Not that long ago, if someone started talking about the cloud, you’d probably turn your eyes skyward to check for rain. Times have changed. Today, a conversation about the cloud quickly involves talk of gigabytes, terabytes, megabits and other technical minutiae.
There are plenty of conversations about cloud video services going on within the industry. Among the many services the cloud enables, perhaps none causes more hand-wringing than storage. There are a lot of questions about cloud storage, including “Can it help me make more sales?” and “How much should I charge?” For dealers and integrators who aren’t well-versed in the cloud, answers can be difficult to find.
The first thing to know before selling or pricing a cloud storage solution is the different types of offerings available. The majority of offerings fit into one of two categories: pure-play or hybrid.
Just as it sounds, a pure-play cloud storage solution — also called hosted video — involves no on-site storage and therefore, no need for an end user to purchase, configure and maintain equipment on-site. A hybrid offering — also known as managed video — includes both cloud and on-site storage. With both, control and playback of the video is provided through a connection to the cloud, the difference between the two being where the video is stored and hence, bandwidth consumption. Naturally, with all video being stored in the cloud, a pure-play or hosted solution consumes significantly more, as cameras are continually uploading video streams. With a hybrid or managed solution, the majority of video is kept on site with only “important” video — such as video related to an incident — moved to the cloud.
While some organizations are capable of — or have a requirement of — storing all video in the cloud, more often than not, that’s just not going to work, making a hybrid approach more attractive in the vast majority of cases.
“Bandwidth is not as ubiquitous for uploads. There’s plenty for downloading, but in a lot of cases only 10 percent of the stored video is downloaded. The truth is, you’re not able to upload to the cloud, especially with a large number of cameras,” says Dean Drako, chief executive officer (CEO) of Eagle Eye Networks, based in Austin, Texas. “Using a mix of on- and off-site storage provides customers with flexibility in how they manage and store video, which is important because of bandwidth constraints,” he explains.
Once you understand those two main cloud storage models, the next hurdle to clear before selling is to determine pricing. Regardless of the technology, this is always a bit tricky and is often driven by a provider’s pricing.
“Cloud recording is still an evolving market so price levels may be difficult to determine,” says Brian Carle, director of product strategy, for Austin, Texas-based Salient Systems.
And while there is no set guideline for pricing in terms of how much to charge for a cloud storage service, there are a number of best practices that will help determine the most appropriate price point for both the integrator and the customer.
“Generally there is a monthly price per camera and in some cases an upfront fee which helps cover equipment and installation. Monthly costs can vary based on the quantity of cameras, the resolution recorded, retention time, frame rate as well as providing motion only recording versus constant recording,” Carle says.
Storage space tends to be the main basis for pricing these services, says Nik Gagvani, vice president and general manager for Kastle/Check Video, based in Falls Church, Va.
“Most cloud services are priced based on the amount of cloud storage consumed, e.g. $30 for a month of online recording for a hosted solution. Managed solutions are priced similarly or even a little lower but can deliver HD video in the cloud. Add to that services such as cloud analytics, system health monitoring and real-time alert notifications to central stations and guards,” he says.
Regardless of the basis on which cloud storage is charged for, remembering the basic model is perhaps the most important factor.
“Dealers have to be thinking about the RMR associated with cloud video solution or service. Some who come from alarms already understand how to do this. It’s a predictable, stable business and cash flow, and you provide services to keep customers,” Drako says. “You have to understand recurring revenue and buy in to it. You may not get the money up front, but it keeps going. That way, you don’t have to close another deal in three months, so you end up in a much better place.”
A cloud storage pricing structure should also be fluid based on what’s currently happening within the cloud service provider space.
“The cloud provider has a cost to the reseller, who then adds a margin, but there’s no set cost. Right now, the ‘big three’ public cloud service providers — Microsoft, Amazon and Google/Rackspace — are currently engaged in a price war, so they keep dropping their price per month or year,” says Erick Ceresato, product manager for VMS for Montreal-based Genetec.
Simplicity of deployment and expansion should also be considered, especially in the face of not needing to purchase and install hardware at a customer’s location. That requires calculating storage needs and costs, which Drako says has long been the bane of the industry.
