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.