Page 30 - Security Today, April 2022

Answering What,
Why and How
Most SaaS will focus on technical aspects, and how it works By Paul Metzheiser
While service-focused sales models is not new, system integrators selling hardware or equipment as-a-service is still a fresh and misunderstood concept. The one-time sales model is all integrators know. Therefore, in- tegrators commonly interpret as-a-service with a one-time sale mindset. Resulting in misrepresentation of a service sale entirely.
Many security integrators don’t know, definitively, what an as- a-service solution is or why it’s touted as more valuable than a cash purchase for integrators and customers. Lastly, integrators that do see value and want to adopt a service sales model, tacti- cally, struggle to execute.
Let’s clarify the answers for these important questions. We’ll define as-a-service, elaborate about the value to integrators and customers, and unpack the tactics integrators must do to success- fully adopt a service sales model.
Security-as-a-Service. Most security-as-a-service definitions only focus on the technical aspects and how it works. While it is not wrong, we’ve discovered two components that must exist, no matter what, for a solution to define security-as-a-service. With- out the following two parts, it is a misrepresentation.
Access To, use of. The more important of the two factors that define a security-as-a-service solution means the proposed offering must provide access to or use of some security product, service, or solution. It is intended to be a subscription solution. Therefore, there is no ownership of the technology and no ownership respon- sibilities. If your as-a-service contract ends in ownership, it is not as-a-service, but a traditional lease with a different name.
Monthly payment. Security-as-a-service should have no sig- nificant, upfront expense. It is intended to be a service provided, for a predictable, manageable, monthly payment.
It is that simple. Without these two components present, tech- nically, it’s not an as-a-service.
Why Security-as-a-Service: customers and integrators. Let’s expand on why security-as-a-service is considered valuable and ideal for customers and integrators through their separate lenses.
Customer perspective: Security-as-a-Service vs Cash/Capital Expense Sale. Put your customer hat on. Consider the makeup of traditional, capital expense solution sales that results in owner- ship. There are some fundamental problems regarding the eco- nomics of ownership:
NON-GENERATING ASSETS
Traditionally, assets a business invests in intend to appreciate in value. However, technology equipment rapidly loses value the day after it is installed. Therefore, using after-tax dollars to pay for these non-revenue generating assets defies basic economics. And while technology is essentially, there is a significant difference be- tween importance and the need to own it. Knowing it’s going to
“We’ll define as-a-service, elaborate about the value to integrators and customers, and unpack the tactics integrators must do to successfully adopt a service sales model.”
lose value, basic economic principles advises us to avoid owner- ship when possible.
NON-RECOVERABLE COSTS
Consider the bill of materials for a technology solution. There’s commonly many non-recoverable costs associated with a solu- tion that often equate to 50 percent or more of the sell price (i.e. manufacturer margin, distributor margin, integrator margin, licensing, installation, programing, software, design, warranty, training, etc.). The value of these non-recoverable costs disap- pear immediately upon installation (there is no resale value for these components).
Understanding this about the make-up of a solution ask this question, when you pay with cash to own technology, what do you actually own and how much of what you paid for does that represent?
RAPID OBSOLESCENCE
Technology continues to advance and change at the most rapid pace in history. With no signs of it decelerating. R&D budgets for major industry manufacturers are fueling this advancement. Just view these publicly available figures allocated to R&D by top tier manufacturers in 2020, a pandemic year nonetheless:
• Axis Communications allocated 18% of revenue to R&D • FLIR had 11.30% of revenue allocated to R&D
• Milestone Systems allocated 25.96% to R&D
This constant investment and advancement contributes to technology’s rapid depreciation.
The combination of these three issues should make customers inquire about a better way to pay for their technology solutions. This has driven customers to realize what their actually seeking is the use of technology. They care about access and outcomes, not ownership. This is one of the key reasons for growing interest and adoption of subscription-based, service-type solutions, even when substantial hardware components are required on customer premises.
RMR VS. ONE-TIME REVENUE
Now let’s view the value from an integrator’s lens. A quality as- a-service program should take integrators accustomed to selling one-time, capital expense sales and help them pivot to a service sales model. Allowing integrators to sell hardware, and easily
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APRIL 2022 | SECURITY TODAY
SECURITY AS A SERVICE