Changing Channels

Convergence is writing new rules for vendors, distributors, integrators and dealers

• By Frank Barbetta
• Sep 18, 2007

Converging IT and IP disciplines have made their way into the once analog-only video security market, firmly establishing new criteria for business relationships among the industry's traditional and emerging vendors, distributors, systems integrators, resellers and dealers.

And by all accounts, the integration of computers, communications and video imaging will accelerate within many of the indirect sales channels as enhancements progress in digital cameras, broadband networking, video management software and open standards.

That has led manufacturers, distributors and systems integrators to impose on each other new sets of qualifications that entail technology efficacy, personnel training, education programs and official certifications. The benefits that accrue for participants who pass muster include customer referrals, potential sales leads, joint sales calls, major project participation, spot price breaks, volume discounts and capital financing aid. But the clear aim of these programs is to push third-party resellers and dealers to adapt to security and IT convergence.

Conventional supply chain strategies need to be restructured to accommodate customers, resellers and new technologies and products driving the video surveillance and security market, said Frank DeFina, president of Panasonic System Solutions Co. of Secaucus, N.J. Its sister unit, Panasonic Security Systems, developed a multi-tiered supply chain structure that encompasses manufacturers' representatives, authorized dealers/systems integrators and authorized national distributors, along with the dealers who purchase through them.

DeFina posits that the distributor channel has always been "a powerful go-to-market solution" for manufacturers looking to gain access to a wide cross-section of industries and to make products more readily available to resellers serving the core security industry.

"As video surveillance and security system design continues to shift to a network-based platform, the sales channels supporting these systems also are changing," DeFina said. "Traditional security dealers/integrators are facing new competition from several different and formerly non-competitive resellers from a range of industries, including IT, telephony, cabling and electrical contractors. Additionally, systems designers and installers must familiarize themselves with new technologies, such as IP/networking and software management, to take advantage of new systems capabilities and interoperability."

A New Core Competency

"In addition to a complete understanding of the products and technologies, security integrators' ability to react quickly to the emerging IP technology applications in the market and meet the demand of their end users is essential to staying competitive," said Tim Holloway, vice president of technology and security solutions at Anixter International Inc., Glenview, Ill. "This technology shift is going to require security integrators to respond now—to devote all their available capital, human and technical resources to learning a new core competency of IP design, integration, deployment and installation."

The once-separate distribution channels associated with physical security and IT have started converging to the point that each side is now aggressively seeking the other's knowledge base and expertise on a regular basis. Eric Fullerton, president of the U.S. office for Brondby, Denmark-based Milestone Systems, said, "They do this by partnering with each other, employing each other or educating each other."

One trend in IT has resellers looking at video and control as a new industry.

"The ability to help that market with channel partners is important," said John Gaillard, president of security distribution at value-added distributor ScanSource Inc. of Greenville, S.C.

ScanSource's value-add proposition to the business includes "ease of doing business" measures such as Web-based tools for accessing product information, assessing prices and conducting procurements, as well as account management, consulting and education programs, the latter involving technology, marketing and sales.

"We want to be more than a transaction-only distributor," Gaillard said.

Scott Schafer, vice president of sales and marketing at Pelco, a video management system vendor in Clovis, Calif., said their goal is to make sure their products can be sold and used by international reseller partners.

"We have to build the product the right way and provide the training and support beyond the traditional CCTV business. How do we take these technologies and prepare ourselves and our resellers to take advantage of what's coming up? This is a lot of what we've been working on," he said.

Pelco also operates a special Web portal for reseller education material and runs a video security institute for training. Resellers of the Endura product line for major products and larger customer installations, however, must be certified by the company; this is significant particularly because the technologies embrace both the Linux operating system and Microsoft X clients.

"We cannot just give it to anybody, but that doesn't mean we can't train," Schafer said. "The resellers have to make a commitment to the infrastructure and the people that are different from CCTV. There are a lot of things they need to do."

