Times certainly are changing in the world of video surveillance. What was once seen as a novelty restricted for retail operations or large corporate buildings has now become an almost ubiquitous object in vertical markets never previously considered.
But there are a couple of other important changes in the video surveillance market these days: Not only are we seeing cloud-based video surveillance deployments become the standard, but most customers are also fine with service contracts tied to their video surveillance camera installations.
Not only does the shift away from a hang-and-bang approach mean security integrators are achieving recurring monthly revenue in greater numbers than ever before. It also means customers are awash in data from their surveillance cameras.
As you might expect, integrators who install video surveillance cameras are hearing the words “artificial intelligence” or the acronym “AI” from their customers in just about every discussion these days, whether it’s to mine the analytics or find ways to save money by letting technology take the place of people who were once charged with watching a wall of cameras from a folding chair in the back room of an office building.
Video surveillance comprises about 80% to 85% of the business for Tech Zone in Jefferson, Iowa, says owner Bob Smith, “and that’s because I love it. That’s what I want to focus on. I don’t want to do anything else. I can hang a projector. I can hang a projector screen, but it’s not what I want to do.”
The company’s primary vertical markets are K-12 schools and commercial installations. In addition to installing video surveillance cameras, Tech Zone also designs solutions for customers, says Smith.
“We call ourselves a security engineer because we do the design site visits,” he says. “We do the placing of the camera and the design camera models and then we do the implementation.”
Dealers hire Tech Zone to do the design and installation. The consulting side of the business takes the company to New York, Texas, Michigan, Indiana, Illinois, Iowa, Minnesota, Nebraska or “wherever the consulting is needed,” says Smith.
Security Control Integrators on Pine Brook, N.J., has made a transition in the past five year to increase its focus on cloud-based installations for its clients, many of which boast Fortune 1000 status, says president Trevor Stewart.
St. Louis-based Interface Systems, which provides remote video monitoring to multi-location businesses, specializes in the retail and quick-serve restaurant spaces and works for some of the some of the largest brands in in the country, says chief revenue officer Sean Foley.
The company also offers a virtual guard monitoring solution, which combines live audio into a video to protect Interface’s customers from everything from burglaries to robberies to loitering to shoplifting. It also works as a managed network services provider, including creating the network upon which its security solutions ride.
About 75% of Interface’s business is focused on video surveillance and video surveillance-adjacent solutions, says Foley, working across the U.S. and Canada in the retail and QSR spaces.
“If you’ve got a brand on the front of your store and you’ve got people and you’ve got assets and you’ve got customers to protect, that’s what folks come to us for,” he says.
Raytown, Mo.-based Watchmen Security Services prides itself on being a nationwide cloud-hosted low voltage integrator for about 14 years.
“Our go-to market strategy is really cloud-based technologies,” says founder and CEO Lucas Ingala, noting video surveillance represents about half of the company’s business. They do installations in vertical markets, including manufacturing, warehouses, multi-family buildings, quick-serve restaurants and retail.
Video surveillance represents about one-quarter of Siemens’ global security work, says senior account executive Tony Landis, who’s been with the company almost 18 years and in the security industry for 32 years. He focuses primarily on the Indiana area and works largely with those in the health care vertical market.
The Growth of AI and Cloud in Video Surveillance
Tech Zone’s customers usually aren’t shy about enhancing their security offerings or about considering artificial intelligence tools or cloud-based solutions, says Smith.
“Parking lots is a difficult one, because it’s more expensive because they’re not wired for cameras,” he says.
Some of Tech Zone’s customers are a bit slower on utilizing AI with their video surveillance cameras, with larger school districts more likely to take the leap, says Smith.
“Once they see the AI in play, they kind of have the ‘a-ha’ moment,” he says. “Then, you try and educate them that now, with the cloud platform, you’re having more people, more eyes with the capability of watching these cameras.”
“To be able to share the responsibility on a cloud platform has been a benefit for the schools, which is another culture change,” says Smith.
Smith is excited about the growth in analytics through video surveillance systems.
“Anything to make it safer for the school,” he says.
Tech Zone offers a 360-degree imaging service with the design side of its business for an added premium, says Smith. They use a hard hat with a mounted camera during walk-throughs and share that video with the school officials, for example, who can share the file with incident command.
“We want it in the school’s hands,” he says. “We want it in the client’s hands. We want it on for incident command.”
Security Control Integrators is “learning more and more” about the role of AI and its customers’ desire to implement it in their security solutions.
