Buyers of Access Control and Video Surveillance Services now have the choice of using Contract Security Service companies or the new breed of ACaaS & VSaaS suppliers now coming from the physical security manufacturing business, with many looking to sell direct to the end user.

Both are delivering sophisticated services that are reducing the total cost of ownership and at a time, when the pandemic has ravaged many of the buyers finances, allowing them to pay for the service on a RMR basis.

The Contract Security Service business has been operating over 40 years and is now dominated by a few major international companies and hundreds of small local operators. Most have been born out of the man guarding business and offer comprehensive management services including security, energy management, lighting control etc. Today they take a major share of this service business. They buy, install and operate some or all of the high tech services and are paid through a monthly fee.

The major international companies over the last few years have acquired manufacturers of physical security products and installers / system integrators. They therefore now have the technical expertise backed up with financial resources to build onto their professional services.

A new breed of ACaaS & VSaaS suppliers primarily coming from the physical security manufacture business have developed their solutions built on their hardware and software skills in Video Surveillance and Access Control including A.I Software. A few have been developing the business for almost a decade but it is only in the last few years that the business has gained serious traction and more companies have recently joined the ACaaS and VSaaS business, selling solutions direct to the end user.

Previously, the traditional route to market through System Integrators has stifled ACaaS and VSaaS some what, as some SI's were not interested in this approach. Now it seems the direct route to market will grow and has the possibility within the next 10 years to take a significant share of the business. But selling solutions direct to buyers will conflict with the more traditional routes to market, so this is not an inevitable win/win solution.

A number of Physical Security manufacturers have developed sophisticated systems and use cloud storage from the major IT companies. They are delivering sophisticated systems and are selling on a RMR basis, many claiming they are growing rapidly. However there is a limited amount of market data on VSaaS. Our best estimate is that world sales in 2019 was around $1.6Bn which includes the hardware and software cost at installed prices together with a relatively small contribution of RMR revenue at this time. The Contract Security Services revenue in the USA including manned guarding was estimated to be $28Bn in 2020 and of this $2Bn included electronics and system integration revenues.

By comparison the Contract Security Services business is very consolidated with 3 major international companies including Securitas, G4S and Allied Universal dominating the security services business. Securitas have around $91Bn in annual sales. According to all three companies statements in recent annual reports, they have pursued a very active strategy of growth through merger and acquisition and have focused in on acquiring system integrators.

All of the world’s major contract security service companies forecast good growth prospects particularly in the USA and Europe and Securitas quote “including technology, that can be combined into tailored security solutions”. They go on to claim that they are expanding their electronic security capabilities to a smarter more digital society offering a complete range of security services, including electronic security, and are at the forefront of industry efforts to capture, analyze and respond to data that is gathered electronically in their Securitas Operation Centers.

At the same time the Physical Security manufacturing business is reading from the same script and now has the possibility through ACaaS and VSaaS systems to sell solutions direct to the client and or offer an up front service package paid on a monthly basis.

This will make for a more competitive market with Contract Security Services companies expanding through acquisition and Physical Security companies delivering through organic growth in ACaaS and VSaaS technology.

Memoori’s annual report “The Physical Security Business 2020 to 2025” showed that demand for VSaaS had grown in Q2 and Q3 of 2020, on the back of a 10% growth in 2019. Given the problems that the pandemic has caused this is very solid growth and we forecast that by 2025 the market could reach $2.6 billion.