Forecast Calls for Cloud-Based Revenues

A lot of people have their head in the cloud these days. Accusing someone of that three years ago might have started a fight. Today, if you have your head in the clouds it’s not that you are an “airhead.” Quite the contrary, it is more likely you are a forward-thinker.

Three years ago, few people outside the IT community had heard of cloud computing. For most of us, cloud was the term used to describe offsite telecommunications infrastructure initially, meaning Ma Bell’s telephony network and eventually the generic term for the public Internet. Today, cloud is a broad catchall for offsite computer, infrastructure and software resources.

For us old-timers, a block diagram of a present-day cloud architecture looks remarkably like a drawing of a 1970s corporate computing environment. The mainframe computers used back then have now been replaced by racks of blade servers, and desktop PCs, laptops, netbooks and tablets have replaced those “boat anchor” monochrome text terminals. While it is a fitting analogy, the similarities end there.

Financial advantages are at the front of the cloud computing revolution. As cloud initiatives’ financial implications begin with a reduction in the capital expense normally required at the front end of a project, but the cost savings go well beyond hardware. For example, for enterprise IT solutions eliminating onsite computer systems means less space is required, which leads to lower real estate costs. Computer systems need round-the-clock power so moving them offsite results in lower electric bills. Cloud-based services also lower software licensing and support costs, not to mention that software upgrade headaches become someone else’s.

In our industry, “cloud-like” card access offerings have in fact been around for more than 20 years with only a handful of firms offering the service, mostly in multitenant buildings. Those systems are better identified as hosted versus cloud, but from an end-user’s non-IT perspective the differences are negligible. Those are more properly categorized as managed systems since the integrator also had responsibility for cardholder database changes. True cloud-based card access systems appeared about five years ago and have realized significant year-over-year growth. The success of cloud-based card access has caused video manufacturers and integrators to try to figure out how to be the cloud services leader in the ever-expanding video market.

Success in the video world will be a little more difficult, however. That is simply because of network bandwidth concerns. As all integrators know, IP-based video installed on a customer network requires careful planning so the primary business use of the network is not impacted. When the video is to be transmitted offsite, bandwidth concerns require even greater scrutiny. Bandwidth constraints will initially hamper the growth of cloud-based network storage as a full function substitute for local DVRs. However, this will drive the creation of innovative applications that leverage camera-based storage and analytics to efficiently manage local versus offsite video storage.

Camera-based algorithms will determine what video is useless, what is worth keeping and what should be sent to a cloud for further processing or archiving. For example, video deemed to be useless may be stored at a lower resolution and decreased frame rate than video determined to be of interest. Only the video of interest may be transported to the cloud. Once the selected video makes it to the cloud, innovative firms will offer managed services that leverage that video data.

Financial advantages of cloud computing are not end users’ alone as they provide integrators with a contracted revenue stream for two product categories, access and video, that did not always generate recurring revenue. They are a win-win for the integrator and the customer.

Jay Hauhn, Chief Technology Officer at Tyco Integrated Security, has more than 30 years’ industry experience and is a member of SSI’s Hall of Fame.


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