Going Vertical
Video management software providers carving out niches or the end user
- By James Whitcomb
- Jun 01, 2010
A business that is interested in a video surveillance
solution could easily find itself overwhelmed by the
choices, yet underwhelmed by the selection.
In an industry with hundreds of manufacturers releasing hundreds
of products, the result is usually the same: a one-size-fits-all
solution for end users with varying needs and skill levels, otherwise
known as a horizontal solution. In addition, most evaluators
go about the selection process backward by choosing the video
camera first and the supporting software as an afterthought.
But thanks to the robust capabilities of IP cameras, software
and features have become a vital part of the solution, requiring a
lengthy evaluation of the video management software. Forwardthinking
VMS providers are capitalizing on creating vertical
markets for themselves by carving out niches that offer specific
features tailored to end users’ needs, providing product enhancements
specifically focused on them.
What is VMS?
Video management software applications were introduced with
enterprise-class DVR systems and, with the migration to IP,
have separated into an independent product category. VMS allows
a user to view live or recorded video from any camera in
the organization, typically from a monitoring station or from a
Web-based platform.
As IP cameras have gained market share, so have the number
of VMS solutions. Camera manufacturers provide nominal
cost or free entry-level software applications that users quickly
outgrow. Recognizing this opportunity, VMS developers created
more sophisticated applications to meet these customers’ needs.
With few barriers to enter the VMS market, developers in all
parts of the world have created solutions with unique attributes
for their market, which, as part of a software application, are easy
to sell across borders and localized for all major languages. Most
products are heavily influenced by the VMS developer’s customer
base, and these differences become apparent during an evaluation.
End users’ needs vary by industry and greatly influence
which feature is incorporated into a product and how it works.
Camera manufacturers also have entered the VMS business
by bundling higher-end solutions with their cameras. While the
bulk of the installs are small, manufacturers do not want a VMS
evaluation interfering with the camera sale.
The security industry incumbents were very slow to adopt IPbased
technology. Many ignored the technology until megapixel
cameras started gaining momentum. Recognizing how late they
were to the game, most of the incumbents simply resold the same
product with a different skin or added unique features to the
base product. This multiplied the number of solutions available
in the marketplace, contributing to the explosion of choices but
not increasing the variety or quality. Interestingly, the end user
perceives these OEM products to be different. In-depth product
evaluation usually exposes these similarities, further hurting the
incumbent’s position.
Global technology companies also have entered the VMS
space as IP cameras started using their network infrastructure.
These companies have solid relationships with decision makers
and sales people who push to make the evaluators decision an
easy one: Go with a suite of integrated products and do not worry
about making the wrong decision.
What’s the Difference?
VMS choices can be overwhelming. Product evaluations start
with a sales person demonstrating a camera, a referral by a peer,
advertising or, at the most basic level, a Web search. The products
tend to fall into a low-end versus a high-end offering, but as the
process gets more involved, more VMS product segmentation becomes
apparent and includes:
Features. The VMS feature set ranges from the basic to comprehensive.
Support for camera models can vary from a single
model to universal support. Integration with third-party products
creates significant distinctions. The VMS vendors are in a
low-key feature war: one innovative feature requested by customers
is typically quickly replicated by all of the vendors.
Casual versus full-time user. The right selection might depend
on who uses the system and why. If the VMS is used by security
professionals in a full-time monitoring center, their feature
set is different than the system used by a casual user who occasionally
monitors live video or periodically reviews recorded
events. When comparing the needs of these two types of users,
it is difficult to build an application that fits both the causal and
professional user.
Complexity. Some of the VMS features require complex networking
or server configurations, raising the cost of the hardware
required to run the VMS and the ongoing support.
Price range. Camera manufacturers often include free applications
with their cameras as well as shareware available by Internet
download. The price of these applications is often much less expensive
compared to VMS packages that can average $1,000 per
camera (taking the entire solution into consideration).
Product support offerings. Products with limited or no support
options contrast sharply to those with comprehensive support
plans as part of the solution. A VMS that offers a one-hour callback
guarantee from tech support is head and shoulders above
one that offers no tech support at all.
Purchasing method. Products are marketed and distributed
in a variety of ways, including through the Web, direct, indirect,
through distributors, bundled, though integrators or part of a
hybrid. Each sales channel creates unique challenges. VMS offerings
tend to vary by purchasing method.
Industry. There is already a trend toward solutions that focus
on certain vertical markets. Reviewing the customers of a VMS
solution can highlight an underlying trend by the VMS to focus
on vertical markets such as schools, airports or banks. This can
happen by accident or through a strategic focus.
