It’s never easy to give up control, especially when you’re talking about turning over proprietary data about your company, business or home to a third party. Even so, security systems integrators are starting to have more success in getting their clients to transition to cloud-based access control and video surveillance services, whether that means through an on-premise, offsite or hybrid offering that streamline operations and increase recurring revenues.
Integrators are making inroads on selling cloud-based security services to their clients, but they know there are still opportunities to grow that sector of their business, whether that means requiring a service contract for all installations or convincing a long-time customer to modernize their systems.
As cloud-based security systems become more robust, integrators expect their customers will become even more willing to jump into the 21st century, head to cloud and let the experts manage their precious security data, in the hopes there will never be an incident they need to review.
How Customers Feel About Cloud-Based Security
GC & E Systems Group, a 22-year-old systems integration firm focused on government, Fortune 1,000 and education customers, has had hosted data center servers for about 12 or 13 years with many of its customers, its director of commercial business, Rob Hile, says. In that setup, the server infrastructure is in the customer’s data center, which they consider to be their internal cloud, he says.
Montréal, Québec, Canada-based Infynia transitioned from an IT company when it was founded in 1983 to physical security about 20 years later, its president, Alexandre Reid, says. The company works mainly at oil and gas facilities and industrial sites, with most of its customers in Canada and some in the U.S., he says.
Cloud-based security technology represents a small part of Infynia’s business at this point, says Reid, because industrial clients “[are] not quite there yet,” says Reid, “but we’re starting to see a change.”
“People are seeing that you’re starting to use cloud solutions for their for their operations, so they’re more open to it,” he says. Having a Software-as-a-Service (SaaS) offering from Genetec on the market could help Infynia’s quest to increase its penetration into cloud-based installations, says Reid.
“We were kind of missing that in the past,” he says. “Now, we’re leading with cloud when we do a pitch, so we’re getting more traction than we used to in the past. We’re seeing more opening, but there’s still some resistance from our client base.”
Infynia has been able to show that the cloud-based security integration will be separate from the customer network, which has helped to thaw the resistance from mining companies and other large operations with which they work, says Roger Nepton, director of service and customer success.
One customer dipped their toes in the cloud waters with a license plate reader hosted on a cloud server that does analytics, he says.
“The gold mines and diamond companies don’t want their video going anywhere other than where they are, so that’s a little bit more resistance,” says Nepton. “But the car dealerships that we have connected to video centers who monitor these after hours, [those] might be easier to go in the cloud.”
Salt Lake City-based Stone Security has offered cloud security options to its global, regional and local customers in almost every U.S. state and dozens countries for more than seven years, president and CTO Aaron Simpson says. The company started in 2005.
“We got in with some larger global customers, probably much earlier than we had any business doing,” says Simpson. “We’ve grown out of there and started doing work all over the world early on, following customers around the world to help support them.”
The company has eight offices across the U.S., two in Mexico (Mexico City and Monterrey) and one in Sao Paulo, Brazil. It focuses more on security solutions than particular vertical markets, says Simpson.
“We’re always a little hesitant to offer it before it’s ready,” he says. “Just because someone has a cloud offering, that doesn’t make it ready for the market, so we want to make sure that what’s delivered to our customers is good.”
Overcoming Customer Resistance
In hybrid cloud models, customers handle their infrastructure, and their data centers are on blade servers. Thus, all their facilities are linked to their data center, using the internet, with either the integrator or customer supporting that server infrastructure directly, says Hile. It’s different than the traditional Azure or AWS environments that are considered a more traditional cloud offering.
“A lot of our customers tend to be very large enterprise customers and they’re very comfortable with that environment being in their data center and their cloud,” he says. “But we’ve had a couple over the last five years that have completely taken that environment and put it into what I would consider traditional cloud where Azure or AWS is managing that infrastructure for them. It’s partitioned off and we support those virtual servers directly.”
Hile continues, “As you see more and more IT groups managing the security infrastructure, and in some cases that the whole physical security team now reports up to the CIO or CISO, those guys seem to have a more of an understanding of cloud and I think the biggest challenge on our physical security side is, when you look at AI and you look at some of the advanced analytics that are happening at the edge, to take all of that and really move it into the cloud.” He adds, “That’s a heavy lift.”
Hile says, “You’re not just at that point in time passing data packets; you’re talking about video. You’re talking about high-frame-rate video. You’re talking about analytics that are being pushed up. I think what’s holding the market back a little bit right now — and why we’re still really stuck in what I consider to be a hybrid model — is a lot of the power that’s being generated at the camera from an advanced analytics and AI standpoint. You just can’t take that and transmit it into the cloud easily and readily.”
