Refering back to my blog on SaaS being around for 114 years, Herman Hollerith didn’t get everything right.  According to IBM archives, Hollerith resisted new ideas for the operation of his machines and wasn’t working well with one of his best and original customers, the US government.

To quote the IBM archive of their employee publication “Think” from 1972:

About 1905, the U.S. Census Bureau gave him an ultimatum: improve the machines and cut the rentals (which each year about equaled his total manufacturing cost). To this Hollerith said, No. The Census Bureau said: Then we’ll make them ourselves and improve them ourselves. Which they did, using former Hollerith employees to run the operation.

A simple age old truth, you’ve got to listen to your customers.  The pace of change and the competition in today’s business makes this ever more important.  But technology still needed to be evolved to meet customers needs back in 1905.

Have you read Behind the Cloud yet? Well, it is probably an understatement to say that we can all learn a thing or two from the success that Salesforce.com has achieved.  Of course I was particularly eager to take in Benioff’s insights given our common roots in MVaaS and always good to learn from the best.  The book is set up as a collection of ‘plays’.  Each one is easily digested and I’d suggest many apply to all business models though obviously the focus is on cloud based companies. Overall it’s a good read, definitely worthy to bring along for your next plane ride.

While Salesforce is wildly successful, good business advice stands up when applied to others so I thought it might be fun to see how some of the play’s in Behind the Cloud apply and hold up to our experience in managed video at Envysion.

First up, #57 – Let Your Customer Drive Innovation. While part of the message here is obvious (listen to what your customers want) the real point is how the ‘as a service’ model lends itself uniquely to this mission. How you ask? Well a couple ways. First, because the intelligence resides in the cloud, and not on PC’s & servers, the ‘as a service’ model accelerates and simplifies the process of delivering improvements. Let’s be honest, traditional software upgrades can be a pain and when things are a pain you do less of them. How many of us are still using old versions of applications because we don’t feel like downloading or buying the new one? For traditional players it is a barrier to the roll-out, listen, and improve virtuous cycle. Second area that is unique in an ‘as a service’ environment is the ability to get visibility to what customers are doing with your application in real time and across all customers. What are they using? How? In an ‘as a service environment’ you can see real-time stats and respond. In Behind the cloud the salesforce.com example of how they watched customer usage to evolve thier ‘tabs’ is an example.

For me this play totally hit home. At Envysion we have an agile development model and literally release a new upgraded version of our application every few weeks. We have both formal and informal vehicles for customer feedback and are constantly using that to shape our development. Just this past Friday I sat down with Rob our CTO and we were talking through an upcoming feature improvement to our video search. In addition to the direct feedback/ask we had gotten from a customer we were able to consider usage stats from all searches (e.g. what time frames were customers pulling up) as we talked through a set of options. Of course we ended the conversation by agreeing that we would circle back again with power-users and vet our proposed approach. At Envysion we directly translate customer asks or new customer requirements into real time improvements in the application. We can see usage and build knowledge from that (e.g. exception reports that work well) we are also uniquely positioned to deliver these changes with no customer IT requirement. Customers can simply log on via a browser and boom they have what they asked for.

So while all companies benefit from listening and responsiveness to customers, there are some structural advantages that the ‘As a Service’ model provides. Behind the Cloud gives the Salesforce.com view and I can say firsthand that they are also in action here at Envysion!

When I explain the value that Managed Video as a Service provides to customers I like to stay simple (ducks and bunnies) and describe it in two dimensions: ‘more of the same’ (similar value as legacy video solutions just more of it) & ‘new & distinct’ (value not currently realized in traditional environment). Today as I was reading Security Magazine’s Why It’s Time to Consider Managed Services I was struck at how well the traditional ‘oustourcing’ rationale applies to MVaaS. It also provided a bit of déjà vu as I spent a fair bit of time in management consulting advising clients on the strategic benefits of focusing on their core business.  So I thought I’d focus on a couple relevant MVaaS outsourcing benefits.  Here are two areas worthy of conversation:  

Immediate access to scale & expertise. In the traditional path a customer can invest all the upfront time, capital, and resources to select, deploy, and manage, grow and eventually upgrade a video system. If the customer is small to mid-sized (sub-scale) the best systems may not make economic sense. With an ‘outsourced’ MVaaS solution a customer can gets immediate turn-key solution that is more robust as they access the service providers scale as well as access to the continuous improvements delivered by the ‘as a service model’. All for an easy to digest monthly charge.  Sure you can develop all of your own from scratch over time (developing exception reporting for example) or you can let an expert accelerate the learning curve and provide an immediate head start. Speed to results.

