Two documents were released by the United States government in February with an impact on the access control market. The first document, the Federal Cloud Computing Strategy, was released February 8 by Vivek Kundra, U.S. chief information officer. It stated one simple fact: the federal government is heading to the cloud — and it is heading there as quickly as an organization the size of the federal government can get there.

In the strategy Kundra states, “To harness the benefits of cloud computing, we have instituted a Cloud First policy. This policy is intended to accelerate the pace at which the government will realize the value of cloud computing by requiring agencies to evaluate safe, secure cloud computing options before making any new investments.”

It is the requirement to move to the cloud that really stands out, explains Steve Van Till, president and chief executive officer, Brivo Systems LLC, Bethesda, Md.

“The policy says two different things: First, federal agencies have to identify three services to move to the cloud. Of the three, at least one of the services has to fully migrate to the cloud in 12 months, and the other two have to migrate in 18 months. If agencies don’t choose a cloud solution they have to write a justification for why they didn’t choose the cloud.”

That will translate into an estimated $20 billion of federal government spending going to cloud computing solutions and the migration to the cloud, according to the strategy. There’s a lot to spend because the government is playing catch up.

“One can see how challenging the implementation of the Federal Cloud Computing Strategy is going to be,” says Jim Callahan, chief operating officer, Ackerman Security Systems, Atlanta. “The government has long missed the ability to innovate as quickly as the private sector.”

It seems the federal government finally is adopting the same mentality that many of the end users of access control technology are predicted to have in 2011 when they harness the cloud and Software as a Service (SaaS) — a mentality that is “rent rather than own, consolidate rather than distribute and by all means don’t pay for anything unless you absolutely have to,” Van Till describes.

“You can’t miss the cloud these days,” Van Till continues. “It is everywhere — or nowhere. Certainly everyone is talking about it. There will continue to be more services in the cloud. That is not just handwriting on the wall, that’s a giant screaming JumboTron™ in our own front yard.”

The industry noticed the sign. In a survey conducted online by SDM (see chart above), 26 percent of respondents chose SaaS systems as the solution having the greatest impact on their business in 2011, second only to wireless solutions (34 percent).

Its impact includes better services, according to Callahan. “Cloud computing clearly will benefit our industry not just economically but will allow the security industry to improve services, innovate and respond to changing customer needs,” Callahan says.

How? “SaaS provides a model that makes investing in security technologies a lot more palatable. Moving from capital expenditures to operating expenditures certainly has its obvious advantages. Overall, SaaS is attractive to organizations that do not have staff to maintain the conventional on-site, hosted systems and is an obvious answer to more scalability and flexibility. The customers can pay for what they use, and it gives them freedom with how they manage their security budgets,” says Bijal Thakkar, director, global security product marketing, safety and security, Johnson Controls, Milwaukee.

SaaS’ ability to keep access control costs within the limits of a company’s operating expenditures has been translating into business for the industry.
“For many companies, capital budgets were decreased with the recession. By offering a managed security solution, it enabled the customer to use operating expense dollars that were still available,” says Steve Sharp, vice president, DigiCOM Systems, Milford, Ohio. “This helped us close business deals that would have otherwise been lost.”

Mike Bliss, manager, channel marketing, Honeywell, Louisville, Ky. reports strong numbers in SaaS.

“In 2010 we doubled the number of dealers selling our managed access solution and we expect to see the same uptake rate in 2011,” Bliss says. “That is driven by our dealers’ need for more RMR and their move to create a services annuity for their companies. We’re enabling more traditional burglar and intrusion dealers to expand their services to include access control using our managed access control products.”

Bliss states the numbers could have been even higher. “2011 will be another year focused on education regarding managed access, especially with the different business model it requires. We doubled the number of dealers in 2010, and we could have quadrupled that number, except it is a very different business model,” Bliss explains. “We’re working to continue educating dealers on how to get into the model — how to put together compensation models for sales, how to present different business cases to end users. We have the enabling technology and we are investing heavily in helping dealers capitalize on it. Quite simply the technology resonates with end users — and it provides the return on investment, flexibility, and support that they are looking for.”

Sharp also attributes successful managed access with creating continued business opportunities. “What may have started as a basic managed access control system, has often led to alarm and video integration, as well as, other opportunities. The response from our customers has been very positive. By including a comprehensive, proactive service package with our managed access systems, we build trust and lay the groundwork for a long-term relationship” Sharp believes.

SaaS is hitting an even broader market, which is also increasing opportunities.

“Over the last three years SaaS and Web-based access control have really proven themselves as a convenient solution and the market has gained acceptance of them. These products put access control within reach of those that would not have considered it in the past due to overall cost and administration time. 2011 will be a real watershed year for SaaS and Web-based access control,” says Steve Dentinger, director of marketing, Keyscan Inc., Whitby, Ontario, Canada.
Jeffrey Stout, network solutions manager for Tri-Ed / Northern Video Distribution, Woodbury, N.Y., predicts strong growth as well, highlighting the solution’s features as a key reason.