“The other thing that’s kind of holding us back a little bit,” Hile continues, “is a lot of the feature sets that are involved in what I would consider to be large enterprise video deployments or even large access control deployments such as intrusion detection, such as intercoms, such as these third-party systems that are by design integrations at the at the prem level.” Those have not really moved to the cloud yet.
“Traditionally, I can get your access control events to go to the cloud. I can get your basic video to go to the cloud. But when you start layering on the AI and the advanced analytics and third-party plugins and integrations. That’s not ready yet,” he says.
“So, we’re not kind of ready for prime time from the large enterprise standpoint to take everything to the cloud yet,” says Hile. “We’re getting close. The beauty about the cloud is, as those integrations come on board, and they’re able to develop them, they’re automatically, seamlessly put into your cloud environment. You don’t have to do plugins. You don’t have to do firmware updates.”
Hile expects large enterprise customers to be ready to jump in on cloud-based security installations in about a year when these hurdles are cleared.
Customers do their own cost/benefit analysis when it comes to going to a cloud deployment, and, sometimes, they have too many doors to manage or cameras to oversee to find value in having an integrator take on the entire security network, according to Reid.
“If you’ve got four doors, it’s a no-brainer; you go cloud,” he says. “But let’s say you get to 1,620 doors. The more doors you add, at a certain point, you look at the yearly cost — and it adds up.” Large customers are more likely to update their servers every four or five years and save money that way, says Reid.
In Canada, Law 25 cracks down on sharing people’s personal data. “So, that’s a big issue for us,” says Reid. Customers want to know if their data will be stored in the U.S. or Canada, and who will have access to it, he says.
Nepton expects customers to embrace the idea of unifying access control and video surveillance in cloud-based installations.
“We can pitch that a little bit easier to the customer,” he says. “They do like the fact that they don’t have to maintain it themselves or buy the computer hardware. Having this hosted in the cloud removes a lot on the infrastructure side, and that’s where for our smaller customers, it seems like it’s a good selling point.”
Many of Stone Security’s larger customers would rather keep their security operations on premise rather than have it managed in the cloud, says Simpson.
“We have customers that have big campuses where an on-prem makes more sense for them and that’s the route they want to go,” he says. “But then, as we move into their remote sites, they want to go cloud out there. It’s been interesting to watch how people deploy their networks as more things move to the cloud.”
“They’re used to having cloud on every other system: all their mail servers and everything else moves to the cloud. We’ve always been surprised that video seems to have a little more push or traction than access control just due to the bandwidth requirements between the two,” says Simpson.
“There are those customers that have very specific requirements as far as their data protection and privacy, but most other industries have a way of having a level of confidence around the data and the security behind the data,” he says.
“If anything, I think, often, it allows them to outsource their data security fears to someone else so that it’s not on them. It’s on the other people to make sure they’re compliant,” says Simpson. “Overall, I think most people have been prepped by other industries that, when we come along and talk cloud, as long as they can check that box, as long as their providers are meeting those high levels of security, then they’re comfortable with that.”
What’s Ahead for Cloud-Based Security Installations
As advanced as the cloud-based security market is today, Hile sees plenty of room for growth.
“I think [what’s lacking right now] really is the ability of advanced integrations being seamlessly put into the cloud,” he says. “I have customers that have multiple levels of integration at the prem level and I’m talking about IT systems, IT subsystems, security subsystems, intrusion subsystems intercom and the advanced analytics that are starting to hit these cameras, not just motion detection.”
Hile continues, “We’re way above that. We’re talking about gunshot detection. We’re talking about people counting. We’re talking about hotspots for crowds, where they’re going. That’s pretty heavy, and it’s pretty heavy at the camera level.”
“The good news is the cameras are processing that and, if you got an on-prem system, there’s no issue with that bandwidth because you’re literally talking, but when you start taking that and putting it into a cloud infrastructure, the bandwidth required for that to be seamless is really heavy and a lot of customers aren’t going to pay for that pipe yet,” he says.
Reid “can already feel the change” in the cloud-based security sector becoming more sophisticated.
“In the next two years, I believe that most of the new projects we’re going to do, or quote, are going to be cloud,” Reid says. “And I don’t know when, but, at a certain point, I feel manufacturers are going to no longer sell on-premise systems. They’re going to do all-cloud. It’s not if, it’s when. It’s going to be only cloud in, let’s say, five to 10 years.”
To Simpson, the adoption rate for cloud-based security solutions is “surprisingly low.”
“I think all of our customers know that they have that option,” he says. “They don’t want to feel that they’re pigeon-holing to one solution. They want to know that they can grow. I think most do expect that over time they will move into a cloud solution.”
