Yesterday’s blog post introduced the term Communications as a Service.  In the post, I opined that the definition of the term as provided by the Gartner Group was too limiting.  I do, nonetheless, like what Gartner Group is saying about the CaaS market.

Like yesterday, I will quote from the Andrew R. Hickey’s September 2007 article:

“Communications-as-a-Service, or CaaS, is starting to take hold worldwide and will rope in a total of $251.9 million by year’s end, according to recent forecasts released by Gartner Inc.   The $251.9 million total is a jump of 37.6% over last year and an indicator that the market for CaaS will continue to climb as providers learn more of the particulars. Gartner predicts that the CaaS market will hit a whopping $2.3 billion by 2011, representing a compound annual growth rate of more than 105% for the period.”

 This is good news for two companies I am heavily involved with:  Zayo Managed Services and NGT.

Communications-as-a-Service taking hold

Communication

By Andrew R. Hickey, News Editor 11 Sep 2007 | SearchVoIP.com

News on networking, mobility and voice Digg This!     StumbleUpon     Del.icio.us

Communications-as-a-Service, or CaaS, is starting to take hold worldwide and will rope in a total of $251.9 million by year’s end, according to recent forecasts released by Gartner Inc.The $251.9 million total is a jump of 37.6% over last year and an indicator that the market for CaaS will continue to climb as providers learn more of the particulars. Gartner predicts that the CaaS market will hit a whopping $2.3 billion by 2011, representing a compound annual growth rate of more than 105% for the period.

One reason CaaS isn’t exploding out of the starting gate, however, is lack of provider knowledge. According to the report, providers are still trying to determine to whom to define, package and market services as a value-added IP telephony offering.

In the report, titled “Emerging Communications Services (Hosted IP Telephony, IP Centrex and CaaS), Worldwide, 2006-2001,” Gartner defines CaaS as IP telephony that is located within a third-party data center and managed and owned by a third party. The assets are not carrier-grade, the service is not in the network, and the assets are multi-tenant in terms of usage, Gartner says.

But the growth of CaaS within corporations will take off once users find its true usability, according to Eric Goodness, research vice president at Gartner. It will grow further as companies realize they won’t run the risks associated with having their own in-house communications systems.

“Users will begin to embrace CaaS more enthusiastically in 2009, attracted by predictable costs for fixed telecoms,” Goodness said. “Users will also be attracted to CaaS as a means of shifting technology risk to the service provider. Technology obsolescence will be more easily managed by a scalable third party.”

The largest growth for CaaS will occur between 2010 and 2011, when the market jumps from $1.2 billion to $2.3 billion. In the years leading up to the market’s boom, CaaS will grow gradually, hitting $576.2 million in 2008 and $742 million in 2009.

CaaS’s slow start will be compounded by a longer sales cycle, Goodness said, as customers need time to get used to higher, but better consolidated, pricing.

“A single bill that consolidates telecom services with equipment infrastructure will gain acceptance,” he said. “Providers are bullish about CaaS’s potential because of the opportunity to bundle more new features and capabilities to avoid service commoditization.”

I recently stumbled across the term “Communications as a Services” or CaaS.  I like the term and might begin to use it to describe the business focus of Zayo Managed Services. 

I do have a problem though.  This will be shocking for those readers who know me personally.  You see, I am known as an agreeable, flexible, accomodating person.  People do not see me as a stubborn individual who has a “my way or the highway” disposition.  So this is why my problem with CaaS–a term I just stumbled on a couple weeks back–will be so shocking.  

My problem is this:  I think the term is defined incorrectly.  Like I said, shocking someone like me would be so bold to question the definition of a term that I had nothing to do with coining.  Whoever did coin it–can you do me a favor and modify the term a bit?   Below is what I have in mind.

Andrew R. Hickey wrote the article “Communications-as-a-Service Taking Hold“ in September of 2007.  Hickey writes:

In the report, titled “Emerging Communications Services (Hosted IP Telephony, IP Centrex and CaaS), Worldwide, 2006-2011,” Gartner defines CaaS as IP telephony that is located within a third-party data center and managed and owned by a third party. The assets are not carrier-grade, the service is not in the network, and the assets are multi-tenant in terms of usage, Gartner says.