“SaaS and Web-based access control systems are the two areas of access control systems that are poised for the largest amount of growth in the access control sector. One key reason is because the systems are much easier to deploy, far less intensive on networks and client machines, and typically have a lower price point,” Stout says.

It is definitely opening opportunities in 2011 with smaller businesses or end users with limited IT resources.

“We see growth in this area as it is a good solution for small systems where clients have limited IT resources. One reason end users are moving toward this model is to reduce the overall cost of maintaining the software and server. Our solid-state, embedded software eliminates most of the indirect soft costs associated with traditional PC-based systems and also provides the client the flexibility of owning the data with no requirement for an ongoing contract,” says John LaFond, director commercial access group, Linear, Carlsbad, Calif.

Dealers are finding success by focusing on SaaS’ value proposition. “It is important to sell and present to customers why a hosted solution may make sense for them. We tell them, ‘Let us be the security professionals and allow you, the customer, to be the business you are, whether you are a scientist, an attorney, a city hall worker, the Coast Guard, a doctor or whatever. You are better off focusing on your profession rather than figuring out how to get a report out of a card access system. Let us do that.’ It really resonates with end users. Having done this for so long I can’t imagine a customer for whom the hosted solution isn’t the right solution,” says Charlie Baker, president of California Commercial Security (CCS), San Diego.

It is all part of a ‘perfect storm’ according to David Ito, product manager, Kantech, a Tyco International Ltd. company, Princeton, N.J. “The technology is beginning to match the needs and wants of both integrators and end customers. Overall, people are striving to make their business run more efficiently. Other manufacturers have also entered the hosted/managed access control space, so market education is also exponentially growing. We see these factors as coming together to make 2011 an overall successful year,” says Ito.

The cloud and SaaS are not new. As Van Till, Baker and others point out, they’ve been offering it for more than 10 years. It is the available products and functionality that is changing — getting better all the time — and it is that way with many of the technologies in access control.

 “Much of the growth in access control is being generated, not necessarily by ‘new’ technologies, but by the technologies that have been around for the past few years that are just now seeing the growth/uptake,” observes Kozak.

Smart Cards

Smart cards command a large portion of the access control market. “By product, the card-based electronic access control systems market continues to be the largest product segment, holding a lion’s share of the global market. Smart cards represent the largest revenue contributor to the card-based electronic access control market,” Global Industry Analysts Inc. revealed in its 2011 research report titled “Electronic Access Control Systems (EACS): A Global Strategic Business Report."

John Devlin, practice director, autoID and smart cards, ABI Research, London, says, “Smart cards are seeing fast growth because there is more demand to multitask within a facility, e.g., use a credential for more than one purpose. This in-turn is driving the market for smart card readers.”

Jim Russell, vice president of sales, Matrix Systems Inc., Miamisburg, Ohio, says 2011 will become a defining year for smart card technology as the government ramps up its requirements.

“We know this spring that mandates are arriving for Transportation Worker Identification Credential (TWIC™) and compliance will come under greater scrutiny this year,” Russell says.

David Adams, senior product marketing manager, HID Global, Irvine, Calif., sees multiple standards and mandates continuing to play a role in 2011.

“SIA OSIPS, PSIA area control, ONVIF, FIPS 201-2, FICAM Part B, RTCA 230C, OMB 11-11, along with a host of other standards and legislation, will impact the market this year,” Adams says.

The demand for smart cards is also in the private sector, namely large commercial/enterprise companies as they follow governments’ lead. However, smart cards’ price point still eliminates potential customers as the company’s size decreases. As the company size decreases, so does the smart card’s value proposition, according to some. (See related article, “The Smart Approach.")

“In my market I am not seeing a huge market for smart cards,” says Baker. “For most of my customers, that small- to medium-sized industrial market, a standard card access system still meets the needs that they have in that market. More importantly, price is still really important to end users and the cost of smart cards hasn’t come down enough this year. Also, smart card technology doesn’t add that much value for most of my customers because, unlike government or enterprise-level companies, the level of security a smart card provides isn’t required for most of the market,” Baker says.

Integrating logical and physical access control remains a growing trend, hitting the radar of companies under pressure to better secure on-premise access to networks from PCI DSS, HIPAA and other compliance mandates, Adams says.

 “Companies will start to realize the cost benefits of re-using their physical access credentials as a logical access credential for strong authentication on the desktop. Further cost-saving opportunities will be presented in the case of employees who also require strong authentication credentials for remote access and can also use this same credential for those purposes,” Adams says.

