5 Tips for VaaS Success
In the world of video as a service, keeping these five things in mind can make the difference between ordinary revenue and recurring revenue.
There’s a lot of talk about the cloud, both in the security industry and in general. In security, that discussion is almost always about cloud-based video, which goes by many names — managed video, hosted video and remote video, to name a few. Whatever the name, the concept allows dealers and integrators to provide video as a service (VaaS) to their customers — thus turning what in the past might have been a set-it-and-forget-it (unless something went wrong) relationship into recurring revenue.
A lot has changed in the VaaS space over the last few years. Among those changes has been an increased awareness and acceptance of cloud-based services in general. Microsoft’s “To the Cloud” commercials certainly helped that along. In security, cloud-based video offers customers a few benefits, not the least of which is a low cost of entry. In most cases, customers pay nothing up front and instead have those costs rolled into their monthly service charge. It’s not unlike cell phone or even alarm monitoring contracts.
“There is a hardware component with this kind of service, but it’s rolled into a subscription fee so the customer doesn’t pay anything up front,” says Sam Naficy, chief executive officer of Los Angeles-based DTT Surveillance. “For our average customer, whether they’re in the retail, hospitality or restaurant business, that ranges from $200 to $600 a month depending on the services they subscribe to.”
The Internet itself has played a major role in making VaaS a growing market opportunity, says Craig Leyers, senior vice president of sales and marketing for Nashville, Tenn.-based ADS Security.
“Even over the last four years, the Internet has become much more of an expected utility as much as people in the past may have relied on phone lines or even to some extent electrical power,” he says. “So if they’re comfortable with their ISP, they’re more comfortable with our solution.”
Many businesses are dealing with smaller staffs and smaller budgets, but the challenges of running a business are, if anything, bigger than in the past. That’s one factor that’s driving VaaS, says Hank Monaco, vice president of marketing for Tyco Integrated Security (IS), based in Boca Raton, Fla.
“Today, everyone needs to do more with less, so the new standard is to find a provider to provide a managed service,” he says.
While increased awareness and acceptance have certainly made the sales process for VaaS less difficult, that doesn’t mean it’s easy. Below are five tips for from integrators who have had some success with VaaS.
1. Make the ROI Case
If a customer can’t see the value of a product or service, there’s virtually no amount of money he or she will be willing to pay for it. So it’s up to the dealer or integrator to demonstrate the potential return on a customer’s investment.
“Video is so pervasive in our daily lives, so folks have a tendency to think about how they could use video in their own application, and whether they could be a smarter-run business with video,” Monaco says. “That’s why it’s important to focus on the operational benefits video can provide them.”
To be successful in the VaaS game, he says, is to transform video surveillance from a grudge purchase to a valuable business tool in the mind of the customer.
“That’s a really important distinction, so you have to look at yourself as a partner in their business. Demonstrate how video can help in many ways so that it’s not just a commodity purchase they need to have for their insurance or that they need to have so their employees feel safe,” he says. “Help them understand that for a little bit more cost, they get a lot more value. For example, video guard tours mean a customer can redeploy their human resources within their environment.”
Although it’s hard to put an ROI value on it, the reliability of offsite storage is also a consideration, Leyers says.
“There’s always the prospect that an on-site DVR may be a target for crime during a criminal event. It may be stolen to get rid of video evidence. The local DVR might fail and software updates to think about,” he says. “The reliability of an offsite portal that allows someone to look in live with the convenience and ease to access archived video. In commercial selling, the proposition is simple: it’s simple, effective video.”
Last but not least, you’ll need to talk numbers with a customer, so having some concrete examples of how they can make back their monthly subscription fee — and then some — is helpful.
“At the end of the day, it’s about getting the ROI compelling enough for the customer. They want to know, ‘If I pay $300 a month, can I save $800?’ And in a lot of cases we can do that by lowering shrinkage, lowering payroll violations or lowering potential liability,” Naficy says.
(For a real-world example of how DTT’s service saved one customer big time, see “ROI, ROI, ROI” on facing page.)
2. The More, the Merrier
When it comes to the services part of VaaS, you can never have too many possibilities on the menu, Naficy says.
“The more of these types of services the industry can provide, the more it reduces the likelihood of cancellation or churn,” Naficy says.
As an example, he points to DTT’s own numbers.
“In the industry, churn is about 13 or 14 percent for residential and commercial. For the video guys, it’s north of 18 to 20 percent. In our last quarter, we had 6 percent churn,” Naficy says.
Not only is a larger suite of services good for integrators but it can also be what helps customers see the value in VaaS.
“These types of video services are what really creates added value for a large segment of the marketplace,” Monaco says.
3. Getting Technical
The biggest technical hurdle is, as we’ve all heard before, bandwidth, specifically at the customer site level. With a large retail chain it’s usually not a problem, but at the franchise level people tend to go with the least expensive option. Three or four years ago, that was fine, Naficy says, because they were using it mostly for video and maybe their back-office infrastructure, but that’s not the case today.
“What happened three years ago was the proliferation and use of free Wi-Fi to customers. So now they’re using the same pipe for our needs, their needs and the 10 to 20 people sitting there with their coffee. They also have satellite music and video that’s being beamed to TVs. So telling them they need a $199 T1 line is an issue. It’s becoming better, but it’s still an issue,” he says.