“[There are] just things you can’t do on a cloud system yet when it comes to more advanced, or you get into these operations centers or these high-bandwidth solutions that even the ISPs aren’t necessarily there. We still have people on relatively low bandwidth with low-bandwidth ISPs, so to push video out to true cloud is not possible. Access control and some of the other ones are more or more doable,” says Simpson.
“It’s getting there,” he says. “I think we’re in a good spot now where the cloud offerings do have a lot of the necessary capabilities. They’re checking all the right boxes now to where we can deliver some pretty high-level cloud solutions. Between that and being able to leverage what is needed and truly integrated on prem versus and in conjunction with cloud, we can usually deliver a high-level product.”
Simpson continues, “I have to think within the next five years, the infrastructure the bandwidth available would be at a point where we wouldn’t have any limitation. I would certainly hope within the next five years, we wouldn’t be limited by infrastructure or cloud capabilities.”
“The hybrid approach does seem to be something that really resonates with a lot of customers,” he says. “They may not be ready today to make the move. They may not have the policies in place. So, as integrators, it is our job to be integrators. We can’t call ourselves that and then not have the ability to pull things together — to have these siloed systems that sit out there and [merely] do what they were designed to do out of the box.”
“I think we’re in a good spot,” Simpson adds. “We’re moving. We’re making progress. I’d like to see a big jump ahead by the access control space. I feel like that’s one where we’ve got it up in the cloud and that we can do well, but they really haven’t changed much in a long time. We still have cards on your readers on walls and status switches and red X’s and there are some ways to modernize that a bit.”
At ISC West 2024, held in Las Vegas this past April, “virtually every booth had AI on it or cloud on it,” says Hile.
“The customers that are there are getting educated very quickly, but there’s still a lot of smoke and mirrors,” he says. “They’re seeing things that aren’t really ready for prime time and the flipside of that is the market is educating them quickly.”
Hile continues, “We’re doing a good job of educating them and they’re doing a good job evangelizing the cloud but they’re also doing a good job in particular of cautioning the end user on cloud deployments and what’s real and what’s not real and what’s ready today and what’s not ready today. That’s probably our biggest challenge today.”
“These companies, these very large technology providers that know the cloud is the future, are building a migration path,” he says. “If a customer just throws everything in the cloud today, they’re going to hate it. It’s not going to work for them like you did on their prem systems. Building that migration path is going to be key for them and that’s what these guys are doing. They’re starting to go in. Let’s crawl before we walk and walk before we run.”
Selling Cloud Security
It takes a different skill set to sell physical security solutions and cloud security systems, says Hile.
“When you talk about an on-prem system, you’re talking about sizing the server accordingly, making sure that the server has enough horsepower for the analytics and the cameras, making sure everything is on prem,” he says, including on-premise licenses, related services, service agreements and programming.
“When you look at the cloud and you look at a cloud deployment, you kind of take that whole model and you turn it on its head,” says Hile. “The server infrastructure is infinitely scalable. You don’t have a prem server, so you don’t have to have rack space. You don’t have to have a lot of this stuff that we have to design into the premise-based system.”
According to Hile, “The licensing is different. It is a license, but it’s a license that’s all-encompassing. You don’t have the camera or door license and you don’t have the services that go along with that. And you don’t have the firmware updates that you have to do on a regular basis. All of that is handled in the cloud.”
“There’s a lot of that stuff that goes out of our estimate and really goes into the value proposition for the customer in terms of how that’s going to be,” says Hile. “You’re talking about a capital expense versus an operational one. These cloud-based systems are going to be a license every year and it includes everything firmware software, the camera connection or the door connection, pretty much everything.”
He calls cloud-based installations “perpetual systems.”
“You can grow them, you can expand them and the only thing you really have to be concerned about and that aspect is as long as the server scalable, and since it’s in the cloud, you can just easily turn it up,” says Hile. “You don’t have to go back.”
It’s more challenging to convince customers to buy cloud security platforms, says Reid.
“Selling a camera and an access controller, you’re not really selling because the customer needs that,” he says. “Where you have to sell is when you sell the solution of, ‘Are you going be on-prem or are you going to be cloud?’”
“They’ve got to be able to explain to the customer how it’s going to create value for them to have a cloud system: no maintenance, no downtime, etc. But they’ve got to have a better understanding of how they explain the value added of having a cloud system. You’ve got to be less technical — maybe be more operational — and try to reach the person you’re talking to to explain to them,” says Reid.
Infynia’s sales support team does the quotes, the solutions, and the salespeople sell both physical security and cloud-based solutions, says Reid.
“They’ll always pitch the cloud first,” he says.