My problems are multi-fold (again, shocking I know):

• Communications is a much broader term than telephone calls.  Texting, video conferencing, emailing, and IP security are examples of non-telephony communications services
• Many next generation communications providers focus on providing a bundle of services around a hosted platform.  Beyond the staples of Internet access and telephony, they provide services like microsoft exchange hosting and web/video conferencing
• The “not-carrier-grade” shouldn’t be part of the definition.  It is certainly true that VoIP platforms are relatively new whereas circuit switch platforms have been around for many decades.  It is also true that early-stage VoIP was unreliable relative to circuit switch.  However, the gap has closed dramatically and, for most customers, the tradeoff is small.  Fast forward a year or two, and this gap will narrow to the point where the difference might not be perceptable.   That the gap is closing is not the point; including not carrier grade in the CaaS definition is simply inappropriate. 

I like the term CaaS.  I’d simply like it to be defined around a broader bundle of communications services.  Ike Elliott–you must know who to talk to–can you help out here? 

Joe Panettieri writes MSP Mentor blog. The blog is a good source for ideas and information about managed services. Below is a reprint of a February 6th post on a managed services application that is closely related to managed video surveillance. Many of Envysion’s customers are retail brands; some have asked about the feasibility of using Envysion’s service as a platform for digital signage, which is what sparked my interest in this area.  Here is Joe’s post:

“During a recent stop at Dunkin’ Donuts (my daily coffee run), I noticed new digital signage promoting local businesses and special offers for coffee. It dawned on me that digital signage is a great opportunity for managed service providers. Sure, you can sell Plasma TVs and large LCD screens to businesses, but the real money is in monthly content management services for those screens.

Skeptical? Consider this piece of news from BroadSign International Inc., which specializes in hosted software for digital signage networks.

BroadSign has launched a managed services platform to help digital signage network operators deploy and run their networks with minimal staff and maximum efficiency.

In a prepared statement, BroadSign Executive VP David Womeldorf said: “Our research shows that the digital signage industry is moving towards outsourcing network maintenance and other technical jobs, so the Managed Services is our answer to this clearly expressed need.”

BroadSign’s managed servcie platform covers such items as:

• Scheduling Services
• Network Monitoring Service
• BroadSign Operating System Services
• Dynamic Content Services

For managed service providers serving retail customers, digital signage represents a multitude of opportunities. For instance, MSPs can design and deploy digital signage systems that complement managed video surveillance systems,  emerging point of sale solutions, and so on.

On Monday, the re-print of “Fathers of Innovation” will begin….

The article below was published last month in the online magazine Stores.org. For Liz Parks’ actual article, please click here. Liz, thank you for the time to capture a lot of specifics on how Envysion’s managed video surveillance service is helping entrepreneurs run their businesses better.

When Brandon Knudsen discovered that the food/beverage costs at his upscale coffee shop were running 25 percent above the industry average, he knew he had a problem. He just didn’t know what it was.

“I thought maybe our vendors were not delivering everything we had ordered and paid for,” says Knudsen, who with wife Camrin owns and operates Ziggi’s Coffee House in Longmont, Colo. “So I restructured how they delivered and I kept trying to figure out what was wrong. But I couldn’t identify the problem. All that time, I was going about it completely wrong.”

Ziggi’s had a closed-circuit video surveillance system, but it was cumbersome to use and therefore underutilized, he says.

“To view the store remotely, you had to have the software installed on your computer, which was a pain,” Knudsen says. “And although they gave you two cameras, when you watched you could only see part of the store from the main camera. Then you got a smaller image — like a television picture-within-a-picture — of another part of the store. But you couldn’t see everywhere.”

Another problem with that system, he says, was the review process. “You couldn’t go to the exact second that a behavior occurred,” Knudsen says. “You had to slowly watch every single thing.”

Last spring, Ziggi’s installed Envysion Video from Louisville, Colo.-based Envysion, a provider of web-based video surveillance solutions. With five cameras, Knudsen can now see what is happening anywhere in his shop. “I can read the letters on a $5 bill as clear as day,” he says, and the ability to “easily search the Envysion videos for specific incidents is awesome.”

Because all that is needed to remotely view the store is a web browser and a secure password, Knudsen can give friends and family — including his father, a silent partner in the business — the ability to see inside the coffeehouse whenever they like.

“With my other system, I had to put in a disc, download software, type in an IP address and all that other nonsense,” he says. “I had a hard enough time doing it, and I knew what I was doing.”

Beyond LP
Matt Steinfort, president and COO of Envysion, says the network-based surveillance solution has a number of applications that go beyond loss prevention.

“Historically, people would put cameras into a business like Ziggi’s … just to catch bad people doing bad things, or to prevent a criminal who spots a camera from doing something bad,” Steinfort says. “But being able to see inside your business gives you the ability to improve the way you are operating and to manage from a remote standpoint rather than being in the store all day. That means owners and managers can leverage their time more effectively and potentially manage more locations.”

