Answering What, Why and How

Most SaaS will focus on technical aspects, and how it works

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, integrators 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, tactically, 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 successfully 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. Without 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 responsibilities. 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 significant, 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, technically, 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 ownership. There are some fundamental problems regarding the economics 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 between importance and the need to own it. Knowing it’s going to lose value, basic economic principles advises us to avoid ownership when possible.

Non-recoverable Costs
Consider the bill of materials for a technology solution. There’s commonly many non-recoverable costs associated with a solution 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 disappear 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 bundle high margin multiyear support, maintenance, and service contracts at the point of sale. Resulting in contractual stickiness, building monthly recurring revenue (MRR) and increasing valuation of the business.

Previously and presently, integrators selling traditional one-time capital expense sales struggle or don’t even bother selling multiyear support and maintenance services at the point of sale. Where, security-as-a-service provides an easier avenue to achieve sticky, contractual, high-margin multiyear support service sales. This builds highly-desired, sustainable, predictable MRR.

First, by adding multiyear support services at the point of sale you increase revenue by 30-45 percent on each transaction. Secondly, building MRR creates a groundswell of benefits to an integrator’s organization. Such as:

  • Recurring revenue has a valuation many times greater than one-time project revenue
  • Sustained profitability (consistent source of higher-margin sales)
  • Weather economic downturns (MRR keeps the business afloat, one-time project revenue disappears)
  • Increased customer loyalty with contractual ties (create stickiness)
  • Improved customer engagement which often leads to other sales opportunities, and
  • Greater customer lifetime value (CLV)

Quantifying Recurring Revenue
Provide a sense of the quantifiable difference in value of recurring revenue versus one time revenue. Look at two key financial metrics – margins and business valuation. The table below compares the contribution of one million dollars of recurring revenue versus one million dollars of one time revenue for each. (Table 1 uses conservative assumptions for average integrator margins on one time and recurring revenue. Table 2 uses basic business valuation formulas with conservative multipliers.)

When analyzed from both of these perspectives; customer and integrator, it’s clear why financially astute integrators and their customers look to security-as-a-service as a more ideal and valuable solution.

Adding an as-a-service offering as an option on a proposal, among a buffet of other procurement options, unfortunately doesn’t create MRR success. The integrators who do have success approach it differently than one-time sales. They implement a multilayer strategy that encompasses sales, marketing, services, and operations. All of the following mentioned tactics are essential to successfully pivot to a service sales model.

The first tactic is leadership commitment. Results reflect the effort. Leadership must be a consistent advocate, understanding and believing in as-a-service. Then, they must inspect and enforce. Think milestones, objectives, scorecards and QBRs.

You’ll need a quality service offering you can deliver on. Productize it. Present your service offerings as an easy presentable package that’s a centerpiece of your value.

Next, find the right finance partner. A good as-a-service partner pays integrators in full, upfront, just like a cash transaction. You should never have to wait or get paid over time for selling a monthly subscription. Choose a finance partner that offers a true as-a-service offering. It should align with the subscription consumption model. Confirm that is focuses on use/access, not ownership. And lastly, a quality partner can provide value-added penalty-free provisions like rapid obsolescence protection and natural disaster coverage.

Invest in training sales teams. No matter how skilled a sales professional is, a service sale is different than the one-time sale.

Then, compensate your salespeople properly. If MRR is important, pay your people for selling MRR. Don’t pay them over time, pay them upfront. It’s how salespeople are wired.

Lastly, share your message with the world. Integrate as-a-service and service-focused messaging into your comprehensive content marketing strategy.

This article originally appeared in the April 2022 issue of Security Today.


  • 12 Commercial Crime Sites to Do Your Research

    12 Commercial Crime Sites to Do Your Research

    Understanding crime statistics in your industry and area is crucial for making important decisions about your security budget. With so much information out there, how can you know which statistics to trust? Read Now

  • Boosting Safety and Efficiency

    Boosting Safety and Efficiency

    In alignment with the state of Mississippi’s mission of “Empowering Mississippi citizens to stay connected and engaged with their government,” Salient's CompleteView VMS is being installed throughout more than 150 state boards, commissions and agencies in order to ensure safety for thousands of constituents who access state services daily. Read Now

  • Live From GSX: Post-Show Review

    Live From GSX: Post-Show Review

    This year’s Live From GSX program was a rousing success! Again, we’d like to thank our partners, and IPVideo, for working with us and letting us broadcast their solutions to the industry. You can follow our Live From GSX 2023 page to keep up with post-show developments and announcements. And if you’re interested in working with us in 2024, please don’t hesitate to ask about our Live From programs for ISC West in March or next year’s GSX. Read Now

    • Industry Events
    • GSX
  • People Say the Funniest Things

    People Say the Funniest Things

    By all accounts, GSX version 2023 was completely successful. Apparently, there were plenty of mix-ups with the airlines and getting aircraft from the East Coast into Big D. I am all ears when I am in a gathering of people. You never know when a nugget of information might flip out. Read Now

    • Industry Events
    • GSX

Featured Cybersecurity


New Products

  • XS4 Original+

    XS4 Original+

    The SALTO XS4 Original+ design is based on the same proven housing and mechanical mechanisms of the XS4 Original. The XS4 Original+, however, is embedded with SALTO’s BLUEnet real-time functionality and SVN-Flex capability that enables SALTO stand-alone smart XS4 Original+ locks to update user credentials directly at the door. Compatible with the array of SALTO platform solutions including SALTO Space data-on-card, SALTO KS Keys as a Service cloud-based access solution, and SALTO’s JustIn Mobile technology for digital keys. The XS4 Original+ also includes RFID Mifare DESFire, Bluetooth LE and NFC technology functionality. 3

  • HD2055 Modular Barricade

    Delta Scientific’s electric HD2055 modular shallow foundation barricade is tested to ASTM M50/P1 with negative penetration from the vehicle upon impact. With a shallow foundation of only 24 inches, the HD2055 can be installed without worrying about buried power lines and other below grade obstructions. The modular make-up of the barrier also allows you to cover wider roadways by adding additional modules to the system. The HD2055 boasts an Emergency Fast Operation of 1.5 seconds giving the guard ample time to deploy under a high threat situation. 3

  • Mobile Safe Shield

    Mobile Safe Shield

    SafeWood Designs, Inc., a manufacturer of patented bullet resistant products, is excited to announce the launch of the Mobile Safe Shield. The Mobile Safe Shield is a moveable bullet resistant shield that provides protection in the event of an assailant and supplies cover in the event of an active shooter. With a heavy-duty steel frame, quality castor wheels, and bullet resistant core, the Mobile Safe Shield is a perfect addition to any guard station, security desks, courthouses, police stations, schools, office spaces and more. The Mobile Safe Shield is incredibly customizable. Bullet resistant materials are available in UL 752 Levels 1 through 8 and include glass, white board, tack board, veneer, and plastic laminate. Flexibility in bullet resistant materials allows for the Mobile Safe Shield to blend more with current interior décor for a seamless design aesthetic. Optional custom paint colors are also available for the steel frame. 3