Ride The Burgeoning IP Video Market
By Matt Pillar, editor-in-chief, Integrated Solutions For Retailers
Just six years in business, AISG projects $27 million in revenue this year — and IP-based security solutions are all it sells.
Levy Acs has a few words for would-be security solution integrators: don’t do it. Not unless you’re thoroughly prepared, that is. And according to Acs, president and CTO of 127-employee integrator AISG (American Integrated Security Group), few integration generalists have the chops to compete — and more importantly perform — in the newly high-tech security solutions environment.
Choose Your Prospects Wisely
Lest you take his words of caution the wrong way, Acs isn’t afraid of competition. “We lose business to Internet pricing and integration generalists every day,” he says. His most formidable competition are businesses that source inexpensive megapixel cameras online and attempt to do it themselves, and IT generalists who start selling cameras simply because they’re in IT. In both cases, Acs says he can’t compete on price. “However, generalists can’t compete on performance — they don’t have the expertise, services, and infrastructure we have.” To that earlier point, there aren’t many integrators with the manpower and resources to lay 14 miles of fiber optic cable and install thermal cameras in and around one of the world’s largest solar farms, as AISG recently did for a breakthrough client in the renewable energy market. And when integration is prerequisite, as it often is in the retail market where AISG planted its roots, the competitive set shrinks considerably. “Security solution sales are very tough, very competitive in smaller, more niche markets, and that makes it difficult to generate revenue,” he warns. When an installation requires a large number of cameras or integration with other systems, like POS and people counting, he says competition quickly fades away. “Integrators that are comfortable with a POS register, a DVR and a few cameras tend to quietly ease out of the way when the project requires NVRs (network video recorders), IP-based cameras, customized integration, and 24/7 support and monitoring.”
Acs, who co-founded AISG in 2007, says a key factor to his company’s success is understanding how AISG’s deep integration expertise and labor resources result in a finite definition of his target customer. While his company is meeting the complex security requirements of large retailers like Burlington Coat Factory and breaking into hot new markets, it’s letting the swarm of small market integrators squabble over opportunities among independent operators and medium-sized businesses. “The more degradation we see in the dealer market, where large security product vendors are breaking unwritten rules and making low-cost equipment available to anyone, the more difficult it becomes to compete in small markets where technology decisions are almost always based on price,” he says. “Sometimes a potential customer thinks we’re too expensive because they’ve seen Internet pricing or received quotes from smaller IT companies. If they still think we’re too expensive after we demonstrate our expertise and explain our support and services infrastructure, they’re probably not in the wheelhouse of our target market anyway,” he explains.
Want To Sell Security? Be Prepared To Spend Some Money
One of the differentiators that aligned AISG with its top-tier target market from day one is the investment it made in the personnel and equipment necessary to meet the complex security expectations of its customers. For instance, the company operates a 24/7 remote video- and alarmmonitoring central station in New York, where AISG staffers fulfill their duties keeping watch over the security networks of monitoring subscribers. The integrator maintains strategically placed offices in New Jersey, Florida, Arizona, and California to ensure efficient coast-to-coast coverage. And, it doesn’t use subcontractors for anything. Case in point, when AISG won the project at the aforementioned solar farm, its own specially trained employees handled everything from operation of heavy equipment to running cable to pouring concrete and installing solar-powered cameras. “When you engage in complex and sophisticated work like this, control is critical,” says Acs. Just how sophisticated is that work? Consider that several miles of pressure- and vibration-sensitive fiber weave throughout the solar facility. When it’s disturbed, the nearest strategically placed camera pivots and focuses with pinpoint accuracy on the site of the incursion. “From the beginning, I surrounded myself with security experts who possessed IP and integration expertise,” says Acs. “We’ve been IP from the start, which gives us an advantage over those who have had to make the transition from analog.”
Retail Remains The Big Opportunity
While Acs says the alternative energy market is opening up for AISG, retail accounts for the largest percentage — about half — of annual sales. “Despite launching in advance of a recession, we grew quickly by focusing on large format value stores. They sell on lower margins, they’re not located in the most desirable neighborhoods, and they focus on lower income customers. This results in a good combination for us — they managed well through the recession, and their shrink rates are typically higher than the industry average.” And IP, he says, reduces the overhead typically associated with installation and maintenance of a large analog camera infrastructure. That point — the goal of improving retailers’ surveillance infrastructures with IP while reducing their total surveillance costs — is another AISG differentiator. “Many people perceive networked video as expensive. We often surprise our customers when we illustrate how moving to IP can save them a lot of money. Your typical IT integrator will aim to sell as many cameras and as much infrastructure and bandwidth as possible. That can result in unnecessary expense, which is not our goal,” explains Acs. Instead, AISG demonstrates how new technology enables a single camera to do the job of six, thus reducing the camera, cabling infrastructure, and labor costs associated with maintenance of an inordinate number of cameras.
The company also instructs clients on the cross-departmental value of camera integration with POS and people counting devices for training, promotional, and operational benefit. “We sell to IT, to LP, and to marketing, and that increases the budget available to us,” says Acs. On the back end, the company ensures its long-term revenue stream through monthly subscriptions to services, such as hosting, monitoring, and support. Again, the approach AISG takes to reducing costs via IP video and sharing the benefits across departments plays into its big-market strategy. “If a customer is only looking to deploy a few cameras, analog will probably be cheaper. If they’re looking to deploy 20 or more per store, and if they’d like to take advantage of the crossdepartmental, store-level intelligence gathered by their cameras, we’re likely to demonstrate a better return on the switch to open-architecture IP.”
At Burlington, the right-sizing of the camera infrastructure also played into an important global initiative for the brand. “Burlington is rebranding. It’s revamping stores and expanding its merchandise assortment. Fewer cameras and a Cat-5 cable, as opposed to bundles of coax, were important to its merchandising team,” says Acs. Where Burlington used to have eight or nine DVRs per store, hosted IP has reduced its back office hardware requirement significantly. Now, each site has a viewing workstation and a couple of monitors.
Minimizing camera infrastructure is, however, risky business for the loss prevention novice or the IT generalist dabbling in IP video. Acs says the ability to strategically place cameras for maximum coverage and various lighting conditions, and appropriately allocate bandwidth comes only with years of experience. “Our account associates are trained well on the delicate balance between the customer’s goals and our expertise. If you go in telling them what they need, you have a problem. If we have sound reasoning to sell them more cameras, bandwidth, or higher resolution devices, we are educating them on the ‘why’ before we move to engineering the solution,” he says.
At Burlington, the results have been positive. The loss prevention team there has seen significant shrink reduction, much of which Acs attributes to the installation of viewing stations at store entrances. “When thieves see the store camera views on a screen above the entrance, they typically move on to another store,” he says. The operations team at Burlington uses the system for remote high definition end-cap analysis to ensure stores are complying with merchandising plans. IT uses it to troubleshoot issues remotely at the POS and walk store associates through resolution of the problem without deploying a technician.
Acs acknowledges that the proliferation of IP video has rapidly resulted in an opportunity for IT generalists to sell surveillance solutions. Still, he cautions new integrators to research the market and commit to establishing expertise in the space. “Five years from now, will the IT integrator be able to do everything? From a technical standpoint, perhaps,” he says. “But they will need to possess a high level of security industry expertise to understand all the pieces, and if you want to play in the big leagues, you have to invest in people and infrastructure.” For you general IT integrators, the burgeoning IP video market presents either an amazing opportunity to expand and thrive, or an excellent occasion to get in over your heads.