North American market: Cloud, MRR and cybersecurity

North American market: Cloud, MRR and cybersecurity
Cloud is one of the major trends seen in the North American security market now, according to interviewees we spoke with at ISC West. One benefit it offers is giving systems integrators the opportunity to get a recurring revenue instead of just a one-time payment. Finally, the ongoing threats of cyberattacks have caused vendors and SIs to be more cautious when providing security systems to end users.
 

Cloud

 
Cloud has gained more market popularity and acceptance in North America for the obvious reasons, one being it offers a practical solution for the end user who does not have to make huge capital investments in purchasing servers, storage and other equipment.
 
“For example the marijuana industry in Colorado … there is a mandate, a state law to hold the video offsite. That's a legal requirement, and there is not much of a technology solution other than cloud. The other one is for small businesses. For example, if you have a small business with a local recorder with 30 days, and you get a slip and fall claim from a lawyer one year later, you don't have enough storage for that. So it's an opportunity there,” said James West, CEO and Co-Founder of Manything.
 
“People can't use their resources to always go on premise, always try to keep a server updated, and cloud is just making it a lot easier for people to run and manage their systems,” said Willem Ryan, VP of Global Marketing and Communications at Avigilon, which has unveiled Avigilon Blue, a cloud-based video surveillance platform that targets primarily the SMB market. “We did a hybrid model where we have a device that’s on premise that stores the video locally and then sends analytical events to the cloud. That greatly reduces the bandwidth; it also focuses the user on events that they should review rather than always looking at videos,” Ryan said.
 

Monthly recurring revenue

 
What’s more, North American systems integrators, along with their peers all over the world, are looking for opportunities to generate recurring revenues rather than a one-time payment for installing security, and cloud makes that possible through services that SIs can offer to their customers in return for a fee on a periodic basis.

“One of the key points is today, a lot of integrators are looking for recurring revenues and high-value service to offer. And you know the reason why. Equipment prices have been dropping like crazy, so integrators, to keep their business, alive need to get recurring revenue,” said John Gallagher, VP of Marketing at Viakoo, which offers service and maintenance automation solutions for physical security. “This is a very sticky service. Our renewal rate is 95 percent. So once a customer starts using us, because of the cost saving, time advantages, security and safety that we offer, they don't turn us off,” he said.

“In the past, if you install a video surveillance system, you do it once and that's it. And they are looking for opportunities to have recurring revenue; monthly, quarterly, it doesn't matter. They want to change from that one installation model to a service model. And so we got this Avigilon Blue platform so that you can add services,” Ryan said. “And for the customer, instead of having to worry about the price of a capital expenditure, they can use an operating expense for monthly or quarterly or yearly charge. And that becomes easy to predict their costs, and they always know it is going to be maintained and up-to-date, and customers love that.”
 

Cybersecurity

 
Finally, cybersecurity has gained more attention than ever amid heightening threats of networked IP cameras and NVRs being taken over by hackers who use them for further attacks. Amid this, vendors and SIs are focusing more energy and attention on providing security systems that are safe and secure.
 
“In North America, we are continuing to update our internal cybersecurity program and look for new ways to engage and offer educational resources to our partners on this topic,” said Jeffrey He, President of North America at Hikvision Digital Technology. “In September of 2017, we hired Chuck Davis as Hikvision director of cybersecurity for North America. Since then, we have hired additional staff for our cybersecurity team, completed penetration testing with Rapid7, introduced a cybersecurity hotline, and opened the security industry's first Source Code Transparency Center. In total, our cybersecurity team will visit 18 US cities this year.”
 
To make sure that the customer’s security system is secure, systems integrators are playing a critical role as well.
 
“Few years ago we recognized our clients were in greater and greater need of some levels of cybersecurity, and we started off by thinking about it from the perspective of a security systems integrator. We came up with four things. The first thing is to ensure we have a very good cybersecurity profile so that we aren't a vector into our customer systems. The second thing is to make sure that the systems are installed with the best cybersecurity profile. The third thing we looked at is offering cyber consulting services. To that end we stood up a separate organization called Cybis, which is our arm in the cybersecurity realm. The fourth and final thing that we can do is we can offer advanced solutions that help with improving customer’s cybersecurity profile,” said Michael Mathes, Executive VP of Convergint Technologies.
 
The final point Mathes made has a lot to do with linking physical and logical access. “A client could choose that to get root access to an important server is to be physically present in one of their buildings. This could mean that somebody could tunnel in through a network connection and pretend to be onsite. So by linking the physical and logical access we can say they need to be in that building, in that particular room before they have any access to it. This now creates a whole new level of complexity for the hacker that wants to get in,” he said.


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