“There’s a lot out there, and what we’re trying to do, and what we’ve have a history of doing, is trying to figure out how it fits in our particular customers’ environments,” says Stewart.
That includes statistics related to occupancy, for example, he says, although that creates a new mindset where people must swipe themselves in and not hold the door for their co-workers.
“There’s a lot of value into seeing how many people and who are on the floors and really the best way to do that is through video,” says Stewart.
Building automation is another area where AI comes into play, he says.
“People want to know how many lights have to be on, what kind of air conditioning, how to cool and how to heat the floors,” says Stewart. “All those things could be tied into access control.”
Foley is always having conversations with customers about AI.
“Everybody’s talking about artificial intelligence, for sure, and video was the first mover in AI in a lot of ways,” he says. “AI needs to suck up data to be effective and there is no more rich data source than video.”
Customers are looking at protecting their assets, their customers and their employees, says Foley.
“That’s where it gets kind of cool,” he says. “Certainly, AI has proven highly effective in improving overall operation metrics within the retail space, within the QSR space and that’s going to continue to improve.”
Foley points to better monitoring of points of sale and monitoring transactions for “anomalous issues,” such as employee mistakes, theft or giving products to people they know.
“When you take the video and you take the data from the point of sale and everything else that’s going on in a retail operation and vacuum that up into an AI-powered or analytics-powered platform, you can start getting really targeted and start saving the operation a lot of a lot of money,” says Foley.
“There is a force multiplier when it comes to deterrence of bad behavior and efficiency,” he says, noting the use of two-way audio and strobe alarms increase the deterrence.
Ingala outlines the three reasons why Watchmen operates with a cloud-first mentality.
“First of all, our support team internally can support our customers better and we never have to roll a truck,” he says. “The second thing is our deployments are a lot easier, so we don’t need an engineering background. That allows our team to just go in and do what they do, which is really just serve the customer well and we’re not tied up on the networking side of it.”
“The third thing for the customer is it’s no longer just a record/review device sitting on their site anymore. It’s an intelligent piece of information that’s gathering information all the time and what we’re finding is businesses are starting to use it in their processes,” he says.
AI has been “the key word” for Landis in his conversations with customers and he’s continuing to learn more about its potential.
“I think a lot of people don’t really understand it so they’re trying to learn as well,” he says. “You’ve got the customers that think that they won’t have to mess with video anymore and it’ll just kind of run itself and others that think they can cut down their staff a little bit and maybe focus more on the system doing some of the more key pieces, which is smart. That’s where I think things will go.”
Landis notes about 40% to 50% of its base is focused on cloud-based solutions.
“A lot of customers start out with on-site and then they go to cloud,” he says. “It really just depends on the cases with their customers. Really what it comes down to whatever works best for them.”
Who’s Leading the Conversation?
The good news is security integrators are largely leading the conversation when it comes to talking about video surveillance, AI, cloud-based offerings and related topics.
“Smaller schools seem to be a little less educated and novice on it, so it takes them a little bit more time,” says Smith. “They want it but budget and management is a big issue for them but we can work with that.”
“I’d say they look at it as more of a commodity item versus a long-term plan of safety so that culture needs some work,” he says.
“We lead the conversation with a lot of questions, because it’s repetition for us and then we work on their trouble areas,” says Smith. “We kind of guide them through the conversation.”
Stewart’s larger customers are looking for technology to replace their security guards through video surveillance and access control solutions, he says.
“Everybody wants to be more touchless,” says Stewart. “We try to marry technology to what their corporate goals are for security.”
Some of Interface’s relationships with its customers go back decades, says Foley, and some approach them proactively when they have problems they need to be solved.
“We tend to do an assessment of the customers’ challenges and their overall security profile and then we will recommend what within our suite of solutions really works for them,” he says.
Because Interface does enterprise-wide deployments, it can tailor the solution to a particular store or location’s needs based on crime statistics and other information, whether that’s at McDonald’s, Chick-fil-A, Panda Express, Dollar General or Jared Galleria, for example, says Foley.
“One size does not fit all,” he says. “We deal with highly sophisticated, large asset protection teams and each one of them has very, very specific and stringent requirements we find.”
Foley adds, “As much as I would like to say, ‘Hey, this is our off-the-shelf solution that is perfect for this nationwide retailer, I’d say nine times out of 10, they go, ‘That’s great but can you maybe tweak it a little bit and make it do this?”