“Initial sluggishness to integrate the previously disparate worlds of logical access and physical access will give way as the financial advantages become better understood, as well as additional security benefits that come from consistent policies and consolidated audit logs. Easier deployment options of strong logical access will also make integration more financially feasible for small- to medium-sized companies. Also, much stronger identity authentication will begin to be used at the door due to new U.S. government mandates, essentially reusing the logical access credential in the physical access world,” Adams says.

The second document that came out of Washington in February to have an impact on the access control market carried one of those expected mandate changes.
The M11-11 OMB Memorandum published by the Office of Management and Budget, Washington D.C., makes the National Institute of Standards and Technology Special Publication 800-116 — which was published as a strategy allowing agencies to personal identity verification (PIV) card-enable their physical access control systems (PACS), and migrate to government-wide interoperability — much more than a guidance, says David Barnard, director of dealer development at RS2 Technologies, LLC, Munster, Ind. Agencies are required to make more of their credentials.

The M11-11 OMB Memorandum states, “As of December 2010, agencies reported that approximately 5 [million] of 5.7 million federal employees and contractors have completed background investigations, and 4.5 million have PIV credentials.

“As the majority of the federal workforce is now in possession of the credentials, agencies are required to develop and issue an implementation policy by March 31, 2011 through which the agency will require the use of the PIV credentials as the common means of authentication for access to that agency’s facilities, networks, and information systems,” the memorandum orders.

In addition to increased government requirements, IT departments also will push the logical/physical access integration in the upcoming year, according to Dentinger.

“There is obviously a natural synthesis between physical and logical access control. With the majority of larger installs utilizing network communications, IT departments are becoming more involved with the purchasing decision, and they inevitably want the physical and logical access control to be integrated. With smaller projects, this type of integration typically still does not hit their radar,” Dentinger says.

HID Global sees 2011 as a learning year for near field communications (NFC), where a variety of NFC use cases will be tested and validated.

“As NFC-enabled phones for enterprises become available in the second half of 2011, we will begin to see larger scale pilots as well as some early adopter deployments. Just as with payment via NFC, access control can be implemented via NFC in a wide variety of permutations. A few companies will begin to explore the possibilities presented by using the mobile phone as a consolidated access credential. Initially this will be driven more by increasing convenience rather than cost savings,” Adams says.

An example of early NFC mobile phone deployment is at Clarion Hotel Stockholm in Sweden, the first hotel pilot of NFC technology, Adams shares. The hotel worked with ASSA ABLOY and other companies to replace the hotel’s room keys with NFC-enabled mobile phones. “Overall, 2011 will see the industry learning which applications are valuable and which are merely interesting,” Adams says.

Limited availability will affect NFC’s growth.

“There has been real development in the past four to six months regarding the NFC market but there remain only a handful of handsets commercially available. Having said this, the majority of (smart) phone companies have expressed an intention to release handsets over the next six to nine months. However, the volume of shipments will not reach significant numbers (on a global scale) until 2013, which will hold back the widescale use of NFC-enabled mobiles,” Devlin explains.

RFID/Biometrics Roll On

Growth is ahead for radio frequency identification (RFID), according to most initial reports.

RFID forecasts from ABI Research indicate that the value of the overall market will pass the $6 billion mark next year.

“Automated vehicle tracking (AVI), personnel or asset tracking will grow,” Callahan says. “There will be more utilizing of (RFID) tags as windshield tags or personnel badges. Combining RFID readers and active tags with tracking and reporting software represents a complete package for 2011. Depending on the application software and reporting capabilities, most administration, asset reconciliation, enrollment or archiving can be performed at the local level and all updates then automatically uploaded and forward to the head end. There is no need for entering the data twice. Access control is not just about opening a door these days,” Callahan says.

Security is a continued concern, however. “The cloning of credentials is the largest problem facing the RFID market today. Depending on the technology used, the radio transmission can be intercepted surreptitiously or for some actually require the physical possession of the device to clone it. The new devices will pose a good retrofit opportunity as they offer more secure applications,” Thakkar at Johnson Controls predicts.

Biometrics will also slowly gain traction in 2011 in a variety of applications including prisons, airports and, to a lesser extent, night clubs, Devlin predicts.
“Subsequently, end users’ awareness of biometric technologies is constantly improving on the back of this uptake. Partnered with improvements in technology reliability, biometrics will play an important role in the security industry moving forward,” Devlin believes.

Not so fast, says Baker. “Everybody every year talks about how biometrics is going to take off, but I just don’t see it in my market,” Baker admits.

Wireless Versus Hardwired Solutions

Russell says Matrix expects both access control and video to see a continued move toward the wireless and wireless mesh platforms.

