Hosted Video Can Deliver Most Value

VSaaS is growing in prominence as end users and installing security contractors alike increasingly realize the value proposition. As workable business models continue to be fine-tuned, recurring revenue is on the rise.

When Service Usurps Product

Nowadays users can purchase a small DVR/NVR and have it installed for around $2,000 or less. Why would anyone want to subscribe to VSaaS? To answer this question let’s look at why organizations buy surveillance systems and what the real value proposition has been.

A key service component of VSaaS is the active monitoring of the system continuity by the service provider.

Surveillance systems have typically been purchased with the same mentality as insurance: “I know I need it just in case. I don’t really want it, but it’s the cost of doing business.” In other words, “I begrudgingly pay for cameras hoping I never have to use them.”

So in the real world, video systems mostly collect dust and all of those feature sets are pretty much irrelevant. Except in the event when the end user really does need their system to perform, in which case the important factors are:

  • Reliability. Did the system record the necessary video?
  • Usability. How do I retrieve the video? How do I share it?
  • Quality. Is the video useful for forensic purposes?

In short, the value proposition of a small video surveillance system has not been very strong since it is rarely needed. When they are used, the output is simple. The customer needs the video of the incident and hopefully the quality is good enough to be useful.

The issue with reliability is that even setting aside intentional tampering and theft, computers aren’t very reliable when left alone for long periods of time. The simple fact is all computer-based systems will fail on some timescale. Whether it’s a physical component like a power supply or hard drive, or a software failure like a crashed operating system or corrupted database, it will happen.

The problem is that no one knows when this ticking time bomb will explode. It could be six months or six years. In most cases, the only way for an end user to know when their system has failed is to experience an incident and discover the video isn’t there. Thus, it has failed to perform its sole function and was probably a poor investment. Even if the user has an expensive maintenance contract, the obligation is still on the user to discover the failure and report it. Unfortunately, integrators don’t have a large financial incentive to provide good service.

A key service component of VSaaS is the active monitoring of the system continuity by the service provider. System health monitoring will automatically detect if a camera is unplugged or has failed and will notify the user in real-time. The cloud service itself is redundant, meaning any failures will cause the system to failover without any customer downtime.

The service provider’s 24/7 staff will be alerted and will scramble to fix the failure as quickly as possible. When this happens, alerts go off, experts are called (and sometimes awoken in the middle of the night), and everyone suffers a panic attack until everything is back to normal. That is service, and it happens because the business of hosting video depends on the continued monthly payments of existing customers.

Expand the Value Proposition

The easier a tool is to use, the more customers are likely to use it. The more a tool is used, the more value it typically creates. By that very fact, the easier a tool is to use, the more value it creates.

Listening to music is a good example of how a product-centric model can be trumped by a service-based one. For some, allegedly easy-to-use “consumer” applications like iTunes can be immensely more difficult and frustrating to use than streaming cloud services like Pandora or Spotify. Take a New Jersey homeowner who has used a computer with speakers in her living room for years. She could never really figure out how to get music files downloaded and to get them to play seamlessly throughout a dinner party. The result was that she either reverted to the old radio (complete with commercials) or just went without music. In recent years she has fallen in love with Pandora where she just opens the page, clicks the station for her favorite band and lets the jams play on through dessert.

Surveillance systems have historically been designed and sold as “professional systems,” meaning customers need to be trained to use them complete with technical manuals that are hundreds of pages long. In a sense they were designed for engineers by engineers.

For most small commercial users (perhaps in the pizza business or a dentist office) the amount of effort involved in daily use exceeds the benefits. So, the systems sit idle unless an incident prompts review, which often means calling the integrator to help the customer retrieve the video and burn it to a disk for review.

The goal of many cloud
services, including VSaaS, is to offload the complexity and create an easy-to-use consumer interface – a system that builds value because the consumer doesn’t need or want to know the complexity behind the scenes. It is unlikely that cloud services such as Facebook, Twitter and Gmail even have user manuals, much less required training. They are so simple that consumers intuitively use them, and the result is addictive constant use, and lots of value.

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