Operators of chain or multi-unit stores (current Envysion customers include IHOP, McDonald’s, Shell, Chipotle Mexican Grill and Qdoba) are able to remotely look at live or recorded videos for all stores in their enterprise and, with the video system tied into POS, can get video verification of transactions occurring at the register, helping to identify incidents of employee theft.

Between them, the Knudsens used to spend 17 hours each day physically being in the coffeehouse. “One of us would leave [home] at 4 a.m. and one of us would close the shop at 9 p.m.,” Brandon Knudsen says. “Now we leave the computer on the kitchen counter and we watch it all the time. We’re usually at the coffee shop by 7 a.m. and out by 4 p.m.”

Knudsen rates customer service as a top priority. When he sees lines getting long and only one associate working the counter, he can call the store and redeploy workers. “The second girl is usually in the back, washing dishes or something, so we tell her to go right to the counter to help the customers,” he says.

The cameras are attractive but quite visible — a feature Knudsen particularly likes. “If someone walks in here thinking, ‘This is a coffee shop, I can easily rip off $500 bucks’ and then sees the cameras on him, he’s going to turn right around and walk out the door,” he says. “I love that.”

And if someone shady walks in on a lone employee at night, “the kids know that I’ll call the police and have someone down there in a second. It’s almost like having a second person there, and they feel so much better about that.”

A training issue
When Knudsen first began performing remote video surveillance, what he saw stunned him. “The kids were stealing,” he says. “I don’t think they knew they were stealing — they were just being kids — but they were taking free drinks for themselves, they were giving their friends free drinks, they were using 20-cent paper cups to drink water from three or four times a day. They didn’t comprehend; they didn’t have a clue as to how much that all added up to, and how their actions were impacting my business.”

Ziggi’s shrink problem became a training issue, and Knudsen didn’t fire any of his youthful employees. “They were full of energy; they were awesome with the customers,” he says. “They were just being very careless.”

Turnover rates are high among part-timers, so most of the associates who first worked for Knudsen have moved on, but the Envysion video system remains a key tool for preventing shrink.

“Because I can see clearly what is happening in the shop and because it’s so easy to review, I can clearly see all the areas of the store where shrink might happen,” he says. “And the kids all know that now. I’ve shown each one the system and how tight it is. I explain that having this system is for their safety, but at the same time, we can see what is going on.”

As a result, food and beverage costs are now in line with segment averages.

Envysion sells its solution to businesses, but Ziggi’s took advantage of the subscription option. “I really didn’t want to make another large capital investment,” Knudsen says. “This way I pay by the month, and just from peace of mind I feel I reached an ROI on Day 1.

“I’d estimate with all the money we’ve saved from reducing shrink, I probably made my money back in a few weeks,” he says.

Bear with me. Below is yet a fourth write-up from one of Envysion’s Account Executives. This also followed an introductory meeting with a different prospective customer. I edited out the names and changed some details to “protect the innocent.” This one also happened recently. Managed Video Surveillance-hmmmm…sound interesting?

Very good demo on 01-22. [The cutomer] was anxious to see the capabilities of our solution. We had previous discussions about how Envysion Video services could benefit both their corporate locations and the franchisees.

This brand has approximately 600 corporate and 5,000 franchisee locations.  They are currently using [___] for the corporate locations. The franchisees have been securing their own video surveillance providers which present challenges because of their requirement for integration with approved POS systems and PCI compliance. The person I met with is responsible for technology evaluation and certification for corporate and selecting preferred technology vendors for the franchisee organizations. They currently have four approved POS vendors and require technology solutions to be compatible with their POS systems. They have a VSAT network for all of their corporate locations. Franchisees secure their own broadband suppliers consisting of DSL, cable and VSAT when terrestrial services are not available.

Envysion’s CTO addressed the customer’s questions regarding PCI compliance, POS integration and bandwidth utilization. [The customer] seemed to be enamored with our reporting capabilities and ease of administration. He also values the Software as a Service (SasS) proposition. He expressed a desire is to have a video solution certified with their approved POS systems. He also requested we send them an EnVR to their lab at HQ for testing.

The customer asked very good questions about the operational aspects of our systems and readily grasped the ease of use and access and management of the system. Save to the Core and bandwidth optimization seem to be well received.

Next Steps - Pricing was requested for 4, 8 and 16 camera configurations and a test logon which was provided on 1-23. We are shipping a EnVR this week. We are also scheduling a follow-up with the expanded organization and doing a demo for one of their major franchisees

Below is a third write-up from one of Envysion’s Account Executives. It followed a different introductory meeting with a prospective customer. I edited out the names and changed some details to “protect the innocent.” All three happened within the past week. Powerful trend perhaps?

