Video Technology Transformation Requires Recalibrating The Market

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Old pyramid w # of cams

It’s clear that the network-based physical security industry has matured rapidly over the past few years. As the technology and other components of security solutions have advanced, so too have the customer’s expectations. Security solution companies must evolve in order to meet these new expectations. This requires an understanding of both the technology and the customers’ motivators, issues and hot buttons.

Arriving at that understanding requires taking a step back to look at entire solutions. As video management software (VMS) has become more sophisticated, so have the accompanying hardware components.

Proof of this is everywhere. Camera technology can now provide much higher levels of detail due to greater capabilities with megapixel and HD. Another example is today’s IP access control software, which offers customers a more flexible way to manage their facilities. Innovative monitoring tools can recognize security equipment that needs repairs before malfunctions become expensive or fail completely.

New Challenges Require New Solutions

In 2012, we at Milestone recognized that these changes were significant enough to warrant a new go-to-market approach. Rather than making changes gradually, the company incorporated the new market realities into the creation of three new business units. Each business unit would specialize in developing new hardware, software and related services to meet the accelerating pace of changing customer security solution requirements.

In order to effectively address all customer segments, Milestone left behind the old physical security market’s segmentation model, which was based on the classic pyramid of categories defined by number of cameras installed per site. Instead, as the matrix graphic illustrates, the company determined customer needs based on whether deployments are needed at one or many sites and whether security and surveillance needs are low or high complexity. 

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New matrix with low/high complexity and site number criteria for Professional or Advanced products

National retail chains and utility companies provide an excellent example of this new perspective on assessing customer needs. Each small retail shop may only need a few cameras for monitoring, but there may be hundreds if not thousands of locations across geographies. An electrical utility installation, on the other hand, may be housed on a single site but have security needs that are highly complex and critical.

How can a single solution accommodate customers with such different needs? Simply put, it cannot. Such varying needs require a diverse portfolio of solutions to provide the features and capabilities appropriate for each type of organization.

Catering To Early Adopters

One of the factors driving change in the network-based physical security industry is a change in the buyer’s tolerance and acceptance of technological risks.

There is a very specific type of person who is willing take the necessary risks often associated with using new technology. Known as the ‘early adopter’ in Geoffrey A. Moore’s landmark book, Crossing the Chasm, the individuals who purchased early network-based security products were risk takers, agents of change and visionaries. The early adopters tended to place comparatively small orders and, perhaps most importantly, sought out specialized integrators for advice and assistance.

After a decade-long, continuous improvement of technology, the adoption risks have been reduced. Evidenced by the now firmly entrenched acceptance and usage of networked-based physical security solutions, this transformation has enabled the more risk-averse pragmatist customer, or, in the parlance of Moore, the “early majority customer,” to start the security technology adoption lifecycle. 

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‘HUMP GRAPHIC’ with text on market adoption segments

It’s important to understand that early majority customers comprise 33 percent of the overall market. As of 2014, this group has only just begun adopting networked security. This customer segment is considered “the next big wave.”

There are several assumptions that can be made when determining how to best approach a buyer who fits into this segment, including:

• The early majority customer, fully aware of the evolution of the industry, expects the technology to be more advanced to address more complex needs.
• The early majority customer is not looking to invest in stand-alone components but in an overall platform solution.
• The early majority customer prioritizes the technology’s functionality and operational effectiveness.

Most significantly, this new early majority customer is not interested in investments that are anything less than rock solid. There are several ways to make sure the customer has confidence in the portfolio he’s investing in. The simplest way is to ensure that each and every component has customer and technical “reference-ability.”

Recalibration: What It Means And Best Practices

The emergence of the “early majority customer” – a pragmatist – and the maturation of the network-based physical security industry are fundamental changes. The combination of these market changes requires not only a new approach to solutions but also for a much more pragmatic way of servicing customers.

In a word, the transformations in our industry call for a recalibration.

While the process of recalibration is different for each organization, there are a few tried-and-true general guidelines. Applying these best practices is critical to correctly identifying how to most effectively reach today’s customers.

First, introduce risk-mitigation tactics. These can include guarantees of operational readiness evidenced by real system proof-of-concept, pilots and rollouts.

Offer a portfolio of hardware, software and services to address every need within the new segmented market model, which speaks directly to the needs of the early majority customer. These customers expect manufacturers and system integrators to address high or low complexity needs and scale within a project, rather than just in size and scope.