While many of Watchmen’s customers are “very educated,” it’s typically Ingala and his team leading the conversation about security solutions.
“In our industry, we’ve got so many hundreds of thousands, if not millions of different products and the customer’s looking to us going, ‘Okay, I’ve got a thing that I’m trying to accomplish,’” he says. “They’re trusting us to put all the pieces together and give them a total solution.”
Most of Siemens’ customers have some knowledge of AI and how it can help them on the security side, but they still have questions, says Landis.
“I guess they’re looking to learn more about it but it’s new to me as well so I’m having to kind of talk around it and try to explain it to them so they can understand it a little better,” he says. “Then we start talking about how they’re going to use it in their system.”
Using RMR to Stay Connected
While recurring monthly revenue has become a large part of helping security integrators keep their conversations going with their customers as well as improving their bottom lines, it’s not something that Tech Zone uses at all, says Smith.
“I don’t get any recurring revenue, but I continue the relationship with the customer,” he says. “A lot of customers leave us on their camera system so that we can help them because it’s going to take some time for them, especially if they don’t have a full-blown IT department.”
“We’re there to help them adjust cameras, look for video if they ask for it. We help them with scheduling if they have a challenge with it. I really am passionate about safety and processes and it doesn’t take me that long. It’s very simple for us. We use the camera systems all the time, so we just help them out,” he says.
On the flip side, RMR has always been an important piece of the pie for Stewart and his team, with maintenance contracts and hosted video offerings accounting for about 30% of the company’s overall annual revenue.
“For every small company that’s out there, imagine every two- and four-reader and four-camera system that you sold since the beginning of your career, if you could still collect on it,” says Stewart.
“For the price of a laptop a year, if you didn’t have to worry about backups, if you didn’t have to worry about upgrades, if you didn’t have to worry about, you know operating systems and you didn’t have to worry about cybersecurity right, why wouldn’t you do that?” he asks.
“You have companies that have 10 buildings, 50 buildings, 100 buildings,” says Stewart. “That’s 10 networks, 50 networks, 50 security systems, especially in your major cities.”
Recurring revenue represents about 85% percent of Interface’s revenue, says Foley.
“We’re a highly recurring revenue-driven business and that’s emblematic of the type of services we go to market with are very service-based,” he says.
“We have a nationwide network of technicians,” says Foley. “Ultimately, the systems we install are there to effectuate the service. It’s very rare that we’re just doing an installation of a thing and that’s it.”
Interface offers a suite of services including an alarm system with a verified aspect to systems with live audio to a system with point-of-sale integration.
Ingala’s company operates with this slogan: “If it’s recurring, then it’s not occurring around our office. You do have to know how to sell it though.”
“We feel like, for the customer, it’s a better experience,” he says. “If they’re in the cloud, it just allows us to do more for them and offer them more options and it allows some flexibility and different endpoints for them that they can use to, you know, protect their business and drive insights into how their business is run.”
Siemens offers “a little bit of everything” when it comes to recurring revenue opportunities, says Landis.
“We work it into the contracts and sometimes we’ve got to explain a little bit to them but for the most part I guess they just expect it,” he says. “It gives me a chance to be in front of them a little bit more.”
Staying Ahead of the Video Surveillance Game
As security technology continues to advance and evolve, our respondents universally say they rely on resources such as this publication to stay at the forefront of the industry. It also helps to be part of industry groups and to attend events including ISC West, GSX and PSA TEC, to name a few.
Smith also sees opportunities for the larger schools in his coverage area to share what they’ve learned with the smaller institutions to pass the knowledge along. Tech Zone also learns from its experiences on every installation, he says.
Manufacturers welcome feedback from the integrators who are installing their products, says Stewart.
“When you’re on the manufacturing side, it can kind of work in a vacuum,” he says. “You have great ideas and then you wonder, ‘why aren’t we selling a million of these?’ So they get that information from people like us who are in the field.”
“We hire people that are on a higher level of technology. We have somebody on our staff that used to be a product manager so he’s used to working with products and looking at products and we try to kick the tires,” says Stewart. “What we do is we try to find out the products that we have, what they can do, how we can apply them to our customers and if there’s a gap.”
“You’ve got to invest and you’ve got to keep a pulse on things,” says Foley, noting that Interface relies on its development team to stay on the forefront of the industry.