The meeting was with the person in charge of delivering a suite of products that allow the franchisees to leverage useful technology to manage their bottom line. He supplies an enrollment pipeline of endorsed technology vendors.

The customer is a 3,500 US location chain headquartered in the Midwest with 100% franchised operations

POS systems are a mix of Panasonic, Aloha, standard cash register and “cigar boxes.”

The only technology that is mandated moving forward is [a particular point of sale system] and the franchisee must use the gift card partner. The reason they decided on standardized is to be able to centrally-manage all product movement data.

PCI is a must

The customer “guessed” that 40% of franchisees currently have high speed broadband

Being able to supply “soup to nuts” offering that combines Envysion’s service with a managed services provider would be a big plus

Franchise video platform project and RFP will be released late spring 2008.  Customer will consider it a success if 1,000 – 2,000 franchisee locations participate in the program. Franchisee hot buttons:

• Video surveillance with POS integration
• Integration with other BSS, IE alarm/central station integration
• Remote video accessibility
• Above store real time reporting capability
• One stop shopping for security and broadband type of systems

Below is a second write-up from one of Envysion’s Account Executives. It followed a different introductory meeting with a prospective customer. I edited out the names and changed some details to “protect the innocent”. See any patterns?

The demonstration originally scheduled for 2:00PM CST was rescheduled to 10:00AM CST with 40 minutes notice due to last minute changes to the prospect’s scheduling. We were able to reorganize at the last minute to accommodate the prospect’s needs and complete the demonstration. Attendees were the VP of operations and the head of loss prevention.

Prospect Summary and Demo Highlights:

• This merchandizer is a 1,400 unit chain of clothing and accessories; all corporate owned. They currently have minimal CCTV in their store locations, but use extensive CCTV in their 6 distribution centers. All stores have DSL lines. All stores are utilizing a XBR data mining software for POS applications without video backup. They have 4 loss prevention field staff.
• They are planning on analyzing video in some locations to develop an internal ROI to sell to the executive management team. They are advocates of CCTV in the stores and it is high on their priority list, but they have to sell it higher on the corporate priority list. They are also looking at cross functional areas to get buy in from other departments, i.e. marketing.
• I have been an acquaintance of one of the guys for several years and have had numerous conversations with him in my past life. I was getting the impression from him that this demo was more of a courtesy to my persistence with him than a true interest in our offerings. As we progressed through the demo, the input we received for internal potential applications made it evident that we had their undivided attention and interest level.
• Customer Pains:
  • Cash refunds are this company’s number one contributor to internal theft. Company incurs loss of $300,000 per month. This equals 75% of their losses.
  • Company receives an unmanageable amount of exception daily.
  • Would like to be able to see video verification of coupon transactions; this would provide immediate benefit.
• Customer Wish List:
  • Video tied to a POS exception with a secondary trigger of motion, i.e. cash refund POS exception, but no customer or product present
  • Object tracking type video analytics, i.e. a video exception generated if motion shows a box being opened, but not if someone simply passes in front of the box as is with standard motion (ultimate wish is being tied into video analytics for object tracking in a way that does not currently exist in the market place)
  • “Favorite views” dashboard on the home page, IE click “favorites” and a specific set of cameras auto populate the viewing area.
  • Ability to view all video from centrally-managed area

Below is a write-up from one of Envysion’s Account Executives. It followed an introductory meeting with a prospective customer. I edited out the names and changed some details to “protect the innocent”. I thought this might be interesting to those of you interested in the emerging video surveillance managed services market.

A tremendously positive, yet very lengthy meeting with [decision maker] from [major brand name] during the lunch hour(s) today. We got started a bit late (almost 1 pm), but we went until nearly 3:45 to make up for it! The only better thing that could have happened is if we walked out with a purchase order in hand for several thousand locations

In summary -

• They are taking a fresh look at Global Asset Protection Program from the entire lifecycle (suppliers, shipping, distribution, store level) - anything that could impact growth
• Very interested in our Software as a Service (”SaaS”) approach. Quote: “Knew that the video surveillance solution would go towards software only.”
• Customer recognizes that technology has leapfrogged since they implemented a basic loss protection solution some time back.
• Customer is extremely interested in gaining a system with the exception-based reporting we talked about - they have an XBR system today, yet still have to manually pull associated video to do any prosecutions or disciplinary actions. Many of the systems today have overlay Point of Sale (”POS”). Loved our concept with the following comments or issues:
  • Tight control on stuff getting “out” - may require dedicated server/network infrastructure
  • Secure and easy-to-use administrative features are a huge plus for Envysion
  • Save-to-core is a big draw
  • No one in company is doing demographics, new product/market success, but always talked about as “if we only had the right product”

This was a great starter meeting and there will be more over the next months. It will take some time before the path is fully understood, so this is a longer play for Envysion. Still, we are perfectly poised.

