John Honovich posted an article on the Top 5 Problems of Managed Video Surveillance / SaaS last week that has some good points in it on the challenges that these models face as they look to grow share.

While I agree with a number of John’s assertions, I think that the article in some cases blurs the lines between three very different concepts SaaS, managed video, and hosted video.  While there are some similarities and overlap between these models, the main challenges that are laid out in the article don’t all apply to each of these in the same way, if at all.  For the sake of consistency, I’ll start with John’s definitions of the models, but add a little clarification of my own:

Managed Video - Video recorded on-site, but 3rd party provider manages access and administration of this video.  Managed Video can be provided using enterprise software model (install a centralized software application in a datacenter to manage distributed video – this is what you get with Milestone + a local recorder) or using a SaaS software model (see defn below – Envysion is one of the only providers that has really implemented the SaaS/MVaaS model at scale)

Hosted Video - Video recorded off-site by streaming cameras over IP network to remote data center.  Implies that 3rd party manages the storage.

SaaS -  Everyone reading this blog should be familiar with this concept of the intelligence/software being provided in the network in a multi-tenant architecture instead of being deployed at the site on the DVR (PC-based DVR model) or on multiple servers on the customers network (enterprise software model)

Now that we’ve got the basic models outlined, we can address the top 5 (okay John really had 6) challenges to see if/how they apply.

Last mile bandwidth limitations

First I have to say that I fundamentally disagree with the premise that the future of Video Surveillance as a Service is eliminating on-site recording.  I’ve said numerous times in the past that it is wildly inefficient to stream all of your cameras all of the time to a central location when you are unlikely to need 90%+ of the video.  You are trading the maintenance/cost of the on-site recorder for the on-going cost of dedicated bandwidth and the risk that if the network goes down – you lose the video, and you are still paying for the storage on the other end.

Having said that, I completely agree with John’s assertion that Hosted Video suffers from the last mile problem and that this will limit its growth.  I’m continually surprised at how IP camera manufacturers and software providers gloss over the fact that most customers don’t have enough bandwidth to stream even a fraction of their cameras over the network.  Yes, I know that bandwidth costs will drop and people will get more bandwidth.  Problem is that as bandwidth improves, so does camera technology and users expectations of video quality, which means the bandwidth required per camera will keep rising as well .  Ever try streaming a megapixel camera constantly to an offsite recorder over a DSL connection?

I don’t agree, however, that bandwidth limitations are an issue for Managed Video (whether enterprise model or MVaaS).  I’ll focus on Envysion’s MVaaS to make my point.  With Envysion, video is recorded on site and only viewed or streamed across the network when someone wants to watch the video remotely.  If no one is viewing the video, it is not consuming the network.  If someone views the video from within the store, the video stays on the LAN and it doesn’t consume the network.  When you do stream the video remotely, our service is intelligent enough that it dynamically throttles the bandwidth that is required based on the size of the pipe available end to end (out of store, across network, down to laptop over wireless card for example)  It will scale back the bandwidth if it senses any congestion so it won’t clog the network while customer is doing credit card processing for example.  As a proof of my point, we are able to stream a high quality megapixel camera at 10 FPS over a consumer grade DSL connection in the store, across the network, and down to my laptop using a Verizon Wireless card and the video looks great (although its not at the full megapixel quality that is still being recorded at the site) .  Bandwidth is not a constraint for MVaaS.

Cost/complexity of deploying/integrating cameras/recorders on-site

This challenge is certainly real, but it is a challenge that is the same for Hosted Video or Managed Video and for traditional video solutions that customers want to access remotely.  Traditional video solutions require the same network configuration, port forwarding, static IP addresses, NAT traveral etc that are necessary to access the video from outside the store.  I would argue that providers of Hosted Video and Managed Video that have automatic remote connection capabilities (like Envysion) simplify this process more than a traditional video solution.  The challenge here applies to any system you want to access remotely – it isn’t a different obstacle for SaaS or Managed Video.

Advantages are not as compelling as they are in other applications

This challenge seems focused on SaaS itself and not Hosted Video or Managed Video per se.  I don’t agree at all with this one.  There are a variety of reasons that the SaaS model has appeal in this market.  Two of the most obvious reasons are the scalability of the solution and the ability to continually update and enhance the service.  Both of these apply very strongly to the SaaS-based Managed Video/MVaaS model.  If you want to provide access to video broadly within an organization, to 100s of store operators, marketing people, executives, etc you need to have a very easy centralized access management capability, which is a key element of SaaS.  Adding a new user involves adding a username and password to the system, it doesn’t require having a person load software on their computer and then figure out how to configure access to the sites that they want to access.  From a feature standpoint, SaaS enables us to enhance the service on a weekly and monthly basis and automatically roll out those improvements to everyone on the service.  This is a huge advantage over the static software applications that reside on DVRs.  Try upgrading 1000 DVRs of various versions and 1000+ remote clients that have been installed and configured for your users.  You won’t do that very often and so the DVR applications will lag behind in functionality. 

Generally weak business case compared to traditional solution

If you are talking about Hosted Video, which the article focuses on with this objection, I can see the point.  Doesn’t make pure economic sense at all to stream your video to a central location.  Having said that, some customers have reasons other than economics to stream video offsite – they may want a copy of the video that is protected and not at risk of tampering or loss at the site.  They are willing to pay a higher price for this added value.  If you are talking about SaaS and Managed Video, I couldn’t disagree more.  Again I’ll use Envysion MVaaS to make the point.  We’ve completed changed how video is used within our customer base, increasing the number of users within our customers by 40X.  We’ve seen customers drive 10-15% improvements in bottom line profitability by using our service extensively as part of their standard operating practices.  Most traditional video solutions are used by a handful of people in loss prevention and security for a relatively narrow purpose.   I’d put our less than 6 month cash payback up against any traditional video solution.  Point here is that if you are talking about SaaS versus traditional software on DVR model, you have to look at the application itself and its impact, you can’t generalize on the strength of the business case based only on the software delivery model.

Vendor promotion is driving the hype

Not going to spend a lot of time on this as it is a statement of the stage of these segments’ development, not a barrier to their growth.  All early stage innovations are first hyped by the vendors in the early days – the ones with staying power move beyond this phase and are eventually backed more by actual customer feedback.

Free offerings will limit growth

Again this is one that I don’t see as a barrier to growth.  I don’t see free software that enables simple live viewing of a handful of cameras as a competitive threat for Hosted Video or Managed Video.  There are very hard dollar costs associated with Hosted Video (storage and dedicated bandwidth) – show me someone that is offering that for free and please let me short their stock.  With respect to Managed Video, there is certainly a low end of the market that may be able to get by with a simple live view of a couple cameras.  I would certainly think that the residential market would be see appeal in a free solution.  In the business market, the requirements are much more significant and customers are demanding capabilities and integrations that you can’t get with free services.  If as a vendor you are losing business in this space to free solutions, perhaps you should look hard at the value that your service delivers, bc if a customer isn’t willing to pay for it, it probably isn’t worth that much.