“We have to be dialed in or you’re likely to miss something,” he says. “We are fundamentally a technology company so we’re constantly meeting with customers, meeting at industry events, learning about what’s developing, even sometimes going outside industry events to get a different perspective on things.”
Ingala calls research and development “my sweet spot.”
“I’m always trying to find out where’s the industry going and what’s the best thing for the customer?,” he says. “I’m putting all those pieces together a lot. And I look at the support, so it’s not just the product.”
Ingala says the security industry tends to lag at least five, if not 10, years behind others in the technology spectrum when it comes to adopting and incorporating new tech.
“AI has been around for a minute but we’re just now taking it on,” he says. “I’ll let the dust settle a little bit and then I’ll go check it out. I’ve got a ton of ideas on how to make things better, but I’ve got to focus on what I’m doing now.”
Landis typically relies on manufacturers to tell him what’s hot and what’s next along with attending in-house training sessions to stay up to date.
“There’s a lot more integration going on out there than there has been in the past tied in with other systems,” he says. “For me, it’s just always learning. That’s really what it comes down to. Then, once I learn, I take it out and share it with my customers.”
Finding New Opportunities in Video Surveillance
Despite the proliferation of video surveillance cameras in recent years across all vertical markets, there is no shortage of new opportunities ahead, our integrators say.
“We’re fortunate that we are connected with some dealers that do not have on-the-ground people who bring us in,” says Smith. “That’s how we get the relationship with the customer. I think it’s continuing to grow and I know it’s competitive.”
The cameras Tech Zone installs have a 10-year warranty and the company offers a 10-year warranty on its installations, says Smith. Typically, they start reaching out to clients about eight months later with information they’ve collected in the interim, he says.
“I collect information and try and share it out to them,” says Smith.
Stewart has seen “a migration” in recent years when it comes to the video surveillance market.
“I don’t know that you could walk through a gas station or convenience store or any kind of area and not see some type of camera,” he says. “Now whether that camera is 25 or 30 years old or not, that’s another story.” The migration, says Stewart, comes from end users looking at the camera for AI and analytics instead of just recording.
An example of that, he says, is occupancy rates in a local pizzeria, where customers had to schedule a time to pick up their pies during the COVID-19 pandemic and some stores have continued that practice five years later.
“There’s a lot more data and people are more open to it now,” says Stewart. He points to the advent of Uber and Lyft as helping many people to more openly embrace analytics and location services.
“We’re gathering this data and now we’re starting to use this data and cameras are the least intrusive way to get the most data.”
Stewart sees “an untapped market out there” for customers to access data through their video surveillance systems and cloud-based offerings “if you don’t look at a video system as just a camera and a lens and you look at as a potential data collector.”
“If you just take one simple thing and look at your camera system as a data collector and not just an appliance that’s on a network, I think there’s a tremendous growth there,” he says.
Foley says we’re “not even close” to the saturation point for video surveillance.
“We’ve got a long way to go because the applications for video surveillance are just going to keep growing,” he says.
“There was a time when Interface primarily focused on the interior of our customer buildings for remotely monitored video surveillance,” says Foley. “AI has allowed us to take that outdoors and be much more efficient in an outdoor environment.”
“We’re going to see the melding of remote video monitoring and things like biometrics for entry and exit to locations, so now you’ve got the melding of remote video monitoring, AI and access control—and that’s already happening,” he says.
Foley sees a future with remotely monitored body cameras in retail stores, for example.
“It’s only a matter of time before we’re using it more in the drone sphere as well,” he says. “There’s a lot of exciting things going on in the space and I don’t see it slowing down anytime soon.”
With estimates showing about $52 billion in revenue in the security industry, Ingala sees plenty of room for growth in the video surveillance sector, with only about 3% to 4% fully in the cloud.
“We have a long way to go before we run out of room for upgrades,” he says. “That doesn’t even include all the new build stuff, so I think we’ve got a pretty big runway.”
It will take a change of approach from integrators to capitalize, though, says Ingala.
“When we first started, you got in a vein and you learned that vein really well and you just started selling to that industry,” he says. “You’d learn all the ins and outs for that customer and then you just pop open new ones.”
“The landscape is a little bit different today. Video is hot right now. Everybody’s buying video. Everybody wants to see video and the camera manufacturer doesn’t really matter anymore,” says Ingala.
Landis is seeing video surveillance deployments in “more and more places, that’s for sure,” but adds “there’s always ways out there to increase coverage and it’s definitely not saturated out there. It might be more about switching out cameras.”
