SMB sector on the security radar

The SMB sector has garnered substantial attention from security solutions providers in recent times, due to the budget squeeze on the higher end of the market. In this feature, a&s looks into the product requirements of the sector and shares how the incumbents are approaching this untapped niche.

The SMB sector is one that should not be overlooked. Although average SMB projects are smaller than government and MNC accounts, the entire SMB sector can be quite significant; for example, there are roughly 8 million SMBs in the U.S., 3.3 million in China, 3.5 million in India, and more than 99 percent of European businesses. In the U.S. alone, security spending from SMBs is projected to exceed $5.6 billion in 2015, twice the amount of IT spending over the same period, according to International Data Corporation. As such, while large-scale security projects grab headlines and attract interest/tenders, the security market potential for the SMB sector can be significant and offer an way out for those who are struggling in the higher end.

IP Uptake by SMBs
Understanding SMB characteristics are vital to gaining market share. First, SMBs have similar security needs to their larger enterprise counterparts, but considerably smaller budgets. Second, most SMBs lack internal IT resources, which is the reason why they have been hesitant over IP technology. Third, SMBs prefer a one-stop-shop as unlike large enterprises, they generally do not have a specified security specialist and most personnel in SMBs tend to wear multiple hats. The added context of a slow global economy suggests that the focus of SMBs is less on future proofing their solutions for the long term, despite the future financial and technological benefits, and making cost-based decisions in the short term.

In terms of product requirements, SMBs typically deploy up to 16 cameras, with storage needs of up to 30 days depending on the business nature. “Most SMB customers want to keep the video for at least a week, but retail customers may want to keep it for approximately 30 days to detect credit card fraud,” said Jumi Edubhram, VP of Business Development at Next Level Security Systems. “To accommodate a range of storage requirements, it is important for video solutions to have flexible storage options, i.e., the ability to easily add as much external storage as required.”

The tides appear to be changing, albeit slowly. “Across the industry, analog sales for small businesses are still healthy although growth has flattened out in the last two or three years,” said Jamie Barnfield, Senior Sales Manager for Europe, Idis. The migration to IP, however, is expected to be steady as opposed to a very rapid switch. This reflects both the steady decline in analog sales and the current slow economy, he added.

The uptake of IP surveillance is driven by a combination of factors, but decreasing price and increasing value is proving to be a game changer. “The costs of all IP surveillance equipment components have fallen over the last few years, while their capabilities and specifications have increased,” said Tony Lannon, European IP Surveillance Business Development Manager at D-Link. “This makes features like high-definition, wireless connectivity, low-light vision, and cloud capabilities increasingly part of the norm. As such, it is now possible for a small business to purchase an entire well-specced, four camera surveillance system at a very attractive price,” he added.

In the SMB sector, IP surveillance is being deployed side-by-side existing analog systems and gradually replacing them. “At first, we thought we were going to see a lot of hybrid systems, but the cost of encoders and the complexity involved means that actually we are seeing a rise in side-by-side systems,” Lannon observed. These SMBs are gradually migrating to pure IP surveillance as each analog camera reaches its end-of-life and is replaced by an IP equivalent. “This is especially true of PTZ cameras which have a much longer lifecycle due to their high cost,” he added.

Large Players on SMBs
Large players who have previously focused on complex, large-scale projects in the top tier have developed a market strategy for the purpose of diversifying into the SMB sector. Meanwhile, players who are already focusing on the SMB sector are strengthening their presence. “We are helping our resellers tap into new markets and build revenue opportunities in retail, financial, and small business,” said Ed Wassall, VP of Global Marketing and Hardware Products at Dvtel.

For example, Axis Communications has introduced entry-level IP video solutions for up to 16 cameras that include a free software client and network cameras or video encoders that are supported by SD cards in the world's largest SMB market — India. Similarly, multinationals such as Honeywell Security, Bosch Security Systems and even Milestone Systems have also introduced affordable entry-level solutions targeting the SMB sector. “As IP surveillance surges forward with new offerings, analytics and technologies, it plays perfectly into a receptive SMB market,” noted Surajit Biswas, Business Development Director for APAC Channels, Bosch Security Systems.

SMBs have a different procurement process to large enterprise and government sectors. Moreover, the sales cycle is typically shorter than those of large enterprises, as there is less interdepartmental decision making required, and SMBs frequently have close and long-standing partnerships with their security installers, Barnfield noted.

According to Lannon, “The vast majority take just two to three months from point of enquiry through quotation and site survey to when the installation is complete. This drops to just a week if the system is installed by the business owner, rather than through a professional installer.”

In this sector, installation and distribution partners are crucial to market penetration. Milestone is making its presence in the Middle East SMB sector through their larger system integrators who have established themselves as reputable integrators in the region. The top tier VMS provider's recent appointment of a vice president dedicated to the SMB sector, in addition to introducing competitively priced solutions, indicated the significance of this sector.

Similarly, while Idis does offer direct training, they noted that SMB customers prefer to work closely and in partnership with their installers. Their strategy is also to equip their installation partners with the necessary skills to serve the SMB sector.

Design Matters
Simplicity in installation and operation is essential for the SMB sector. Analog systems remain attractive because with such systems, installers and end users do not have to configure IP addresses, consider multiple storage options, and counteract bandwidth across networks. Hence, security companies gain market share in the SMB sector if their IP solutions are simple and affordable.

Idis, for example, has eliminated video storage issues with recording direct to an NVR with huge capacity — far more than most SMBs would require. “We've packaged the solution with everything the customer needs to build a complete HD video solution, including all network accessories,” Barnfield said.

Similarly, Dvtel developed its SMB solution based on a plug-and-play approach to simplify installation and management. The company released their plug-and-play networked recording appliance that practically “self-installs” for the SMB sector — a significant target market — in January this year. The system is available in 4- to 16-port models, and standalone units are ideal for surveillance environments of up to 24 cameras. Moreover, multiple units can be set up to build a larger system to meet the growing security requirements of the company.

“The plug-and-play approach enables installers with basic IT expertise to deploy a full-featured IP video solution in less time than is required to deploy an analog system. Technologies that make it easy for installers and users to leverage the power of the IT network will help this market adopt IP technology more quickly,” Wassall said.

Small but Steady
As in other sectors, the migration to IP is well underway in the SMB sector, although most security players do not see 2013 as the year when IP-based surveillance sales surpasses analog. “But we do see it growing faster. It provides better pictures, much better resolution, and better overall delivery of the functions and features of video products,” Biswas said.

In the U.S. and many European countries where budgets are tightened at the top end, many large security players are extending their market reach downward to the SMB sector, by launching IP-based solutions that cater to the specific needs of SMBs. “We are leveraging our enterprise-class systems to deliver solutions to the small and midsized market that feature ease of deployment in both installation and management,” Wassall said. With the migration to IP being easier and faster, the SMB market segment is looking particularly bright.