Envysion recently introduced support for ACTi IP cameras.  In particular our customers are demanding a mid to low priced camera that offers megapixel resolution.

Our customers needed a reliable, high resolution camera option at the lowest possible price.  ACTi’s megapixel cameras supply good quality images that exceed our customer’s requirements.  Our customers also like the several flavors of dome cameras which ACTi offers in megapixel resolutions.

We liked the easy integration with ACTi’s software and the near ubiquitous Power over Ethernet support.   For software integration, all we really need is the RTSP protocol for video transmission and a simple web interface that we can create scripts to auto-provision from our Hybrid NVR’s.  We also received excellent support from their development team.

Thanks ACTi!

Is IT governance a problem?  Using internal charge back schemes to manage costs for IT?  A simpler solution might just be SaaS.  Check out RSR’s article on IT Chargebacks: Tools for Business Alignment or Past their Prime?

I agree with them that internal chargebacks for IT have past their prime.  SaaS is helping to further make such schemes unnecessary by helping companies stay specialized on their business and not building ‘infrastructure’ that is outside their core competence.  It seems to especially make sense in business segments where technology isn’t the core product or competency.

Not sure if you’ve been paying attention, but it appears that there are a host of players and investors that share our bullish view of the opportunity in the restaurant and retail space - despite the gloomy economy.

By my informal count, $35 million has been invested in video providers that target retail and restaurants in the first half of 2009 alone.  None of these companies are MVaaS providers (well except for us, as we are counted in that $35M figure having raised a round ourselves), but all of them are squarely focused on the value proposition of taking video beyond security and extending it into the organization.

Here’s are some examples:

• DTT - Geovision based DVR solution + operational audits focused on franchisee community - $7M
• Westec - Video and remote guard/monitoring - $20M (although big chunk of that was recap)
• Agilence - Video, exception reporting and LP consulting - $4M + undisclosed strategic investment from Schneider

I’m excited to see this activity, despite the competitive nature of these companies, for a couple of reasons.  First, it is again a sign that others (including investors willing to bet serious $) see the same opportunity that we do, which is always reassuring for our current and prospective investors.  Second, one of the biggest categories of competition we face is the “status quo” - old DVR and video technology that companies still buy that will only ever be used by a small group of people in a company for security purposes only.  The more companies that are promoting a broader value proposition, the more customers will start looking for solutions that meet these increased needs - this will be good for all of the providers that can deliver a more extensive ROI.

There might be more people competing for the same opportunities, but the number of opportunities will grow exponentially.   This is good for the space and good for us (b/c I really like our chances..)

I’ve been thinking a bit about operations science and quality assurance for a few weeks now.  I think there could be some parallels to performing loss prevention.

If no one counted the cash at the end of the day, how much would go missing?  The answer: you can’t tell if you’re not measuring it.

So one must at least collect some information.  Great, now you have an idea of how much might be missing.  If you collect that data over time, and compare it, you may also find out if you’re doing better or worse.  But one must go further to actually get to the root cause and determine accountability.  This is where video is an important complement to one’s point of sale data.

If one can consistently demonstrate the ability to detect and correct a problem, then the corrective action provided is not simply a momentary act of containment.  In operations science it’s most desirable to create an “irreversible corrective action” (ICA).  The goal of an ICA is to create a solution to a problem that eliminates the problem in such a way that it cannot reoccur.  However an “ICA” can be invalidated when change occurs.  So when dealing with change, (such as new employees, new sales promotions, new application features, new processes and so on) the corrective action may need to be modified or be re-introduced.  Quality control and loss prevention are a continuous process.

If you just install cameras and a POS monitoring system, but never look at it,  at best you won’t know if you’re reducing “shrink”.  At worst, a reduction in shrink is likely only temporary as people figure out that it’s not being used.    If you want continuous prevention, your employees need to know the system exists and see it being used.  You need a easy, quick, repeatable process you can continously apply.  One that tells you what to look for and where, so you don’t have to spend too much time searching.

Last week I wrote a post decribing how broadband service providers (BSPs) are doing much better as a channel for MVaaS than traditional security integrators.  This raises a couple of obvious questions:  what is driving the early disparity in traction and is this advantage sustainable over time?

In order to understand these two channels’ relative performance, it is necessary to reflect on the ways that MVaaS is different than traditional video solutions:

Services vs hardware model: MVaaS is a managed service that includes concepts like SaaS and service level agreement (SLAs) where traditional video systems typically follow the hardware/warranty service model.

Recurring vs upfront revenue: MVaaS revenue is earned and collected over time in monthly or annual subscription payments where traditional video is predominantly upfront revenue with equipment and install upfront and a smaller maintenance component over time.

