Access control as a service market revenues are forecast to grow at nearly triple the rate of the traditional access control equipment market over the next five years. The global ACaaS market will grow at a compound average growth rate (CAGR) of 16.5% between 2017 and 2022, according to new ACaaS research from IHS Markit. The traditional equipment market is forecast to grow with a CAGR of 6.2% over the same timeframe.

The widening use of innovative web-based applications and IT solutions for business purposes is having a strong impact on the access control market. By moving data storage and processing to the cloud or an external server, which is managed by a third party, access control as a service offers businesses an excellent opportunity to install an electronic physical access control system without the burden of managing and maintaining their own costly IT infrastructure. The latest ACaaS offerings are also now leveraging public cloud infrastructure to provide a service that offers unlimited downtime and load distribution support, and virtually unlimited scalability – the critical ingredient of business operations continuity.


ACaaS is particularly beneficial for the following types of end users:

  • Businesses without the resources to afford the high initial costs of installing an electronic access control system.
  • Businesses with insufficient resources to maintain a full time or 24-hour security team.
  • Businesses who already own an on-premise access control solution. For them, doing away with a private server room and the responsibility for its management would free up resources necessary to focus on the businesses’ core revenue generating areas.


New Opportunities for Growth

Cloud based access control solutions have the potential to improve the penetration rate of electronic access control systems in small and medium businesses, and particularly those who haven’t considered using an electronic access control system due to prohibitive initial costs. ACaaS contracts based on an operational expenditure model could have an even stronger effect on improving adoption of ACaaS across both small and medium businesses. Furthermore, as businesses grow and their access control needs evolve and increase, the upsell opportunities for providers increase. ACaaS providers could offer system upgrades as well as provide additional services to basic ACaaS packages, such as alarm and event monitoring, credential management, and the management of all access control activities.


Service Based Solutions Are Here To Stay

  • Subscription based services create more interaction with the customer. This can offer more opportunities for upselling and improved customer satisfaction as regular feedback on the offered services becomes available.
  • Dealers and integrators will be able to capitalize on the alternative model that service-based access control systems offer for attracting and retaining new customers for longer.
  • Increasing availability and affordability of public cloud storage providers across various geographic regions will also help lower the barriers to entry for new ACaaS providers.
  • The growing popularity of mobile credentials will further improve end user’s awareness of cloud-based systems, and may help overcome some of the cultural opposition to shared data storage architectures.


Factors Limiting Adoption of Cloud-Based Access Control Solutions

Unfamiliarity of access control dealers and integrators with the recurring monthly revenue model of ACaaS contracts is one of the main stumbling blocks preventing wider adoption of ACaaS.

Traditional dealers and integrators have historically relied on equipment sales for capital generation, which is inherently contrary to a subscription-based monthly income.

Most of the ACaaS solutions sold today are based on a capital expenditure model, where the end user pays for the equipment upfront, while the data hosting charges are covered by a relatively small monthly fee. Even though the cost of IT infrastructure is avoided, some end users may still find the cost of access control equipment too high to afford. Only a small number of dealers and integrators can afford to offer to spread the cost of the equipment over the duration of the contract. Smaller dealers are more risk averse than regional players because their ability to absorb losses is limited. This will stifle adoption of ACaaS in regions where smaller dealers hold a larger portion of market share.

Adoption of the ACaaS systems in the enterprise sector has been so far limited. Typical end users in the enterprise sector to adopt ACaaS include retail chain outlets, property management companies, or networks of GP surgeries or clinics. ACaaS solutions help these end users to make significant cost savings by avoiding the need to deploy separate IT infrastructures in each of their small branches as part of the company-wide access control system.

The typical enterprise users of traditional access control in large corporations such as banks, consultancies or law firms, are unlikely to consider ACaaS due to culturally-motivated concerns over the security of data. The biggest barrier towards wider adoption of ACaaS is the opposition of the enterprise end user sector to adoption of cloud based systems, for fear their data will be stolen or someone will gain unauthorized access to some areas of the building. 

The billing models used in ACaaS contracts are inflexible, and may not reflect the complexity or specific features of some end users’ installations. This creates issues over transparency in how providers charge for certain services.


Action Plan to Boost the Market Outlook

  • ACaaS providers should focus on developing solutions that satisfy the data security and protection concerns of bigger commercial end users, or offer hybrid solutions where only part of the company data is hosted in the cloud, while still allowing for the reduction of costs of running the IT infrastructure.
  • Access control dealers and integrators should seek to partner with financial institutions that can help amortize the upfront costs of installation. Allowing them to capitalize on the recurring revenue model of ACaaS contracts and improve their businesses’ liquidity.
  • For providers of basic hosted ACaaS solutions, a good option would be to introduce additional services such as credential management, or event monitoring, extending up to an offer of managing the entire systems.
  • To overcome the problem of fixed billing options, providers of ACaaS should work with end users to develop pricing plans that offer flexibility and transparency necessary to build trust and long-lasting relationships.