19 Nov 2018
Breaking Down Both Sides of the RMR Business Model
The concept of recurring monthly revenue (RMR) in the security industry has begun to shift over the last few years, as it once only referred to integrators monitoring and managing monthly contracts with end users. Now, with the proliferation of cloud-based technology, its definition has changed to incorporate more than just a legal binding: companies are no longer just selling systems, they're providing a service.
RMR can have varying effects, and opinions on this business model often depend on the side of the coin and size of the organization.
Software as a Service (SaaS) applications are a natural fit for start-ups and small businesses. These customers are the ones that are unlikely to be attracted by the prospect of setting up and managing on-premises infrastructure and applications and would prefer a service-based approach from their integrator partners.
Managed solutions, such as Access Control as a Service (ACaaS), offer end users the ability to implement a robust security solution without having to invest heavily in IT infrastructure. Instead, the security oversight is shifted to the integrator through a hosted platform in the cloud, simplifying operations and overall management. The end user can still reap the benefits of the cloud, such as accessing data and doors at any time from any location.
Most integrators and dealers are in favor of an RMR setup, which provides them with the opportunity to serve customers while simultaneously building consistent revenue for their businesses. They can present customers with added flexibility when it comes to their security solutions, allowing them to overcome challenges they may not be able to take on themselves.
RMR also enables integrators to develop a stronger connection with the customer, conveying that they understand their specific needs and will always be available to provide the necessary service. This can also lead to a potential increase in business down the line, as the integrator becomes a trusted partner in the end user's eyes.
But for larger integrators and end users, RMR isn't always top of mind. Salespeople are often accustomed to selling a product rather than a service, finding difficulty in fully explaining the intricacies of anything other than a project-based system. Additionally, most integrators find it difficult to shift from a per-project model of business, where a customer requires a significant technology investment that the integrator installs and that's it. Larger enterprises may already possess the IT team and infrastructure needed to manage a solution on their own, and therefore may prefer a one-and-done type deal in a simplified fashion, avoiding a monthly contract.
The future of RMR will depend on a number of factors, with the most important being the type of systems and solutions involved. And as long as cloud-based technologies are at the forefront of the security industry, it is likely that integrators will continue to desire the ability to add more value to their offerings through a recurring monthly service agreement.