With its existing customer-base and IT skill-sets, venturing into the physical security market is a natural progression for the IT channel. What’s more, it offers significantly higher margins
By Amit Singh
The physical security (PS) market has turned out to be an excellent opportunity for IT partners in the last few years. While many IT partners struggle to transform their businesses or face declining profits, PS offers twice the margins compared to IT as a market driven by government guidelines and rising crime.
“Definitely, with regards to multi-scale projects, IT SIs and VARs do have an edge as these kinds of projects involve high quality IT expertise including networking, business intelligence systems, and cloud storage,” affirms Oliver Philippou, Research and Analysis Manager, Technology, IHS Markit.
Moreover, with the security industry slowly moving towards value-based solutions than mere PS equipment, it has increased the scope for IT being able to merge easily into the physical security space and emerge as an integrated security platform, he adds.
Overall PS market is moving towards IP-based solutions; hence IT SIs and VARs do have a larger role to play over the traditional PS integrators. So far, traditional PS integrators are founding it difficult to cope up with the network integration, which is core strength of IT SIs, says Rajesh Mehta, Managing Director, Geo Integrators.
Delhi-based MK Infosystems, which ventured into PS in 2008, identifies it as a high growth area with handsome margins. “Initially, we entered the domain to broaden our portfolio during the slowdown in 2008, our interest increased when we saw higher margins compared to IT. Being a solutions-based business which is not yet commoditized, it offers twice the margins or even more, compared to IT,” confirms Manoj Bisht, CEO, MK Infosystems.
Moreover, IT companies find a lot of value while bundling their offers with networking and IT security packages giving the customer a one-stop solution for all the IT and IT-enabled systems. This trend is more witnessed in small and mid-size projects as the customer finds a lot of value interacting with single network SI at the same time optimising the project costs, discloses Thanik B, Director, Segment Marketing & Business Development, Lighting Controls & BMS Products, Schneider Electric.
High growth area
According to the recent Physical Security Equipment and Services report from IHS Markit, the Indian market for PS equipment (video surveillance, access control, intruder alarms, entrance control (pedestrian and vehicle), consumer video surveillance, mobile video and body worn cameras, and enterprise storage) was worth $490 million in 2016. This represents a 9 percent (worth $50 million) increase from 2015.
Looking forward, the analyst firm forecasts that the Indian market for PS equipment will be one of the fastest growing regional markets in the world, and is expected to grow at a CAGR of 12 percent from 2016 to 2021. The Indian market is expected to be at $850 million annually by 2021.
Besides rise in terror attacks and crime, technological developments and IoT are further fuelling the demand for PS solutions and services. “The future of PS will be on IoT platform. IoT is proving to be crucial in monitoring health of the systems through command and control centers. Video is getting intelligent day by day and convergence of video surveillance is proving to be essential for prevention of crime. These trends will drive the PS market for the next 4-5 years,” explains Pramoud Rao, Managing Director, Zicom Electronic Security Systems.
Government initiatives such as smart cities, investments in public infrastructure, and increasing security awareness will further boost the market for PS systems and solutions in India.
The video surveillance market is experiencing a major shift toward IP-based solutions. At present, the majority of the market belongs to analog systems, which is poised to change in the coming years. “The coming decade will see an expansion of IP-based video surveillance systems which will make analog systems completely redundant. Customers are now realizing the better RoI from IP-based setup with higher resolution images, better compression and reduced cost of cabling and maintenance,” claims Sudhindra Holla, Country Manager, India and SAARC, Axis Communications.
There is a growing demand of highly sophisticated solutions, such as thermal imaging, low-light receptor, advanced sensors, license-plate reading and facial identification. “Earlier, there wasn’t much scope for these products as only enterprises would opt for them. Now, people are far more cautious and want to adopt these solutions which can be customised. Facial recognition and license plate recognition are two of the most sought after technologies as merely recording and archiving video footage is not enough,” explains Mehta of Geo Integrators.
In fact, video surveillance is now becoming a productivity enhancement tool. “Apart from ensuring the safety of our customers, video surveillance doubles as a tool to monitor employee productivity and effectiveness. We have installed cameras with facial identification and low light vision to keep a tab on any ill-treatment to guests,” shares Kuldeep Singh, Security Manager, Clarks Exotica Convention Resort and Spa, Bengaluru.
Another trend picking up in video surveillance is remote monitoring. Since the bandwidth requirement for video streaming has been reduced to as low as 64 Kbps per camera, customers are readily considering it as a necessity. “Now the focus is on prevention rather than recording of crime or incident. IoT and analytics are enabling real-time health monitoring of security devices, and delivering end-to-end personal safety and surveillance services to customers through command centers,” explains Ranjan Chopra, Managing Director, Team Computers.
The verticals like government, transportation, commercial offices and banking & financial sectors followed by the upcoming sectors such as retail, residential, education and industrial set up are expected to generate high demand for video surveillance solutions. As indicated by the IHS report, India’s market for network video cameras is estimated to reach $194.7 million by 2020.
Access control is being led by trends including the continuing shift to mobile-based credentials, a focus on user experience, wearables, the convergence of physical and online authentication and the growing pressures of exposure to IoT.
Access control is experiencing a long period of growth, with no signs of slowing down. Now is the time for VARs to get started in the access control as the market is undergoing a strong shift from proximity cards to biometrics and two-factor authentication (including both biometrics and smart cards).
“Biometrics is finding greater acceptance as the quality and accuracy of biometrics has rapidly improved in recent years. Fingerprint readers and facial recognition systems are now widely accepted. Advances in biometrics will result in the deployment of more complicated systems such as palm vein and heartbeat recognition readers,” predicts Sharad Yadav, General Manager, Buildings, Honeywell Home and Building Technologies, India.