Last week, I reprinted a post from Joe Panetteri from his MSPmentor blog.  Joe published a follow-up post on January, 22nd, which I reprinted below. 

Back in December, I blogged a bit about video surveillance as a managed service, and the rise of Managed Video Service Providers. Readers sent me plenty of emails and questions about both posts. But it wasn’t until last week, when I spoke with Envysion CEO Matt Steinfort, that I began to realize some of the new video opportunities awaiting managed service providers.

At first glance, most people think video surveillance is nothing more than traffic cameras mounted at intersections or video cameras monitoring retail cash registers. That’s only part of the story. The real opportunity for managed service providers is to marry video surveillance with business intelligence, point of sale, customer relationship management and other applications.

Here’s one powerful concept: A video surveillance managed service married to point of sale cash registers and credit card systems. In this scenario, your customers (for instance, a retail chain) could check the POS system for specific transactions. The video system, in turn, would automatically display a video clip associated with the POS transaction. This would allow merchants to spot fraudulent or questionable transactions, cashier errors, etc. This approach would also allow merchants to monitor customer lines, the quality of customer service during specific employee shifts, and so forth.

The video system could also be designed to monitor specific events. For instance, every time the door to a retail store opens, the video system would automatically create a record of the event. Rather than searching through hours of endless video, retailers could quickly review specific events based on time of day and other parameters.

Sure, much of this technology is common in high-end retailer chains that have deep IT budgets. But now, managed service providers and aggressive startups are bringing this video surveillance technology to the masses.

Which brings me back to my conversation with Steinfort from Envysion. Granted, he’s in the business of selling video applications. But in this case, he really doesn’t have to do any selling. When he demonstrated Envysion’s product to me over the Web last week, I immediately understood the true power — and potential — of managed video surveillance.

No, I’m not endorsing Envysion’s product (I haven’t spoken to the company’s customers nor have I tested Envysion on my own). However, it’s safe to say Steinfort has found a hot market niche for MSPs. And this is more than a retail solution. Higher education, state and local government, financial services, and plenty of other verticals are embracing video surveillance.

A case in point: Hundreds of cities across the globe are rolling out public WiFi networks. This municipal broadband movement, documented by MuniWireless.com, has hit a few bumps because cities needed to cost-justify WiFi, mesh, fiber and other network investments. In many cases, video surveillance has emerged as the killer application that allows municipalities to move forward with wireless broadband projects.

 Joe, I hope you have a chance to try our product. I think you will agree it is truly a commercial-grade software-as-a-service application that is changing the meaning of video surveillance.  I’d welcome feedback from you on the service/product. 

Matt Steinfort, CEO of Envysion, sent me a post from Joe Panetteri. He posted it on the MSPmentor blog on January 10th, 2008. ”The independent voice for managed services providers” is the tag-line for the blog. Employees of Zayo Managed Services–you might want to add this to your favorites list. If you are a managed services provider and want to explore a partnering relationship with the most advanced hosted/IP/software-as-a-service solution in the video surveillance industry, please contact Matt Steinfort at Envysion.  Below is a reprint of Joe’s post.

Last fall I predicted that video surveillance would emerge as a hot managed service in 2008. Two pieces of anecdotal information are now backing up my prediction.

When we publish the MSPmentor 100 — a listing of the top 100 MSPs — on January 28, you’ll see data indicating rapidly growing interest in managed video surveillance services. This trend became clear to me back in October.  Now, peer bloggers are write about the rise of managed video surveillance. Smith on VoIP, one of my favorite blogs about IP and unified communications, offers the following perspective:

Like VoIP, IP surveillance is rapidly turning the traditional surveillance technologies on it’s ear. Legacy equipment manufacturers and VAR’s are quickly learning that the move to IP based solutions is inevitable. The same joys of IP based voice communications are realized with IP based surveillance. Lower TCO, increased scalability, more/better access to the technology and of course more functionality. As I have stated before, the parallels between the current surveillance marketplace and the voice marketplace are strikingly similar.

You can read Smith’s complete perspective here. And be sure to check back January 28 for additional trends culled from our MSPmentor 100 research survey.