For customers that have scale, outsourcing typically represents value through opportunity cost, or opportunity gain depending how you are looking at it. This one is best conveyed at 10,000 feet, and simply asks – what business are you in? Ok, would you like to spend more of your time and resource on that business or in the management and administration of your video system? Where do you think you will get better returns on your invested hour or dollar? The difference in the return for each is the opportunity cost. This value can be unlocked by letting an expert do the ‘non-core’ activities.

Net-Net while other areas of our proposition may deliver more, for some customers this qualifies as ‘new and distinct’ value worth talking about.

I’m reading a new book called “The Future of the Internet and how to Stop It” by Johnathan Zittrain.    In the early part of the book Zittrain examines some of the history of the computer and data communications industry.   It seems to me that one of the first “computers” was sold as a service.  It’s arguably not software or even a computer, but the business model and type of service being performed is quite similar to SaaS.

In 1896 Herman Hollerith formed the Tabulating Machine Company (TMC).  He invented a machine to tabulate the 1890 census.  But instead of selling the machine to be used by the US government, he leased it.  The system was owned and operated by TMC and produced the results for the 1890 census in only 1 year the 1880 census took 8 years to tabulate)

In 1911, TMC and 3 other corporations merged to become IBM.

The book is an interesting read so far (just started it) and raises several social and legal questions about the Internet, free access to the Internet and regulation.

Hello to the Managed Video as a Service community. I’m Carlos Perez and I recently joined Envysion to lead our Product and Marketing efforts. I am excited to join the great team here at Envysion and look forward to bringing our innovative managed video as a service solution and story to the marketplace.

I thought I’d kick-off my participation in the MVaaS blog with some thoughts on a subject that is now very near and dear to my heart – adoption of Managed Video. For any given innovation, much like prognostication on the stock market, we all see and hear differing perspectives from analysts and solution providers on what any given year holds. Already we have dueling perspectives for Managed video in 2010. Will it be a ‘breakout’ year (IMS)? Or will adoption be ‘gradual’ (Honovich)?

For me a useful reference point in thinking through the pace of adoption with a product & marketing lens is with our old friend Geoffory Moore and his ‘Crossing the Chasm’ take on the adoption curve. I won’t waste time here with a synopsis of the book, instead I’ll cherry pick out a few key challenges Moore might identify if he were to examine Managed Video adoption. In doing so I’m suggesting that Managed Video as a Service currently sits with ‘early adopters’ in Moore’s model.

So putting aside investment (agree that $ is a factor) and presuming that core technical aspects of managed video are sound, where would Moore point to as key areas that will determine if adoption will be rapid or more gradual, in particular with the pragmatic ‘Early Majority’? My take (admittedly early days) is Moore would point to three key areas:

1. Value delivery and value clarity. Sounds easy right? Execution is harder. Pragmatists in the early majority are black and white and want to see the numbers. They are about the solution, not sexy technology that makes them look cool. The first challenge for managed video is to deliver substantially more value vs. what customer have today. ‘More value’ here can translate in a couple ways, more from traditional sources (such as security & loss prevention) or more from new value sources (marketing effectiveness driving increased revenue). Both of course need to translate directly to the bottom line. Critically, value must be succinctly and effectively communicated to the customer in terms that resonate.
2. Total customer solutions. Proven 100% easy. The Early Majority customers don’t want to ‘work with you’ they want you to make their lives easier. They need soup to nuts, turn-key solutions that are well thought through and apply to their specific needs (be they industry specific or functional needs). For managed video this translates to presenting solutions that contemplate all elements of the system from install to management and future growth. That provide an easy path to acquire hardware, to scale, administer, and of course a system that is accessible, intuitive, and easy of use and. Further, customers in this next stage typically want proven solutions with references from other customers in the same boat. Anchor customers are important.
3. Understanding & coexistence with existing infrastructure/ecosystem. The Early Majority are aware of existing investment and functionality of existing products. These customers respect the relationships they have with existing vendors and the interconnection of any system with other data & adjacent systems. Its not that these can’t be overcome, they just can’t be ignored if you are going to accelerate adoption. While clearly overcoming switching costs is a part of the story, adjacent systems and data are also a tremendous enabler for Managed Video. The better understood the adjacent systems and data, the better those elements can be integrated with video to drive insight and value. POS systems and data is an obvious example, as video integrated to POS can create exponential insight and value to the customer vs. either alone.