The Stone Security sales team is comfortable selling both physical and cloud security, even as the company has grown to about 200 employees across the U.S., says Simpson.
“It’s one product, one family of products,” he says. “They’re not offering four or five or six different brands as they go out there, so they’re very well-educated in it. It’s really been part of our success is having people that are experts when they go and sit down with customer.”
When Customers Move to the Cloud
Most security integrators do work for customers who are reacting to a situation perpetrated against them and there doesn’t seem to be much difference on whether they’re seeking physical security systems or cloud-based solutions.
“We’ve been designing prem-based systems for 10, 15 years that phone home when there’s an issue,” says Hile. “That’s not only at the technology level, whether that be the VMS or the access control. We don’t do a lot of systems that aren’t unified. So, those access control and CCTV systems are really tied together and even down to the power supplies.”
“We use power supplies that are IP-enabled,” Hile explains. “So, if there’s an issue with the power supply, it’s calling us; it’s sending email to our service desks. That’s really not going to change in where we’re going as a cloud. We’re still going to have premise-based power supplies. You’re still going to have premise-based controllers in some aspects, and those will still phone home if there’s an issue.”
Hile sees cloud becoming more popular for the management of security and other systems, where the directory server will be in the cloud.
“They’ll just email us, just like we have before. So, it’s really not a big difference for us,” he says. “Our service desk will still get those alarms a lot of times before the customer even knows that there’s an issue. We fixed it already. I think the cloud may help us a little bit in being able to repair some of those issues virtually than having to roll a truck.”
According to Hile, “We may be able to do more things that’s yet to be seen as we start getting more and more into the cloud and some of these larger manufacturers roll out what I consider to be security services, security as a service, if you will. I think that’ll help us. I think there’s going to be some things we can do virtually that we can’t do today. But for the most part we’re already there. We’re getting that notice before it becomes an issue.”
Infynia does monthly checkups with its 300 or so customers, says Nepton.
“Most of the customer systems are connected to an internal in-house system so, if a server goes down or they lose some equipment, we do get notified,” he says. “We do have all that in place with our own procedure. And I’d say, in the past, not having the real offering we have now, some of the customers bought the on-premise system but hosted it in their own cloud.”
Where Things Stand in Cloud-Based Security
Hile sees large enterprises as the segment of the market that can most benefit from cloud-based solutions since the small- and mid-sized businesses have largely been saturated at this point.
“We’re just starting to stick our toe in the water, so there’s a lot of opportunity for further development,” he says. “Also, I don’t want this to come out the wrong way, but much like when we heard about this whole convergence of IT and physical security, I think we’re seeing that right now with cloud and AI. There’s a lot of people that are talking cloud and AI that don’t have a clue what it means.”
Hile continues, “They’re just talking about it because it’s a great marketing buzzword and it’s the thing to talk about but, when you get down, you look under the hood, it’s no different than what we already have. I think, from a large business standpoint and a lot of the large enterprise customers, we’re going to see a big shift in technology being developed for that for that space in the next three to five years.”
“Then we’ve got customers today that don’t even talk about it, like, ‘I want my video in my closet, I want it locked up. I don’t want to listen to anybody,’” he says. “There’s still that ‘Big Brother’ outlook. There’s going to be those guys that are going to hold out, and they’re OK because there’s a position for prem and cloud in this market, and I don’t think prem will ever go away.”
Clouds Rain with Recurring Revenue
Infynia has required all customers to sign service agreements when they get integrated systems for the past four years, says Reid.
“We don’t do break and fix,” he says. “So, we’re already in that mode where customer already have a support agreement or there’s a base fee, so that’s not going to be a big change for us, because they already pay yearly to do business with us.”
According to Reid, “It’s going to maybe be easier to secure the relationship with the customer having a cloud solution, because now they have to keep their service agreement up to date if they want to keep access.”
Manufacturers have gone from putting their on-premise systems on the cloud to adding value to their cloud systems with new features that aren’t available in on-prem offerings, says Nepton.
“Now you go into a demo saying you integrated ChatGPT with true text search, where you type in ‘look for blue cars at a stop sign with people in white shirts,’ and the analytics can go out and do it,” he says. “Those little nuggets are what captivate some customers and get his interest. It’s not the reason he should be going to the cloud, but those little features help sell it and want him to.”
Having a steady stream of cash coming in thanks to cloud-based security installations is “massively helpful,” says Simpson, noting the company used to work in the residential intrusion space and saw the benefits of recurring revenue in that model too.
“You’ve got to really tool your business to provide that level of support as well,” he says. “If you’re just collecting those checks and not providing the value outside of just a monthly subscription to a cloud service, then I don’t know that benefits anybody.”
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