What are the new opportunities for RMR in the security industry?
Lower equipment prices (with less margin) are one industry trend leading more integrators to seek out new sources of revenue. With margins shrinking on lucrative, but unpredictable, “project-based” business, integrators are looking for more revenue stability. One solution is recurring monthly revenue (RMR), which is already common in the related field of alarm monitoring. But where does RMR come from? Creating more RMR also requires that integrators change how they do business, from sales commissions to the technologies they deploy. On the other hand, increasing RMR is a great way to build additional value in a business. We asked this week’s Expert Panel Roundtable: What are the new opportunities for installers/integrators to create recurring monthly revenue (RMR) in their businesses?
Recurring monthly revenue is the perfect stable and sustainable business model for security providers. Looking at how businesses and individuals are increasingly leasing or renting services, there is no reason why the security sector cannot do the same. Security as a Service is already a popular phenomenon in the IT sector, and I believe it would be just as suitable for physical security. There are considerable benefits for both the provider and the customer. From a provider’s point of view, it takes away the need to constantly “shift boxes,” with a more stable income that can be invested in high quality services and support. Naturally this is highly beneficial to customers as well. From a customer standpoint, there is no need for a massive capital outlay when a new security system is required, and all the servicing and repairs are expertly carried out at a predictable and fixed fee.
New opportunities for RMR for integrators are growing beyond the traditional monitoring fee model we have known of for some time. The onslaught of new technologies, especially cloud-based security software solutions and cybersecurity monitoring, are opening new market and RMR opportunities for integrators. The future of RMR in our industry is really all about value-add services as the commoditisation of the physical devices continues. Integrators can now give their end-users better access to their own security systems via cloud-based technologies and can charge a premium fee for that access. Similarly, integrators are becoming more versed on cybersecurity as a value-add service they can offer to their end users, either directly or in partnership with other cybersecurity professionals.
There are multiple ways to generate RMR, but the two categories that can have the biggest impact are services and product technology. Many opportunities fall into each category, but within services the opportunities could include maintenance agreements, service level agreements (SLAs), cyber hardening and policy enforcement, leasing equipment (Opex vs. Capex), system health monitoring and remote management capabilities/diagnostics. The industry is trending toward subscription services that generate RMR in many areas such as, video, access control, managed services, etc.
Today, integrators are constantly seeking different ways to increase revenue as competition continues to shrink profit margins. Access Control as a Service (ACaaS) presents a new opportunity for integrators to grow recurring monthly revenue (RMR) by delivering physical access control (PACS) as a subscription-based service. It also enables integrators to further build RMR by managing the entire access control system on the customer’s behalf. Leveraging the public cloud, true ACaaS can scale up and down quickly based on business requirements. Additionally, it makes it possible for customers to conveniently incorporate video, intrusion detection, IoT, building automation, and other third-party systems in increasingly connected environments. This allows integrators to add more value as the access control system becomes the connective tissue for many enterprise applications. The agility of cloud-based PACS creates a win-win scenario: it delivers lower TCO for the customer, and contributes to healthier RMR for the integrator.
The best new opportunity for RMR is with Smartphone Access Control systems, which provide all the benefits of a traditional access control system at a fraction of the cost. Before Smartphone Access Control systems, recurring revenue was limited to re-ordering cards, software upgrades or cloud-based systems with confusing pricing. All these required service calls and a lot of on-site equipment. But since installation costs for a remotely managed Smartphone Access Control system are about the same as a keypad, the installer now has an opportunity for a much faster ROI. They are also providing their customers with a system that is more secure and convenient.
Cloud-based hosted security solutions are making their way into the market and offering installers/integrators the opportunity to serve customers while simultaneously building recurring monthly revenue for their businesses. More specifically, cloud-based access control and video management solutions offer this option and are poised to bring significant value to integrators looking for additional revenue streams, as well as provide customers with added flexibility in regards to their security with a minimum up-front investment.
From access control to cyber-hardening services, from system health monitoring to video in the cloud, RMR offers a lucrative range of opportunities for integrators and installers to build value. Embracing RMR is one of the key strategies integrators can use to survive – and thrive – in the industry's changing business environment. The rewards are there for those who choose to adapt.
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