What to Know Before Transitioning to an ‘As-a-Service’ Model
Experts explain why you shouldn’t sweat the as-a-service transition, and how it can reduce cost and maintenance pain points for customers.
These days security customers can’t help but hear about almost everything they can get ‘as a service’ within their system proposals. Opting for video-as-a-service (VaaS) and access-control-as-a-service (ACaaS) solutions, just to focus on two, is becoming increasingly more attractive to end users.
Systems integrators (SIs) are, in turn, embracing the approach more vigorously, and with good reason. This new business model can catalyze additional RMR opportunities and give them an edge in closing more sales.
But scaling the learning curves to transition from traditional physical security solutions to Cloud-based ones can be an intimidating proposition for some. Here, representatives from several industry-leading manufacturers share their perspectives on this emerging market and how it’s impacting integrators, end users, and the industry at large.
Read on to learn from these experts why you shouldn’t sweat the as-a-service transition, and why your customers will be on Cloud Nine, too, with their new solutions.
Explore the Core Differences
Integrators new to ACaaS and VaaS need to first recognize that there are some significant deviations between traditional, onsite physical security installations and the ‘as-a-service’ models. For starters, the two types of offerings have very different sales (and end-user budgetary) structures.
Steve Van Till, president and CEO, Brivo, and a recent SSI Industry Hall of Fame inductee, notes, “Prior to selling ACaaS, [SIs] sold hardware-based systems with large upfront costs that generate large commissions and then moved on to the next project. With ACaaS, they’re shifting to a subscription service model that includes a wide range of capabilities and support included in a monthly revenue stream.”
Along with a different financial aspect to the sales, integrators must also prepare customers to think differently about some fundamental technology changes. James Hoang, integration manager, Speco Technologies, says dealers may need to reassure and better inform customers.
“This new approach will require extra effort to educate end users on the new technology. The idea that their video will no longer be kept on their premises but would reside on someone else’s servers thousands of miles away may be unnerving for some end users,” Hoang says. “The end user will have security and privacy concerns, and dealers must be prepared to address these concerns and put the end user’s mind at ease.”
Cloud-based solutions, however, should not be a cause for concern, contends Martin Renkis, general manager, Cloud Solutions, Global Security Products for Johnson Controls (JCI). He says that actually Cloud storage can serve as a strong selling point.
“When we first started seeing these Cloud-based solutions, many people didn’t want to their information up on the Cloud. My argument is that a Cloud-based solution is more secure than a local solution, if you look at the amount of investment that a company like JCI puts into cybersecurity and protecting the data,” he says. “We encrypt the data from the moment it’s captured at the camera and have built out a robust feature set with our Cloud platform. It’s been operational for 20 years and an entire team is dedicated to protecting the user. It’s not just your local IT guy saying they put up a firewall.”
Appealing Attributes to Emphasize
The as-a-service model is an attractive one, especially to small- to mid-sized businesses (SMBs), because upfront costs often only include those of the edge devices such as cameras and access control readers. There’s no need to purchase servers or operation systems and there are no databases to license.
Cloud-based access control offers end users the opportunity to implement a robust security solution without having to invest heavily in IT infrastructure, echoes Eric Widlitz, director of North America sales, Vanderbilt.
“Instead, the security application is hosted in a datacenter off premise, saving both time and money. Organizations can access and manage the system remotely 365 days a year from any Internet-enabled device. End users also never have to worry about software upgrades again. Because this is a service, users are always using the latest software version available. Once the software in the Cloud is upgraded, everyone gets access to it immediately.”
There are myriad other advantages to the model that shouldn’t go unnoticed by SIs, such as simplicity of scale, ease of management and streamlined user experience, notes Cody Flood, senior sales director, Arcules.
“These services should be as easy to use as an app on your smartphone, which is why they are ideal for a small- to medium-sized enterprise environment,” he says. “Because these customers likely have a limited to nonexistent IT or security team to lean on for support, an easy-to-use service with an intuitive user interface is critical.”
Flood says for many SMBs, on-premises solutions can be cumbersome to update. With Cloud-based solutions, updates can be implemented automatically, which also saves SIs from having to roll trucks to a customer site.
“The support integrators provide can truly be remote and provide added value for customers, who will … continue to invest in the service-based relationship through a recurring monthly service contract,” he adds. “Additionally, integrators need to look for solutions that have the ability to easily scale — beyond just having the ability to add additional cameras.”
The relief on end-user organizations’ IT strains is a major item to pitch for ACaaS, explains Paul DiPeso, executive vice president, Feenics.
“There are no servers or appliances required onsite, which reduces the carbon footprint, frees up space in the IT closets, and eliminates any cooling costs or power consumption associated with server-based solutions. ACaaS also eliminates VPN tunnels which opens ports on the firewalls,” he states. “Also, a Cloud implementation removes the risk of incompatibilities of what server software the end user could be running and what is needed for an on-premise install.”
Proceed With Caution
Ian Siemer, vice president, marketing & product management, OpenEye, agrees that from a performance, functionality and ease-of-use perspective, as-a-service is a better solution for end users in almost every way. But security integrators should make a well-thought-out decision before offering them.
“Integrators need to look internally and ask themselves if they have the infrastructure in place to support the transition to an RMR sales model,” Siemer says. “Do they have a commission structure in place to incentivize their sales team? Do they have the right resources in finance to manage recurring service billing? Do they have an operations infrastructure in place to service and support the managed services normally paired with this type of solution? Are the verticals they service open to allowing web access to all systems, and do they have the network infra-structure to support it?”