I’m not suggesting this is rocket science or that this list is all inclusive. But these are some of the real challenges that will determine the pace of adoption. Of course I’ve voted with my feet and believe that here at Envysion we are taking these challenges head on and are well positioned to drive acceleration. Of course there is a lot of hard work (and fun!) ahead to make that happen.

I’m interested to hear other perspectives and in the future I’ll circle back with more of the Envysion view on overcoming these hurdles, our progress, as well as the new things that we find along the way!

I almost never open marketing solicitation emails, but Friday morning I got one from IMS (a UK based research firm that covers the worldwide video surveillance market) that caught my eye.  Title was Top 10 trends in video for 2010.  I hadn’t talked to the folks at IMS in a while so I didn’t have a good sense for what they were thinking these days so I clicked through to the report to see what they had to say.

It didn’t take long for the smile to cross my face as I read through their report.  The first sentence of the report (here’s the full report) was:

“It has a host of names – Managed Video as a Service (MVaaS), Video Surveillance as a Service (VSaaS), Remotely Monitored Video – but whatever the name, 2010 will be the year it moves out of the shadows into the limelight.”

It has been several years since I posted on this blog, introducing the term Managed Video as a Service as a way of giving the new category we were creating a name.  The name isn’t that important, although it is really cool to see it being used by other companies and by research analysts.  What is important is that the segment is maturing enough that there is general recognition of how important it is and how much it is going to change the traditional video surveillance market.

I couldn’t agree more with Alistair’s position – 2010 is definitely going to be a game changing year for all of the SaaS and other as-a-Service models that are beginning to proliferate in the video world.  While there are a lot of different definitions and different business models, we all share the common goal – provide video in a service model that eliminates the barriers (economic, management, complexity) that have traditionally limited customers’ ability to maximize the impact and value of video.

John Honovich, on his IPVideoMarket.info blog, posted an interesting article on ease of use or user interface design and how it applies to products typically found in the video management space.

I found his article http://ipvideomarket.info/report/easy_to_use_video_management_software a very compelling read and wanted to compare some of his findings to our experience here at Envysion.

His first and most important point is “Training = Failure” – I couldn’t agree more. Our goal at Envysion is to build software that does not require any training to use. Our goal is that with at most a 5-10 minute demo, most users should be able to navigate the software, search for recorded video with data, and share that video with others. Based on customer feedback to date, we seem to be generally reaching that goal.

John also raises a very interesting point about the type of person and their skill sets for whom the video application is designed. My general sense, especially when walking the floors of a conference such as ASIS, is that nearly all vendors design their system for the security professional, who is typically located in a video room with a wall of monitors. Their user interfaces are focused around cramming as many features into a single screen as possible. How else, for example, might you come up with the idea to display 48 thumbnail sized live video channels on a single screen? These professionals may represent perhaps less than 1% of the total population of a company that has video cameras in use.

At Envysion, on the other hand, we design our application for the other 99% of the population of the company. This includes marketing, sales, IT, operations, management, human resources, and so on. To be successful in this, we constantly have to balance complexity and features with ease of use and simplicity.

Use of icons, as John points out, is a great example of this balance. With Envysion, we used to use a number of icons for functions such as “edit user” or “remove user”; based on customer feed back we have found it much more effective to use simple words such as “edit” or “delete”. As a result, we’ve removed many of these icons and replaced them with text.

Another challenge that we face, especially with a web-based application, is consistency of style. Just because you may have hundreds colors doesn’t mean that you should use them all. We have found it important to be very consistent with respect to fonts, colors and general style-sheet items. A great example of this is the design of buttons. We have found it very helpful to insure that buttons have an identical look and feel. In addition, our users appreciate that fact that the most commonly pressed button in a specific situation (e.g., the “OK” button in a search dialog”) is highlighted to stand out. You’ll find this technique used in many web sites today. (Hint: look for the shape and size of  the “purchase” or “buy” button on any commerce web site).

