It’s fair to say that coronavirus has changed the world in an incredibly short time, especially when it comes to technology and the way in which we consume it. The majority of customer meetings are now virtual, conducted over Google Meets/Hangouts, Zoom, Webex or Microsoft Teams. Employees are now largely remotely based, leading to a surge in SaaS technology adoption. This adoption has been especially prevalent in networking and device security markets. With this change in how we are consuming technology has come a way in which we finance that consumption, and video surveillance is no exception.
Coronavirus has decimated entire economies and altered the way in which CFO’s are managing cash flows, costs and operating models. In these unusual times, capital expenditures (CAPEX) are becoming infinitely harder to justify to a CFO. Financing options to cover a large purchase are unfavorable, and companies with cash reserves are hesitant to spend them currently given the global uncertainty in all markets.
The OPEX Model Offers Benefits to Customers and Solution Providers
In technology, with so much of the industry adopting the “as a service” model, it becomes much harder to deliver a compelling argument for a CAPEX purchase, especially with a workload that is as incalculable and static as video surveillance tends to be. By moving your video surveillance to an as-a-service model, it becomes much easier for a CFO to manage cash flow, moving from a CAPEX to an operational expenditure (OPEX) model with easily forecasted costs and the flexibility to stay nimble during an uncertain future. In turn, your job of convincing your CFO to improve your physical security systems is made easier.
From a technology partner of integrator’s point of view, that move from a CAPEX to an OPEX model has similar benefits. Rather than the large peaks and valleys that come with CAPEX-based selling in a project-led technology market, a recurring monthly revenue (RMR) model smooths out the sales revenue line and enables simpler and more accurate revenue forecasts each quarter. This series of benefits is then passed down the chain to the integrators and resellers, keeping money moving on a more regular basis and improving cash flows throughout.
That’s not to say that the benefits are purely financial. Cloud-based technologies are almost exclusively SaaS-based and operate on a consumption model. This approach brings a host of technology advantages to cloud technologies in this turbulent time. A large number of traditional physical systems are ill-equipped for remote management or administration, requiring a physical presence to ensure everything is running smoothly and configuring new hardware and software as they are purchased. If physical presence isn’t required for management, access is usually restricted by VPNs or IPSEC tunnels to the physical datacenter, restricting manageability and requiring additional network resources for daily operations. Cloud-based technologies remove these barriers as they are designed to be managed remotely from a variety of devices and locations.
That’s not to say that you are limited in your deployment of cameras or need to rip and replace the existing infrastructure that you have put in place. Cloud-based technologies are designed to take advantage of existing infrastructure, largely to smooth the journey from on-premises to the cloud, and cloud-based video surveillance is no different. This is a direct cost savings. Your benefit then comes from the fact that remote management and configuration of those new cameras and sensors is taking place in the cloud, rather than having staff on site re-connecting NVRs and balancing camera groups, migrating storage and adjusting retention times. This results in a more indirect cost savings of time and resources. If you are deploying net new cameras and sensors, this remote configuration and administration also helps reduce the number of personnel required on site and maintains a more effective safe working environment during the current pandemic.
As more organizations adopt cloud-based technologies that require a more OPEX investment, there is no reason to exclude your video surveillance and physical security applications. The benefits are clear, even in these uncertain times.