Sometimes this trend happens due to the macro economy,
while other times, VMS providers look at the success of their
peers, which displaces some of their risk. This becomes self-reinforcing,
pushing the VMS into a vertical market.
Using the education market as an example, taxpayer-funded
school districts have unique and stringent purchasing requirements.
Surveillance systems are typically funded by bonds issued
for specific projects and for a set number of years. The bond
funds allow for the upfront purchase of cameras and software
but not for technology support employees, as schools have limited
budgets for ongoing maintenance.
Most schools’ IT departments are understaffed relative to the
size of deployment. Additionally, once approved in the bonds,
the VMS products must be procured through stringent public bid
procedures. In certain situations, bid requests can get so specific
they eliminate any real competition.
The education VMS features set is unique: schools need limited
features -- compared to an airport -- but they need a large number
of cameras as they have to monitor thousands of students
across sometimes dozens of buildings within a single district.
Integration with access control is common, as there are always
areas off limits to unauthorized school visitors or students. There
also is increasing need for integration with point of sale systems
in schools, as cafeterias and school marketing departments have
turned into commerce centers.
Education VMS end users are teachers and administrators --
not computer-savvy technicians -- which means they need easyto-
use systems that do not require a great deal of training.
In an airport, operators must become proficient in the
VMS, spending their entire shift using the application. Their
funding is typically not as restrictive, and their needs are often
more intricate.
The task at hand for VMS developers has been to build a feature
set to work with each of these segments and their varying
needs. The result has been a hard-to-use application, sometimes
bloated with features. It is a difficult balance for a VMS vendor
to create a software application that serves all of the different
markets -- and their associated features -- while maintaining ease
of use.
The Influence of the Integrator
The system integrator plays a crucial role in the VMS selection
process. VMS developers essentially extend their sales force by
partnering with integrators. Integrators usually have a devoted
customer base for whom they must pick products. This selection
process can vary drastically based on geographic, technical and
price considerations. Integrators often say they do not see much
difference between the products.
Many integrators pick a single product so their service organization
can provide support. (If they offered multiple products,
they would have to offer quality support for all of them.) They
take this single product they are well trained in and offer it to all
their customers.
Evaluators are influenced by the products that are demonstrated.
Integrators might have in-depth knowledge of a product
and demonstrate that product skillfully, thereby elevating the
VMS in the evaluation. This also works to achieve the opposite
effect, however, as a mediocre demo by a salesperson can hurt
the VMS.
Integrators also tend to be vertically focused -- some focus on
retail, while others focus on commercial or large deployments.
Most mid-sized firms will accept business regardless of the industry.
Many end up vertically focused due to references and the
equipment needed to serve the vertical.
Integrators who are focused on the K-12 market, for example,
have the unique skillset to meet and support a K-12 purchase.
These vertically focused integrators tend to migrate to
VMS offerings that fit these K-12 needs only, regardless of the
evaluator’s needs.
Consolidation Predicted in the VMS Space
Industry observers expect there to be a VMS consolidation, and
investors have funded VMS companies with the hope their company
will be at the center of a winner-take-all consolidation. We
have seen this pattern before, so it is not hard to predict a simulate
consolidation, similar to the dominance of Quickbooks in
the small business accounting software market.
As the personal computer gave rise to computer-based accounting
systems, dozens of software packages tried to solve the
challenges faced by small business. Quickbooks slowly consolidated
the market with a simple application that fit most industries
and was competitively priced. Over the years, the product
matured, and vertical packages were created for each type of
industry. This pattern gives investors reason to assume this will
happen with VMS.
Despite the camera market’s domination by several big players,
no one has been able to take the entire market. The industry
has seen its share of consolidation, yet there continues to be many
different camera manufacturers and access control vendors.
The argument against consolidation is that security is unique
to the customer, usually requiring a high level of integration. But
we will see a healthy mixture of large and small players, each filling
specific needs in the marketplace.
In Your Vertical Market
A complete evaluation of VMS packages is a time-consuming
process. The evaluator must sift through all the information provided
by the vendors as well as the companies actually selling the
product. Service, support and references will play a big role in
these decisions. Even after a successful product evaluation, decisions
are complicated by purchasing issues that have nothing to
do with the products.
Horizontal -- one-size-fits-all -- packages will continue to garner
most of the attention because they are designed for a wide
variety of users and are the easiest to sell, but they also tend to
be the hardest to use. Vertically focused packages will carve out
niches that offer the end user a specific feature set that is tailored
to their needs and provides product enhancements specifically focused
on them. As VMSs move to the customer-focused vertical
market, evaluators, integrators, users and their constituents will
all benefit.
This article originally appeared in the June 2010 issue of Network-Centric Security.