This same approach applies to links within a page. Users always appreciate common indicators that a link exists – e.g., the link is always a specific color and has the same behavior when you hover over it. Wikipedia is a good example of this behavior.

For those of you who are curious about our application, I’ve posted a short demonstration of our application below.

Enjoy

We’ve long been advocates of the merits of Software as a Service (SaaS) and have always said that we believe there is tremendous potential for this model to disrupt the traditional video surveillance business.  Despite our firm belief in this, other providers in the market have been slow to pursue this model and continue to pursue the traditional hardware or enterprise software models.  While on one hand this is good for us from a competitive standpoint, it leaves the burden of educating the market on the benefits to a small group of companies, of which we are one.

With that as a back drop I was pleasantly surprised to see an article in Today’s System’s Integrator about the merits of SaaS.  I’ll forgive the author for saying SaaS is Security as a Service as the overall article was a reasonable overview of the concepts aimed at an audience that hasn’t spent a lot of time thinking about it.

It’s great to see this becoming part of the dialog in the industry beyond what we’ve been contributing.

Computers use a lot of power.  A typical home PC might use between $5-$10 a month in power if left on 24×7 without any power savings functions turned on.  Video recording systems based on PC’s which are encoding video and constantly writing that to hard drives puts a heavy load on computers and normally  defeats any power saving capabilities they have.   Multiply this times hundreds or thousands of video recorders and the cost for power starts to add up to tens of thousands of dollars a year.

As part of some development we’ve done to implement the Envysion EnVR software on low power embedded type systems coupled with IP cameras I wondered what the cost savings in power might be versus more power hungry PC based platforms.  So I compared the embedded platform to a configuring using our standard video recorder system which runs on PC based hardware and utilizes software compression with analog capture and analog cameras.

Doing this we’ve found the embedded system running the same EnVR software reduces power consumption by about 70% on up to 8 camera systems.  However, power still really isn’t currently all that expensive at a US national average somewhere around $0.11 per kilowatt hour.  So even with this big power reduction it didn’t make sense to go beyond 8 cameras due to the increased cost of the IP cameras versus analog cameras.

Even at 6-8 cameras, the cost savings in power consumption takes  3+ years to payback versus the lower cost analog cameras.  With more than 8 cameras, it quickly takes some much longer to achieve any cost savings that the time exceeds a reasonable life expectancy of the video recorder system (Assuming a range of 3-5 years for the hard drive and cooling fans in the recording system).

I had an opportunity to spend some time reflecting on the year during the holiday week.   I’ve got a lot to be thankful for this year – both personally and professionally.  I won’t bore you with any personal reflections, but did want to share with you some of the things I am most thankful for at Envysion.

Demonstrated customer results – The first thing I am grateful for is our large and growing customer base that is using the heck out of our service and that is seeing material results (profitability increases of 1-3% of net sales).  Without progressive customers and demonstrated results we’d be facing an uphill battle as an innovative start-up trying to disrupt the market.

Great team – I am very fortunate to have a team of people that are both incredibly talented and very fun to work with.  Both of those traits are critical to building a successful company with a strong, positive culture.  It is easy to find people with only one of those characteristics (we’ve had our share), but our goal is to make sure that everyone in the company has both.  We’ve come a long way toward that goal this year.

Committed investors – Growing a SaaS and recurring-revenue business from scratch requires a long-term investment horizon and a substantial amount of upfront capital.  We are fortunate to have a committed group of Tier 1 investors that have fully participated pro-rata in every investment round we’ve done to date.  This commitment enables us to pursue the growth opportunity in front of us without worrying about cash.

Incredible performance – Despite the worst economic period many people have witnessed, struggles in the restaurant and retail sectors and the poor results posted by many players in the video space, 2009 was Envysion’s best year ever.    We landed several large national brands and saw sales and recurring revenue grow 150-200%.  I’m not saying I told you so, but here’s a post from 4Q08 that has a pretty good hypothesis.

And finally, while it may be traditional to look backwards when saying thanks, I am most thankful for the bright future we have in front of us.  Looking forward to a fantastic 2010!