Historically, the purchase, installation and maintenance of physical security systems has been a relatively straightforward proposition. A security need is identified by an end user – be it for access control, video surveillance, etc. – who then turns to a systems integrator tasked with the responsibility of recommending a specific solution that will meet their particular needs. The end user, in turn, purchases said equipment which is subsequently installed and, in most cases, maintained by the integrator on an ongoing basis for a fee. This market dynamic has started to change in recent years with the advent of the cloud and an increased desire by end users to make security an operational, rather than a capital expense.
As a result, a number of security vendors have started to offer their technology as part of a subscription-based security model. The benefits for both end users and systems integrators are numerous. End users no longer have to make a substantial investment on the front-end for their video or access control management system, while integrators are spared the cost of rolling trucks to perform system updates. More importantly, perhaps, subscription-based services provide integrators with another way of generating recurring monthly revenue that hadn’t previously existed in the market.
Some of the industry’s most well-known and established companies are betting big on a substantial number of security end users, from small businesses to enterprises, making the switch to this subscription-based security model. Among these firms is Genetec, one of the leading providers of video management software, which rolled out a subscription-based version of its flagship Security Center product to its channel partners earlier this year.
According to Andrew Elvish, Genetec’s vice president of marketing, the move to subscription-based security services is a sea change for the security industry.
“When we rolled this out to our integrator channel in January… they got really excited about the opportunity. We said to them, ‘think about what you can do if you can take the Genetec [software] out to your clients as a subscription,” said Elvish at the recent ISC West tradeshow in Las Vegas. “You could build your own RMR business and, on top of that, you amortize the cost of servers, amortize the cost of cameras and the integrators said, ‘Oh, I get it, I see where this is going.’”
In addition to offering their Standard, Professional and Enterprise versions of Security Center on a subscription basis, Elvish said they also decided to roll out a new edition of the video management software dubbed “Compact” which is geared toward applications with 25 cameras or less.
“We’re giving that as 90 days free, so they can go to our website right now, log-in and download the software. They don’t have to give us a [purchase order] or a quote, they just have to be a certified channel partner,” he explained.
Elvish said they found that many of their customers are already moving to subscription-based services in other parts of their businesses because it shifts power away from the vendor and back towards the consumer.
“The reason why we started doing this is because our customers, who are different from a lot of the customers of our competitors, are much more IT-type customers and they’re buying a lot of their products as a subscription already because so many companies are moving toward that model and the buying patterns are moving towards that model,” added Elvish. “IT departments want a product that can stay fresh and that they can say: ‘You know what, we haven’t been getting value out of your product and we’re turning off the subscription.’ If we don’t keep up the product or if we’re not being innovative with the product and they’re not getting value, that’s the end of the subscription.”
Despite the win-win situation that subscription-based services provide to everyone involved, Elvish said it’s not something a vendor, regardless of the product sector they’re in, can just decide to do on a whim.
“There are a lot of moving parts to subscriptions, especially when you consider that we’re a religiously channel-based company. We don’t want to own any customer; we really want our channel partners to own that, so the whole billing and provisioning system is not a trivial, back office, end-to-end thing to build up. You can’t just go out and buy one off the shelf, so getting that built up is big and actually getting your channel partners to want to sell it is also not trivial.”
Of course, the whole idea of having a subscription-based service is what is driving adoption of cloud-based video surveillance and access control services throughout the security industry. In fact, it was this paradigm shift that motivated Dean Drako, president and CEO of cloud-based VMS firm Eagle Eye Networks and the founder of IT appliance maker Barracuda Networks, to enter the security industry in the first place.
Eagle Eye recently commissioned a survey to gauge the opinions of end users on how they wanted to pay for video surveillance. According to Drako, 56 percent of the survey’s respondents indicated they would prefer to pay for video surveillance as part of a monthly subscription package.
“Given that probably about five percent of video surveillance [installations] in the world is on a monthly subscription right now basically means that the industry is not really meeting the desires of the customers,” said Drako. “We’re seeing more understanding in the market that the total cost of ownership using a subscription model is actually lower than the total cost of ownership if you buy equipment upfront and maintain it. You kind of see that trend in the IT world; everything is moving to cloud-based solutions like crazy and the reason is it ends up being cheaper in the long run and people are excited about that.”