Coordination Linked to Growth

Fredrik Nilsson, general manager of Americas for Lund, Sweden-based Axis Communications, indicated that sales channel coordination by this maker of IP network cameras, video servers and video management software is linked intrinsically to marketplace growth. Its two-tier model involves about eight distributors funneling product to resellers and systems integrators, with some of its big-name relationships being with Ingram Micro, Tech Data, Anixter, Securitas Systems, Lenel Systems International Inc., Honeywell and Milestone Systems.

"With distributors, the focus is on their markets and their expertise to educate resellers and systems integrators," Nilsson said. "Some distributors are from the traditional security side interested in IT and IP, some are from the network side interested in security, and some are traditional IT looking at video as the new element."

With a background in manufacturing and factory automation, Robert Lecher, owner and president of value-added distributor RepLogix LLC in Shelby Township, Mich., said his firm is leveraging technology know-how into video surveillance for production plants, the food processing industry and utility market verticals.

Such applications as supervisory control and data acquisition for large-scale, distributed measurement and control, as well as management execution systems (MES), are intrinsic to the RepLogix niche business, and the company is seeing a good deal of action in the water utility and treatment areas.

"A lot of security people don't understand SCADA and the integration with MES," Lecher said, suggesting a broad trend of merging security, data collection and plant/process/quality control is making its way into the distribution channel.

Among the RepLogix video security partners are Milestone Systems, LongWatch and Mobotix. Lecher maintains that despite the disruptive potential of IT and IP, the security business is generally holding true to its traditional model of using systems integrators and distributors to reach end-user buyers.

Development Partnerships

Like several others in the business, Nilsson underscores the key roles that open architectures and application programming interfaces play in total market success. The company also has an application development partner program that involves complete solution work; there are about 400 ADP partners worldwide, including 100 or more in the United States.

"Open systems and IP integration provide the groundwork for true systems integration and the ultimate convergence and interoperability of all physical security and IT systems," DeFina said. "It is imperative that equipment manufacturers and software developers across all categories of security systems products -- video, access control, fire and life safety -- share protocols to ensure interoperability between systems and products from different manufacturers. Without this fundamental level of cooperation, true convergence cannot take place."

The Panasonic Solution Developer Network is a typical initiative; it provides a platform for companies to share resources and encourage enhanced interoperability across formerly disparate product platforms. At least 24 companies have enrolled in PSDN, with Cisco Systems recently emerging as a partner.

Milestone's Fullerton echoes the corporate message offered by the maker of IP video server/software platforms: the whole video security industry is moving away from the vertically integrated proprietary technology of the CCTV era toward open APIs addressing multiple vertical markets.

"What you will then get is an ecosystem of specializing companies in those market areas," he said.

The business has progressed from a point several years ago when there were concerns over camera quality and bandwidth, but the intelligent products now are "winners," and networks are faster, making installations of 80 to 100 cameras or more commonplace, according to Art Morrison, operations manager at value-add distributor ProTech Security in North Canton, Ohio.

ProTech now looks only at IP and open architecture products, seeks out the appropriate vendors, pursues IT training and strives to be more IT savvy, as the industry moves from dabbling with IP video to jumping into IP video with both feet.

"We are not really in the computer business, but guess what, we are," Morrison said. "The industry is now coming to companies like us with open arms; we are being sought after. They need access control and video in the security mix."

ProTech's relationships have included Dell Computer, Anixter, Axis Communications, Milestone Systems On-Net Surveillance Systems Inc. and Berbee Information Networks, a Cisco Systems contractor.

Robert Hile, vice president of business development at Adesta, an IT, network systems and broadband integrator in Omaha, Neb., said leveraging his company's expertise into IP-centric video security and surveillance is an easy evolution, yet there are challenges in product manufacturer selections and sales channel alliances.

"We are trying to stay with products that are openly integrated with as many protocols as possible," Hile said. "This whole market is changing, and manufacturers before didn't always stand behind their products. We are asking vendors to belly up to the table. If they don't do that, we will walk away. And many systems integrators are becoming more sophisticated and savvy. They want products that work and integrate well; if the products don't, they'll pass on it."