Cloud-Based Video Surveillance: How to Sell It ‘As a Service’
Johnson Controls’ Martin Renkis talks pricing, sales tactics for integrators adopting an ‘as a service’ business model for video surveillance.
Cloud-based video surveillance is the latest trend in the security market. It offers numerous benefits for both integrators and end users.
Martin Renkis, general manager Cloud solutions, global security products at Johnson Controls, is the person responsible for all of the company’s Cloud-based solutions for physical security. Johnson Controls is entrenched in the commercial security world, but also handled all the Cloud-based surveillance needs for Time Warner Cable, Cox Communications and Best Buy on the residential side.
In an exclusive interview with SSI sister publication CE Pro, he explains why an “as a service” business model is the future, and how integrators can prepare for it.
What percent of integrators would you estimate are offering Cloud-based video surveillance versus on-site storage systems?
Among the integrators we deal with every day, somewhere between 20% and 30% offer some type of Cloud-based video surveillance.
What percent of projects would you estimate have some sort of Cloud storage surveillance?
About 5% of commercial projects are storing some level of video in the Cloud, so it’s still very early in this market stage on the commercial side.
On the residential side, the percentage is significantly higher. The residential space has certainly led the market, which is kind of interesting. The reason the commercial market is lagging behind is mainly due to the bandwidth requirements for a commercial project. A typical commercial installation might have 16 cameras, with each camera requiring 2Mbps to 4Mbps of bandwidth to maintain the resolution requirements. That is much higher than is needed on the residential side.
What is the difference between Cloud management versus Cloud storage?
It’s important to clarify that just because you have a Cloud-based surveillance solution, it doesn’t mean you have to store video in the Cloud. It’s an assumption we all make. You actually can store video in the camera itself and manage the video from the Cloud. That is called Cloud management versus Cloud storage.
Cloud management is more prevalent on the enterprise side where there are a lot of cameras to track. Via the Cloud, we can track upload speed, download speed, latency, how many users are online and how much bandwidth every camera’s using.
Our Cloud management solution is called Tyco Cloud, through which we can monitor Cloud cameras or gateway devices that can support existing cameras. We also have video analytics, or artificial intelligence, that can be in the camera itself, in some kind of edge gateway or in the cloud.
Does an affordable Cloud-storage pricing structure like Nest Aware help or hurt the surveillance market?
I think it’s amazing. I love it. Google has done a phenomenal job. They’ve built a great product. It validates the market for all of us. It’s a positive thing in the market.
Why is bandwidth not an issue in residential Cloud surveillance?
In a home, you might have 7Mbps of upload bandwidth. With two cameras in the home, you are never going to need that amount of bandwidth. Two cameras likely upload 500kbps of residential video. It’s not a challenge at all.
What are some per Camera cloud storage fee guidelines for integrators?
On the commercial side, prices can run anywhere to as low as what Nest Aware is charging and all the way up to $100 to $200 a month. For example, at Johnson Controls, the Tyco Cloud platform is resolution independent, so it’s highly dynamic. That means you can take send images from a single 4K camera to the Cloud 24 hours per day with constant recording of every frame.
That camera will run at 5Mbps, which is going to be quite expensive. If you downscale it to 720p, then it is only $10 per month. So there is really no right answer on pricing per camera there because it’s dependent on the customer’s requirements. You can also lower the fee by setting the analytics to only record during motion activities versus recording an empty room.
What’s the most effective way for integrators to talk to their customers, both the commercial and residential, about the advantages of Cloud surveillance?
On the commercial side, integrators can sell the benefits of the Cloud in several ways:
- Businesses can deduct the expense of the surveillance as an operating expense versus a capital expense.
- Cloud systems are easier to install and maintain, reducing maintenance costs.
- If there is a power failure, you lose everything you have recorded with an on-site solution. But with a Cloud solution, it’s almost like a mesh network. It provides an extra layer of reliability and security.
- Cloud systems are easier to expand. You just add a camera.
On the residential side, it’s really all about simplicity. You just plug in the camera, fire up the mobile app, show it a QR code, and the system is registered. Plus, the interface is super easy to use.
Will 5G ease the bandwidth problem or change the way Cloud surveillance systems are deployed?
It’s going to change everything. 5G makes high speed connectivity ubiquitous. 5G is just going to make video surveillance a “software as a service” the standard because bandwidth will be not an issue anymore. You will just plug in a device in and bingo, you can remotely manage it from your phone or your web browser. That will be the baseline for everything we do moving forward.
Absolutely 5G is going to affect video surveillance, but how and when that’s going to happen, I don’t know. It may be some time before there are enough 5G networks everywhere to support that.
So you see the “as a service” business model is going to be the standard in the future?
I do. It’s terrifying for integrators that are out there today. It’s like when Microsoft went to Office in the Cloud, or when Adobe went to Cloud-based solutions. Your whole business model has to change, and that’s a terrifying thing for anybody. You are not going to make the money you used to make upfront… it’s just not going to happen.
There’s going to be this period of business transformation period which will be uncomfortable. Instead of selling a system at full price for $10,000 installed, in three years it’s going to be $3,000 upfront and X dollars per month. Over time, the integrators that stick to that business model will create a more stable business model with stickier customers and better relationships.
There will always be somebody who’s just going to want to buy it and have you install it, but the majority in the industry will be going that AAS type of a model.
The system doesn’t even need to be subsidized. Most of our integrators on the commercial side have the customer buy the camera hardware, and the integrator makes a margin on that, but then they sell the service for maintenance and storage separately.
This is not about the technology, it’s really about this business platform. What we’ve done at Johnson Controls is we’ve built a management platform so our integrators can log in, see every connected device, run reports and charge for subscriptions. The future is more than just super cool awesome technology. The future is finding a partner who will help an integrator move forward.
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