One of my favorite quotes, even before the COVID chaos is, “adapt or die.” I love its jarring nature. Straight to the point! There is so much truth in those three words. Unfortunately, it’s exactly what most businesses and organizations are theoretically being faced with. Personally or professionally, the idea of becoming so comfortable with how things are that you stay in the same state and are unwilling to readjust or relearn in order to grow and change frankly terrifies me. However, I’ve noticed that this is not the case within the commercial security industry. In fact, with the exception of a few progressive businesses taking note of the market trends, most security integration businesses have been operating within a transactional, project-based business model since the beginning of its conception. And if it ain’t broke, don’t fix it!
Prior to COVID, many integrators and customers were content with capital expense (CAPEX) sales. Only in the last five years has the as-a-service, operating expense (OPEX) trend for security solutions truly started to gain some steam. The mindset of ownership was changing. Organizations were starting to see the benefits of having access to and use of technology thanks to this subscription economy we are now living in. Then, along came COVID. COVID has caused a dramatic rise in demand for OPEX models. Even in this Securityinfowatch.com article, 11 Ways COVID has Changed Security Integration, “Transition to an OPEX Model” is listed as #2.
How Organizations Are Operating In COVID?
So, how are organizations operating in this COVID market that’s causing this demand for OPEX solutions?
01. Cash Preservation
COVID has forced organizations into a capital preservation mode. In fact, in a recent survey we did with top national retail chains, 89 percent stated that their 2020 and 2021 budgets have been greatly impacted. Most CAPEX budget plans for technology equipment essentially dried up overnight. Now, more organizations are noticing that under an OPEX model they have better control over their cash flow. With an as-a-service OPEX subscription solution, customers pay a low, convenient, predictable monthly subscription payment that includes the total security solution including equipment, and support services.
02. Uncertainty In The Solutions Needed
The second reason for the demand in an OPEX model has to do with the uncertainty within technology strategies. Most organizations have had to completely adapt their technology needs due to the unexpected changes this year. And many organizations are still uncertain about what they may need going forward.
A good OPEX solution provides organizations with increased flexibility, protection & control. Take TAMCO’s as-a-service OPEX solution for example. It provides customers with the ability to grow and scale without financial penalty. Meaning, if a customer acquires technology today, but their needs change or the solution they choose becomes obsolete they’ll be able to replace the solution without any financial burdens, penalty fees, or rollover balances. Their existing contract is forgiven and a new one is issued. Under a CAPEX model, the customer becomes handcuffed to their solution. It is a myth that owning technology equates to greater control. If anything it equates to greater limitations in today’s environment. Additionally, with an OPEX solution, added services, maintenance agreements, and needed upgrades are typically part of the subscription. This provides the customer with even more security and support for uncertainty than a CAPEX model ever could.
The OPEX Benefit to System Integrators
As you can see, the rise in demand for an OPEX shows many benefits for your customers during this time. But, what about the benefit to you, the system integrator? It is extremely beneficial for security integrators, especially during difficult and uncertain times. When you are able to sell an OPEX solution that includes multiyear support services, you are creating new recurring revenue streams for your business. Therefore, you will have a steady stream of predictable and sustainable revenue you can depend on during unpredictable times.
Adapt and Thrive!
One thing that won’t change is the need for security solutions. Security has evolved into a mission-critical technology need. Today, most organizations view security as an essential part of their operations and will continue to acquire technology to help them protect their people and their assets.
Integrators are noticing if they don’t adapt to the demand and this new way organizations are having to operate, their future looks bleak. Are you prepared to effectively adapt to this new demand? Can you provide complete as-a-service subscription solutions that will preserve capital? Do you have a strategy that allows customers to overcome their uncertainty? Lastly, do you have a plan to build predictable and sustainable recurring revenue for your business for years to come? If you can answer yes or are on your way to answering yes to these questions you are well on your way to an “adapt and thrive” outcome versus “or die!”
About TAMCO
TAMCO has been helping system integrators and solution providers for over 26 years adopt subscription solution sales to address the types of demands listed in this article. Learn more about the exclusive as-a-service solution for integrators and discover if you make a good fit for the TAMCO partner program.