Broader and more extensive user group:  The primary objective of MVaaS is to get video into as many hands in an organization as possible, well beyond the traditional security and loss prevention users, to maximize the ROI.  This increases both the number and diversity of the user groups.  Traditional video surveillance is typically used by security or loss prevention personnel with minimal use outside those organizations.

More complex buying decision: With a broader user group and more significant potential ROI comes a more complicated buying process.  The decision process no longer rests solely with a security or LP director.  IT, Operations and other executives are involved in the decision which changes the dynamics and can lengthen the sales cycle.

So why are BSPs ahead of security integrators as an MVaaS channel?

BSPs

• Understand managed services and can articulate the value proposition and differentiators vs traditional equipment solutions
• Are already in recurring revenue businesses and are looking to expand the services that they offer to include value added broadband applications like VoIP and video
• Have strong relationships with the CIO and can leverage that relationship into the operations group.  The CIO is an important decision maker in the MVaaS sales process and it is critical to have the trust of the IT organization
• Understand the complexities of operating large scale distributed network applications and can speak to the nuances and advantages of MVaaS
• Don’t have a legacy video offering that is at risk of cannibalization from MVaaS
• Suffer from lack of CCTV experience, but ironically this can be an advantage as they tend to focus more on value proposition and solutions selling than pushing specific camera or DVR technology

Security integrators

• Know cctv and have strong relationships with traditional video buyers in security and LP groups, but these contacts are not always able to create organizational momentum around broad deployment of video for operations and other groups
• Are intrigued by recurring revenue, but have well established financial model reliant on getting cash for upfront equipment sales
• Have material installed bases of older technology and may be reluctant to “rock the boat” with customers that continue to order traditional video solutions
• Don’t speak network and haven’t internalized technical nuances of MVaaS, making it hard to effectively communicate differentiators
• Have a dozen options and can follow path of least resistance - their sales reps may or may not buy into MVaaS, but if they can sell a traditional DVR solution with almost no effort b/c the customer is comfortable with that solution, many will not make the effort to promote MVaaS even if it is clearly a better long-term solution with a higher ROI for the customer 

BSPs have a better understanding of MVaaS, it fits their existing business model, they don’t have to worry about installed base challenges, and they are well positioned organizationally to have the right conversations so they are moving quickly.  Security integrators are still coming up to speed on the technology and they have to combat a lot of inertia both from customers and their own organizations, which is slowing down their adoption.  This explains why BSPs are the early leader.

The second question was whether this advantage is likely to be sustainable.  Here I think there is more debate.  BSPs are likely to have a single, focused video strategy that centers around MVaaS, where Security Integrators will always have 6-10 other options they can present.  BSPs are likely to be better at the service provider aspect of the business and have the inherint advantage of being able to manage both the video and the network elements together, which will give them better control over availability, but Security Integrators have the CCTV depth that customers will also require.  BSPs may be moving quickly, but Security Providers have a huge lead in existing market share and customer relationships, and could easily dominate the MVaaS market by switching some of their current customers to the new platform - the question is will they make that effort and when.

To close an already way too long post - I think that BSPs will likely continue to lead as an MVaaS channel for the foreseeable future until the leading Security Integrators commit to making some hard changes to their model and make a more concerted effort to understand and promote MVaaS where it best meets the customers’ needs.

I’ve posted before on the various channel partners that I believe are good fits for our service and for MVaaS in general.  There are a lot of potential partners that are interested in adding a recurring, managed service to their portfolio, particularly one that is differentiated and has a very measurable and powerful ROI.

Two segments in particular are (or should be) very natural channels: security integrators and broadband service providers.  When we first launched our channel efforts about a year ago, we decided to focus the bulk of our efforts on establishing partnerships with those two segments to see which one takes off faster.  We’ve gotten very good early traction with partners in both spaces and have been supporting a number of partners and pursuing a number of large opportunities with both.

Given its been a year, I thought I’d give a quick readout on how the two channels are developing.  The short answer is that broadband service providers (BSPs) are ahead by a mile.  This is great for broadband service providers, but should serve as a bit of a wake up call for the security integrators that they are going to face competition from a new segment that is much more aggressively adopting technology that will leapfrog a lot of what is in the market today.

Before I get into why BSPs are ahead, let me put some numbers on it to give you some context (per a motto from my Bain days, “in God we trust, everyone else bring data”).  Envysion works with partners to jointly sell to large multi-unit businesses like retail and restaurants.  We are either in pilot or the early stage of rollout with a number of large customers with our partners.  Security integrators in total have us in front of customers that control in aggregate a couple thousand sites.  Almost all of these opportunities are ones in which we had some traction on our own and either ceded control to the security integrator who was also there or introduced the integrator in an effort to “prime the channel pump”.  In contrast, our BSP partners have introduced us into customer prospects that control in aggregate more than 15,000 locations, none of which we had a prior relationship.