“Customers and resellers have had to make predictions or estimates around how much space they need to make sure they buy enough disk drives, know the megabits and megapixels of the cameras, how to calculate their storage needs and more. That level of complexity needs to — and should be — eliminated. That’s where cloud storage solutions can be helpful,” Drako says.
Assuming you’ve decided on a service offering and have the necessary contracts with a service provider and have determined a manageable pricing structure, it’s time to start selling cloud storage services. Customers want the cloud, as evidenced by a recent survey Drako sponsored, which found that 65 percent of respondents were looking for some form of cloud video recording, whether a mix-of on-premise and cloud, or pure-play cloud.
However, the first thing to know about selling is actually when not to sell.
“Not all customers qualify for cloud-based recording. How far a system can be expanded depends on the consumer’s desired recording settings and quantity of cameras. These factors affect the amount of bandwidth needed to stream video to the cloud,” Carle says.
“Generally the best customers to target are consumers who have a low camera count per location. Small retail business, quick serve restaurants, gas and convenience chains are a few examples of consumers who may qualify for Cloud recording deployments. Such customers may also have space or environmental constraints, the need for remotely accessible video and desire to perform limited system management and therefore would also benefit most from Cloud based recording systems,” Carle explains.
It’s also incumbent upon the dealer or integrator to recognize the value of cloud storage services and communicate that value. Among the many added benefits are redundancy, flexibility, 24/7 monitoring of system health, not to mention the cost of electricity, space, connectivity and support staff that the cloud service provider is absorbing. Reliability, however, may be the greatest benefit, Drako says.
“There’s a lot of value in the fact that it works, and that it always works. You have to understand how to articulate that so price doesn’t become the primary discussion,” he says. “When they understand the convenience, safety and security, customers are more willing to spend a little more. The cloud is not always cheaper, but it provides more value.”
That reliability is more than just a claim; with most established providers, it’s almost always a guarantee, Ceresato says.
“A cloud service provider is going to have a service level agreement to back up the uptime of their cloud infrastructure,” he says. “Microsoft Azure, for example, provides a 99.5 percent uptime guarantee. Making sure that reliability is there is an extra consideration. If a data center is down very frequently, that’s not something customers are going to be very pleased with.”
“Cloud services provide an opportunity for existing customers — including folks with analog cameras — to upgrade to the cloud. It can be done quickly and easily without having to forklift out a system to upgrade cameras to get them into the cloud,” Drako says. “It gets the dealer a recurring revenue stream and a chance to upsell their customers to a better system.”
If done right, a cloud storage solution also presents an opportunity to offer additional applications and solutions for both video surveillance and operational improvements.
And if there’s one takeaway from this entire discussion about cloud video storage, it’s perhaps best summed up by Jennifer Bruce, business development manager, hosted video, for Chelmsford, Mass.-based Axis Communications.
“Keep it simple. This is not a solution to deploy in an enterprise manner; it’s more for the SMB market,” she says. “Be careful not to over-engineer or over-complicate it. Come up with a few repeatable solutions and provide a price model that’s both digestible and realistic using selling features up front. It’s that simple — make packages and resell those packages.”
Business Preference for Video Recording Location
44% of information technology (IT) and video surveillance professionals and management want a mix of on-site and cloud recording.
Source: The June 2014 “Video Surveillance Survey” released by Eagle Eye Networks Inc.
An Integrator’s Perspective
As chief technology officer of Los Angeles-based DTT Surveillance — a company that boasts 35,000 customer locations connected to its cloud infrastructure — Vic Herrera knows a thing or two about cloud video services. In an SDM cover story on cloud storage two years ago, Herrera talked at length about the cloud infrastructure his company operated to provide storage and services to its customers. That DTT no longer uses that model is indicative of how expensive and complex it can be for integrators to be in the cloud service provider business.
Based on that change at DTT and, because — in his own words — he “can speak ad nauseam about cloud video storage,” SDM reached out to Herrera to discuss a few poignant issues on the topic. Read his conversation with SDM at www.SDMmag.com/Herrera.