Cashing in on the Cloud: Delivering the hosted solutions customers want

Published On
Oct 15, 2021

For systems integrators looking to increase their physical security business and attract new customers, the effort of moving to cloud-hosted video and access control will pay off with long-term customers and a regular monthly revenue stream versus one-time project payouts.

Advantages of using the cloud include lower total cost of ownership (TCO), reduced IT overhead, increased cybersecurity and enhanced system scalability. For the end-user, the cloud has become an essential business tool for system management and a streamlined user experience, including deploying mobile credentials. Many people made the jump to cloud services during the pandemic for sales management, HR, CRM systems and other automation and processes. Now users want to continue to implement cloud services’ efficiencies throughout facilities, including physical security.

Video surveillance managed through cloud services is a growing option for networked camera installations, storage, recording, event detection and remote viewing accessed from anywhere. The cloud removes the burden and cost of storing captured feeds on-site. Users can manage their systems remotely, eliminating the need to be physically present to open doors, grant access or modify access permissions.

The cloud’s lower TCO provides value to the customer in reduced on-site server hardware while eliminating or lessening dependency on IT for support and maintenance.

Users aren’t just contemplating the cloud; they’re prioritizing it. According to data by (ISC)², a global nonprofit membership association for information security leaders, in the latest 2020 figures, 83% of enterprise workloads were using the cloud.

The cloud is the “everything as a service” model systems integrators need to embrace and build a business model around. Without it, they’ll likely lose customers looking for contractors with cloud-hosting experience.

Selling a service

With cloud-based solutions, updates are implemented automatically, saving significant time and resources from sending technicians to a customer site to perform these services. The support integrators can provide remotely delivers added value for customers, who save on the initial investment in hardware and move to a monthly operating expense rather than a capital expenditure. At the same time, integrators continue to invest and build the service-based relationship through a revenue-generating service contract.

Offering cloud services gives systems integrators the ability to generate recurring monthly revenue (RMR), enabling reliable allocation of resources and budget planning, said Nigel Waterton, chief revenue officer for Arcules, Irvine, Calif., a cloud security company. While it can be a significant change for many integrators to shift from “per project” to service-based sales, it opens far more opportunities, he said.

“One of the challenges we’ve seen is the confusion related to the shift in installationbased projects to a more continuous service-based revenue model,” he said.

Waterton said integrators who add service-based offerings to their managed services portfolios can overcome these obstacles with a plan in place for billing, training, support and implementation.

“Not having a suitable business model to support video services and RMR can be a significant roadblock to successfully adding offerings like video surveillance as a service, which is different from an integrator’s traditional approach to installation and support,” he said. “There’s considerable change that needs to happen, from selling an asset to selling a service.”

Cloud-first attitude

Making the transition to hosted services starts with a “cloud-first” mentality, said Paul DiPeso, vice president and general manager of Ottawa, Ontario-based Feenics, a cloud-based access control company.

“Users have contacted us to direct them to integrators who are deploying the cloud. They are asking about lower TCO and not about specific products—for them it’s about the bottom line and being able to better manage and control their physical security with the cloud, while maintaining a secure environment.”

DiPeso suggested that systems integrators educate themselves on the technology and hire a lead cloud technician to head the department. The cloud mentality will infiltrate the rest of the organization and its RFPs.

“When you lead with cloud and respond to an RFP, for example, and put in the structured cabling grid, you won’t be running coaxial for the camera into every location. You’ll follow the open supervised device protocol standard and use CAT 5 at MDF rooms, making sure you have the network drops necessary to enable the environment. You’re coming in ready with a hosted solution for the user as a cloud consultant, as opposed to basing pricing on wiring, hardware, etc., when it simply becomes a numbers game,” he said.

Video surveillance cloud services are a business accelerator and a natural move for electrical contractors/systems integrators, said Ken Francis, president at Eagle Eye Networks, Austin, Texas, a cloud video surveillance solution provider. “Many are already selling cameras and surveillance. The cloud makes it easier, faster and less expensive to get started.”

Francis said on-site video management systems (VMS), as opposed to cloud hosting, require technicians who can handle the complexity of service calls.

“With the cloud, you don’t have the complexities associated with setting up the network and can dispatch technicians who command a lower rate, another cost savings. Your installation service business will spend fewer hours on technical issues, freeing up your deeper-expertise technicians to address more complicated installations,” he said.

Total cost to serve

Another element to consider beyond TCO is total cost to serve. Basically, it’s what it costs the integrator to serve the customer’s installation, which can be labor-intensive if it involves numerous different network video recorder (NVR) and VMS platforms.

“Installing NVRs and on-site VMS can be time-, labor- and skill-intensive, as opposed to utilizing the cloud that’s already up and running,” Francis said. “With the cloud, technicians don’t have to patch, load the video surveillance company’s software or perform tasks that normally require higher skill sets. You don’t have commissioning or cybersecurity, as the cloud provider takes care of that. There’s lower financial risk on the project and a stickier relationship with the customer because you now have ongoing monthly billing instead of shaking hands after a project and moving on.”

Francis said systems integrators should follow these four steps in building out their cloud offerings: 1) evaluate the cloud versus on-site VMS, 2) get technicians self-paced certification on configuring cloud systems, 3) add customers and 4) rinse and repeat.

Moving to a service-based business with hosted solutions is the best way to prepare for the future. When you make this transition, you’ll become the technology influencer the user is looking for.

Stay Informed Join our Newsletter

Having trouble finding time to sit down with the latest issue of
ELECTRICAL CONTRACTOR? Don't worry, we'll come to you.