While the installed base of biometric solutions is still about 40 percent, more than 80 percent of the new installations are on smart cards and biometrics. Moreover, there is not much price difference between a proximity card and a smart card solution.
Further, a growing number of organizations are embracing mobile devices as access control credentials. Using Bluetooth technology or dedicated apps, smart phones are able to interact with special access control readers. Not only does Bluetooth-enabled access control add an additional layer of convenience for end users; it also speeds up the time it takes to gain authorization.
“Many of the enterprises with large field workforce are embracing mobile apps for secure access and attendance management. We have recently developed a mobile app with features including mobile-based access control, attendance management with automated GPS, and convince claims management. It is a great fit for both small and large customers,” shares Chopra of Team Computers.
Moreover, few discerning customers are embracing access control capabilities, including support for Apple Watch, Android Wear and tablets to provide users the option to use phones, tablets or watches. “In fact, few of them are interested in solutions that can support future applications beyond access control – PC login, biometrics and more – and enables security to be dynamically updated in the future so that customers can employ the right mix of form factors, use cases, and security as their needs continue to evolve,” shares Vishwanath Kulkarni, Director, Sales, India and SAARC (PACS), HID Global.
For comprehensive physical security, it’s important for a customer’s access control solution to seamlessly integrate with their video surveillance technology. This is especially true for larger facilities that have hundreds of doors, parking garages, loading docks and other entry/exit points.
Integration with video surveillance enables security officials to link access control events—such as unauthorized entry attempts—with corresponding video footage. This helps officials respond to incidents in real-time, and streamlines investigation.
In addition, IoT and increasing dependence on connected solutions is shifting the market focus towards convergence of platforms with IP technology backed by open platform and video analytics integration. “We are seeing increased adoption of edge-based analytics in applications like city surveillance and traffic management for automatic number plate recognition (ANPR) and red light violation detection system (RLVDS). Convergence is also penetrating mid-segment applications like POS integration, people counting, facial recognition, masking for retail and banking verticals,” elaborates Yadav of Honeywell.
Convergence of PS and IT is also enabling a connected building at lower cost, better ROI and improved user experience – all by providing systems with knowledge of identities and their authorizations for access to elevators, parking garages, vending machines, printers and other systems.
In a 2017 IFSEC study sponsored by HID Global, more than half of respondents said they are already connecting their building systems to access control applications including AV conferencing, elevators, secure print, locks for interior draws and racks, and HVAC control, with a smaller percentage doing so for cashless vending, mustering and asset tracking. “These applications, along with the move to mobile access technologies and cloud architectures, will continue to bring PS and IT closer to each other in the coming years. In fact, the customers are now moving towards integrated building management system (IBMS),” says Kulkarni of HID.
There is a strong trend towards the integration of once-separate systems like video surveillance, access control, fire safety and incident response.
“There is huge potential for IBMS adoption in India as buildings are becoming smarter. The need for IBMS is gradually moving from high-end/premium buildings to include mid-segment buildings as well. Analytics and IoT are playing a huge role, in not only making our service delivery processes more efficient and customer-centric but also reducing labor costs to a large extent,” states Yadav of Honeywell.
In fact, IBMS is readily taken up by large enterprises and corporate hubs to streamline and automate their in-house systems. “Almost all corporate hubs in metro cities are opting for IBMS solutions where they integrate temperature control and public announcements as well. These are complex and large projects with heavy integration of PS and IT,” says Bisht of MK Infosystems.
Further, enterprises in tier-2 and -3 cities are embracing IBMS in its basic form where they integrate HVAC, access control, fire alarm and video surveillance. “In Surat, for instance, diamond merchants opt for basic form of IBMS to check any pilferage. In these cases, the project cost may be between Rs 1-6 crore. We have seen demand coming from sectors like hospitality, healthcare and education as well,” informs Mehta of Geo Integrators.
AMC and managed services for PS has emerged as a fairly lucrative business for partners. “Services contribute almost 15 percent to our PS business. As the dependence is huge, customers hesitate to move to another vendor due to security reasons. The AMC business offers an 8-10 percent increase every year. Moreover, failure rates are very low as we take up projects with end-to-end implementation of networking, server, storage and PS,” explains Bisht.
Indeed, the designing and consulting service segment of the PS market is estimated to witness highest growth during the next few years.
On the other hand, video surveillance-as-a-service (VSaaS) is a trend which is gaining high prominence by enabling customers to use surveillance solutions for their homes and businesses just the way they use telephones and electricity.
According to many experts, PS market will be driven by VSaaS with IoT-based security systems enabling effective monitoring and crime prevention. “There is an acute need to monitor video surveillance systems as many a time cameras are not working at the time of incident. IoT is proving to be crucial in monitoring system’s health through command and control centers. On top of it, VSaaS removes complications and offers end-to-end personal safety, surveillance and monitoring services to customers without any obligation to own the PS systems,” elaborates Rao of Zicom.
As VSaaS is witnessing huge demand from large enterprises, BPOs, housing societies and banks, companies like Zicom are looking for partners across the country.
The PS market is unique in terms of its number of untapped opportunities as well as high margins. At the same time, there’s no denying that the PS industry is trending away from proprietary technology and towards open-source devices. Today’s customer wants to rest assured that the technology they are investing in will easily integrate with other access control systems, as well as video surveillance, security management and other platforms, for years to come.
Hence, as a true IT consultant, be sure to choose devices that are built on an open architecture. This will ensure that your customer can easily grow and adapt the system as their needs change and technology evolves.