These are just some preliminary questions SIs should ask themselves when considering an as-a-service undertaking. AJ Frazer, V.P. business development – Cloud Services, Agent Video Intelligence (Agent Vi) explains, “Our industry is undergoing a significant transformation. VaaS isn’t just a more efficient way to install video analytics. It is fundamentally different.”
So, how will this impact the security integrator with 30 years of experience and training? What happens to their business model if software installation, configuration and maintenance can be done automatically?
“They have to recognize that SaaS is not software. SaaS is a service,” Frazer notes. “Traditionally, when a customer buys software, they’re responsible for it and everything that comes with it — up-dates, hardware, firewalls, etc. When the customer buys a service, they buy a capability, and all product responsibility shifts to the service provider. In our definition, VaaS includes all video-related technologies and features, including real-time camera monitoring, real-time camera control, video storage, short-term — under 30 days — and long-term archiving, analytics and forensic investigation.”
Successfully Shifting to Subscription Sales
Integrators need to plan ahead and prepare for a marked change in their pricing and payment processes. JCI’s Renkis stresses the importance of understanding and being comfortable with the subscription model.
“The first hurdle we run into when we talk to a typical SI is understanding the business model. They need to spend time building an Excel spreadsheet to that clearly defines how much they’re selling products for, how much they’re selling services for, and how they’ll make money because it changes in this scenario,” he says.“And then there’s the investment, because what we find is when SIs look at this model, a) there are going to be challenges as they look into a recurring services business model and, b) this is not what they’re used to. They need to build up an RMR model as they grow. So, they must ask themselves if they’re prepared to make the investment and go down this path.”
It doesn’t have to be complicated, Renkis says, noting that vendors like JCI are happy to assist since dealers are relying on selling their products and services.
“There are some interesting opportunities there and, luckily for us in the physical security space, there’s still opportunity for hardware to be sold and installed,” he says. “So, it’s an interesting model and there are some creative ways that may make the transfer over to the service model less painful.”
Because integrators are used to getting a payment upfront and will now have to strategize for relying on a monthly payment, they may have questions on how to properly price such subscriptions.
“It depends on the SI,” notes Despina Stamatelos, product marketing manager, Genetec. “They may charge one price that includes all while others may have different packages. Education is very important with regard to setting up the right pricing structure. If an SI is new to the model, we can help them be more competitive and explain how they can set up their monthly pricing.”
Arriving at the right subscription rate to charge is highly dependent on what other services the dealer offers, Open-Eye’s Siemer states. “Some bundle all their managed services into a single line item and others break out the video surveillance recurring cost as a separate item. This is why it is so important for integrators to understand their own revenue model and capabilities first, before they start selling to their customers. Standard margin rules apply if they are reselling the service with no value add. If the solution is being bundled with other managed services, then a majority of the quoted price will be based on the integrator’s internal costs to offer those services.”
Richard Goldsobel, vice president, Continental Access – a Division of Napco Security Technologies, says integrators new to ‘as a service’ will need to have some resident IT and server expertise on staff. That can aid technical configuration and support of the server software, and can also assist on the sales side to interface with end users.
“Typically the integrator will arrive at a base price by amortizing their cost of software and server support and maintenance across the number of locations that are being serviced,” he adds. “After that, optional additions can be offered for a more heavily managed system or other high end features.”
More Tools for Supporting Service
Though the subscription model for ‘as a service’ might be based around month-to-month payment, Arcules’ Flood contends SIs should approach it holistically. This relies on educating their teams about shifting their mindset as well as maintaining ongoing communications and properly planning for the new paradigm.
“When beginning to offer a service-based solution, integrators should have a plan in place for billing, pricing and implementation before selling to customers,” he says. “This seems like a logical step, but it’s important to go back to basics in an effort to avoid issues down the road. Ensure there is an open dialogue with the service provider for troubleshooting, technology updates and more. Keeping the lines of communication open is critical to the success of implementing an ‘as a service’ product into your portfolio.”
Using Cloud-based technology to make businesses more efficient, effective and secure should be a priority, Vanderbilt’s Widlitz emphasizes.
“The responsibility that comes with this lies in ensuring the solutions used are safe and protected from outside threats. Integrators must seek out manufacturers that prioritize cybersecurity through comprehensive data protection and reliability,” he says. “Integrators should also be prepared to offer immediate, efficient and remote support at all times to their customers and ensure the manufacturers they work with have the tools and support available to help them succeed.”
Manufacturers can highlight the features of their software that help support multiple end-user environments on a single server, says Goldsobel. “We provide training and a field engineer who can be onsite with the integrator to help get them set up. The integrator should look to a manufacturer that can support their level of expertise, so that they are comfortable to provide hosted services to end users.”
Erin Harrington has 20+ years of editorial, marketing and PR experience within the security industry. Contact her at firstname.lastname@example.org.
Security Is Our Business, Too
For professionals who recommend, buy and install all types of electronic security equipment, a free subscription to Security Sales & Integration is like having a consultant on call. You’ll find an ideal balance of technology and business coverage, with installation tips and techniques for products and updates on how to add sales to your bottom line.
A free subscription to the #1 resource for the residential and commercial security industry will prove to be invaluable. Subscribe today!