjunction with a hardware or cloud platform provider). Yes, this already exists, but it's either an outlier or an anomaly at this point. It will become a very prominent way our products and services are brought and maintained in the market.
Yes, I am saying that integrators will also create their own software solutions and IP for their customers. And yes, manufacturers and customers alike will welcome this type of ISV with open arms.
And with it, we will see an immense value arbitrage happen.
So, to answer the three questions posed to me:
Yes, more wall gardens but done as platforms with APIs. The impact will be massive.
Some companies are ahead of the trend, and customers care more about the experience than the hardware. They are following IoT trends, so, in many ways, they are IoT-focused.
Security is converging to become a feature of a much larger value proposition. The industry will be forced to use more standards as it goes mainstream and horizontal as a platform. The attention to the hardware lessens, the software increases, and the end-user demands drive adoption.
About the Author:
Lee Odess is in the business of information and innovation. He recently wrote the book on "The 6 Phase Changes Shaping Access Control." (Visit www.accesscontrolbook.com for more details). Selected as one of the 2020 IFSEC Global influencers in Security and labeled as an uber-networker by the Washington Post, Odess has over 18 years starting, building, and leading businesses with an exceptional track record for sales growth and marketing effectiveness.
Odess has worked as an entrepreneur and an integrator (founded E+L+C), for a multinational billion-dollar manufacturer in the lock and access control industry (Allegion), as an executive of a start-up who pioneered the IoT/smart lock/smart physical access control industry (UniKey), and as an executive with the first cloud-based physical access control manufacturer (Brivo). He put all those years together to form www. the inside. online, a media platform focused on the physical access control industry, and Group337, a growth studio focused on business creation in the CRETech, proptech and smart home markets for small to large companies in the security, access control, and IoT industry.