And while some manufacturers may tout their products’ ease of installation, there’s often more to the story, Monaco says.
“We all like to think it’s all plug-and-play, but in reality it’s almost never that easy,” he says. “It might be for microbusiness or homes, but in a corporate environment you’re most likely going to have an IT infrastructure, which means you have to have a discussion around bandwidth requirements.”
So it behooves dealers and integrators to either have a plan for not only understanding IT but having an advanced knowledge of how to deal with it.
“Ensuring that you have an IT-savvy go-to-market platform is important. It’s also important your salespeople know how to talk the language and your technical people know how to work around IT,” Monaco says.
4. Know Thy Customer
Understanding your customer’s needs seems so simple, but it sometimes gets lost in the excitement around new technologies and functionality. However, Monaco says, getting to know their business is the first step in any sale, not just VaaS.
“It’s the role of a good integrator to ensure that they know their customer’s needs and requirements — both business and security — in a deep way,” he says.
So rather than pitching VaaS based on features, dealers and integrators have to communicate how those will benefit the customer, which means a lot less talking and a lot more listening.
“Understand their pain points and determine how to manage them appropriately and how you can serve their needs. VaaS is one way to do that,” Monaco says.
5. Be the Expert
Last but certainly not least is the education component. After all, if a customer doesn’t understand how a service will benefit them, no technology — no matter how cool it is – will appeal to them.
“As an industry, we need to do a better job of educating businesses, depending on the type of business, how to take advantage of this service to meet their unique requirements,” Monaco says. “Each type of enterprise has a unique set of requirements, so you can’t pitch some vanilla service. That does a disservice to the customer.”
Tyco Integrated Security (IS) has been offering managed video services through its operations center in Aurora, Colo., for nearly 10 years and more recently added a new, more bandwidth-friendly hosted video service slated for release later this year, Monaco says.
“With the technology available in the cloud, there’s been a move to more hosted or cloud-based video and less of an appliance infrastructure,” Monaco says.
One of the main things customers are looking for in their VaaS solution is the ability to gather business intelligence, not just traffic flow and conversion rates but also intelligence about products themselves, particularly in a restaurant.
“Customers are looking for video in a more mobile, self-service way because it’s hard to know what’s going on in a restaurant when you’re not there, but they need to make sure the things that are occurring are meeting the standards they have in place,” Monaco says. “We have one customer using remote video to ensure that the coffee is fresh to the standards of the business.”
And while Tyco IS may be a massive organization with decades of experience and success under its belt, Monaco says that reputation doesn’t always make a difference — and the integrator has no plans to rest on its accomplishments moving forward.
“It’s really something where our size is not what’s most important. It’s how we can translate that to benefit our customers, and that’s through the depth and breadth of experience we have and the number of other businesses like theirs we have, which shows how we can serve them,” he says. “We’ve been in the monitoring business for 100 years, so we want to leverage what we’ve done up to now and add competencies that make it easy for customers to run and manage their business.”
ROI ROI ROI
DTT Surveillance’s approach to VaaS involves a solution that relies on the company’s own product, which means a lot of software development and programming. As CEO Sam Naficy says, that development is an ongoing effort to make sure the integrator is providing its customers with new solutions and capabilities.
The DTT Portal, which is built on Amazon’s AWS, allows customers to log in remotely and see all their information, such as employee information, POS exceptions like discounts and payroll information — all with the video associated with it. While DTT has been in business for 16 years, about eight years ago it shifted to offering just subscription models that it based on the software-as-a-service model.
In addition to the portal, DTT also employs a team of 80 loss prevention specialists, based in Las Vegas, who analyze data from its 30,000 customer locations and perform what DTT calls a Smart Audit to ensure that locations are in compliance with rules and regulations that government, their franchisor or their industry dictates. They then provide feedback to owners so they can take corrective action.
Additionally, DTT offers case management services, which are particularly helpful when it comes to workers compensation claims.
“In the old days, they had everything in a folder in a drawer, but today it’s all in the cloud, including video and an employee’s time sheets, original employment application and original background check,” Naficy says. “If Facebook is your personal life’s depository of your ‘life stuff,’ then this is your depository for your business.”
ROI is the name of the game, and Naficy says for some customers, that ROI can become apparent very quickly. That was certainly the case with one customer, a 63-restaurant chain located in the Southeast.
“They pay roughly $500 a month, and after nine months of having our solution installed, their CFO contacted us to say they’d seen an increase in profits of about $7,200 per site per month. Even if it was half of that, it would still be an enormous ROI,” he says.
In With the Old
After nearly four years, customers who are employing ADS Security’s advanced services — of which its Remote View VaaS offering is a part — now make up the majority of the company’s customer base.
It seems lowering customers’ up-front costs and focusing on the market Craig Leyers calls “the smaller, the better” has paid off for ADS Security.
Leyers attributes this growth mainly to increased acceptance of and comfort with video in the cloud.
One trend ADS has seen lately is customers’ desire to take advantage not only of their existing network infrastructure, but their existing on-site recorders, Leyers says.
“We have the ability to provide our Remote View solution as an overlay. With an eight-camera system, for example, we can peel off a subset of those cameras, split the signal and have the DVR function at the location, combined with offsite storage,” he describes.
This particular service has proven very popular with customers “who are concerned with shrinkage, loss and employee shenanigans that may be going on,” Leyers details.