The quality and pace of the activity coming out of the BSP channel is orders of magnitude better than it is out of the security integrator channel.  Clearly there is a chance this could be something we are causing ourselves by supporting one channel more effectively than the other, but in this case I think it is structural.

I’ll spend some time over the weekend putting my thoughts together in a concise way on this topic and will post the key points on why I think this is happening.

Have you ever heard of the Hawthorne Effect?

The Hawthorne Effect is a term from psychology that describes the tendency of people to act differently when they know they are being studied.  The concept was named by Henry Landsberger, who was busy in the 1950’s analyzing experiments from the 1920’s at the Hawthorne Works.

The earlier experiments were designed to measure the impact of lighting on worker productivity.  Presumably they expected to find that worker productivity increased with better lighting.  However, this was not what they found.  Instead, the original researchers observed productivity improvement in both control groups, regardless of the lighting.

The researchers were puzzled by the result.  Presumably it was not until Mr. Landsberger reviewed their work was his theory postulated.

The Hawthorne Effect has since been used to describe any short-lived productivity improvement that occurs because individuals are being watched.

So what happens if you apply this concept to MVaaS customers?  If MVaaS is deployed to several “test” sites, and these sites achieve greater performance than the other “non-test” sites in the enterprise, could you dismiss the findings and conclude that this is due to the Hawthorne Effect?

I was recently asked by a customer if I could help him pull 30 minutes of video from 4 different cameras and then send it to him.  The problem with sending video clips is that the size of the file can be very large making it difficult to email.  A 2 minute video clip is about 2MB so a 30 minute clip would be much too large to email. 

 With MVaaS from Envysion a customer can log in remotely and download the video directly to the PC themselves without ever needing to send a thing.  Envysion also provides a feature called My Clips which allows cusotmers to download video and save it directly to our secure data center as well.  The My Groups feature allows customers to remotely share the video saved in My Clips with anyone in the organization without ever sending a thing.

The tools Envysion provides make it very easy to download and share video but the customer asked if I could still help them with these 30 minutes clips.  They were traveling and needed to get these video clips to an officer for an investigation which led me to a great service called Yousendit.com.   They provide digital content delivery so I signed up for the basic service which is free and allows me to send up to a 1GB file.  I was able to help my customer and sent the four 30 minute clips, about 60 MB of video. 

Having the right tool for the job can really save time and money.  The MVaaS provided by Envysion and the SaaS provided by Yousendit.com are both great tools that can really help get the job done.

Fredrik Nilsson of Axis wrote an article at SecurityInfoWatch about how SaaS is taking off in video surveillance.  It’s a good article and highlights some of the reasons that SaaS is gaining momentum, although as you would expect it is definitely told from the IP camera manufacturers perspective.

A key point jumped out for me as I was reading it.

Fredrik states that “instead of maintaining the recording and monitoring station locally, companies can now limit their capital investment to just the cameras and a gateway or router to the hosted storage. The vendor provides the servers that archive the video and manages them for the business”. To me this is one of the broader misconceptions I come across in the market: that SaaS in video surveillance equates to “hosted storage”. SaaS is a method of delivering functionality through software that is hosted in the network. Remote or hosted storage is an architectural decision that one can make depending on the circumstances.

I have talked to people that have declared that they tried to build a SaaS application, but they couldn’t get the service to scale b/c of the bandwidth limitations of streaming all of their customers cameras all of the time (here’s a hint: if you don’t have to stream the video all the time, don’t). I have also seen numerous players in the space touting their software as a service models when they have a hosted storage offering but you still need to load their video management software on your PC or a server in your enterprise in order to access the video.

The Axis article and these anecdotes highlight the fact that while SaaS is gaining momentum in video, many people still don’t understand exactly what it means to provide a SaaS offering. There are some great articles on SaaS at SandHill if you are looking for a bit more of a primer. In the meantime, I’ll take the increased visibility and focus on SaaS video businesses, even if a lot of people don’t yet get what it is.

Over at IP Video Market Info John Honovich has a good discussion going regarding megapixel without IP.  The topic might also be labeled: “What’s the best way to retrofit an existing analog system for megapixel video?”

Currently megapixel requires IP cameras which can be a costly upgrade if you are all analog today.  IP is very different from an install perspective and requires new cabling and complex configuration of IP addresses, cameras and NVR’s.  Or does it?

IP cameras can be auto configured with a good vms system. we at Envysion implemented auto-discovery and configuration in less than 30 days for Axis IP cameras. Using zeroconf and a simple http api we can now do it in just a couple days and push the software update into production automatically.

Ethernet can run over coax (IEEE 10Base2 is based on rg58 (50ohm), but with tweaks can run on rg59 (75ohm). There are a number of products that do this now, but they are currently a bit clunky and perhap too expensive. But that can be fixed. Just need some IP cameras with an integrated Ethernet over rg59 interface to get the cost down and provide a clean install.