“The cost savings and reliability levels continue to increase and now it can be seen as another form of redundancy as well,” he says. “The value in both time saved during installation as well as real equipment and cabling dollars is becoming increasingly significant when an overall project analysis is completed. The ability to run both video and data over these systems without stressing the current LAN or WAN that is needed for so many other systems is also beneficial.”
Linear’s LaFond also anticipates growth in wireless, but only in compatible applications

“We see wireless as a growth area; however, there are just some applications where it will not work,” LaFond says. “Our position is that for the ultimate in speed and reliability you must have a hardwired system. Also as you integrate more technologies, the requirement for constant communications is essential. Wireless can limit this potential,” he says.

As Stacy Deveraux, senior product manager for access control, ADI, Melville, N.Y., explains it, “The natural tendency of wireless to have interruptions in service creates risks and makes wireless a less reliable choice for access. For example, if there was an interruption in service during an emergency, users could potentially be locked out of a building. To overcome this, manufacturers are designing solutions with intelligence located at the door that can perform in a reduced capability mode during an interruption in service."

There are other concerns lessening the benefit of wireless’ initial low installation cost.

“The demand for wireless access control is increasing steadily. The obvious reason is the lower initial cost of installation of these devices. However, the current generation of this equipment suffers from two factors. Battery life and hazardous waste disposal of used batteries are a major concern to many organizations. Maintenance costs are the other concern. So the total cost of ownership needs to be evaluated and balanced before proposing or buying a wireless solution,” Thakkar warns.

Although some may find that wireless access control technology has too many shortcomings, wireless is advancing integration capabilities in 2011.

“Integration will be extremely important this year as networked environments are becoming the norm across the market and more technologies migrate to IP-based solutions. There will be a huge move toward the integration of video surveillance and access control. Users are looking to get more out of their investments and prefer a system that can perform multiple functions. They want an easy-to-use, comprehensive solution that offers a single interface to control access control, video and intrusion. These technologies that were previously tied together physically are now being controlled logically,” Deveraux says.

It is easier to combine multiple systems with open architecture, a continued focus for companies.

“Our strategy is to have architectures that seamlessly integrate into the OEM platforms that the customers know and use so well — platforms like Lenel, Software House, GE and Honeywell, in order to provide a medium by which these technologies can go into existing architectures with no software overhaul to accommodate them. That’s important to end users,” says Mark Duato, director of the integrated solutions specialists group, ASSA ABLOY, Stockholm.
Integration should be important to installers as well, Barnard stresses. “In this market a company who doesn’t have integrations, and partnerships with other companies with other technologies, is on the outside looking in. Even if integration isn’t part of the current project you must be able to prove that it can be moving forward,” Barnard says.

Twice as Nice

Video and access control are two leading areas of integration. It is all about offering a comprehensive view.

“When the security system is fully integrated so that various subsystems such as video management, access control, video analytics, intrusion devices and all IP-based edge devices are managed through a single user interface, information is immediately correlated, providing users with an enhanced level of situational awareness,” says Bill Jacobs, vice president of access control, Next Level Security Systems, Carlsbad, Calif.

Steve Gorski, general manager, Americas, MOBOTIX, New York, says, “The ability to integrate video with access control only helps increase security and safety because information from these systems is correlated and therefore, end users receive a comprehensive look at what is occurring.”

A comprehensive solution and view is something everyone wants, especially after they try it, but they might not be able to afford having it work with existing systems that must remain in place for the time being. In 2011, the industry is continuing to change that and companies are working to bridge the gap between old door technologies and new door technologies.

“We’re focusing on providing products across the security continuum and bringing solutions to market that effectively fill the gap between the traditional mechanical non-intelligent locks to intelligent openings,” Duato says. “If you looked at that spectrum in the marketplace, you’d see the cost per door ranges from a few hundred dollars to an average of $3,000 to $4,000 per door for tradition online access control door. We’re aiming to offer different technologies to the marketplace that allow security directors to get more protection at more doors for the same budget by bringing the cost down per door while bringing the intelligence up. It had been part of ASSA ABLOY’s strategy for years, but we see it scaling significantly in 2011,” Duato says.

Honeywell is focused on a similar strategy in 2011 — getting solutions on the market for the full range of end users — from top to bottom.

“Enterprise and government entities with highly sophisticated needs are looking for a robust offering, and there continues to be growing demand for an equally proven system in the lower end of the government space. We’re introducing new MIL-SPEC solutions for a greater range of government, military and critical infrastructure applications,” Bliss says. “In addition, we’re expanding the number of end users who can take advantage of the benefits of electronic access control by providing traditional intrusion dealers and locksmiths with a scalable system that’s highly cost effective and more user friendly.”
 
Health of the Market

Factors holding the access market back are starting to improve in 2011, leading to higher expectations for growth.

As Global Industry Analysts Inc. describes, “With the recession now at its tail end, the market will witness a quick resurgence of demand fundamentals, such as increase in commercial and residential building construction, improvements in disposable spending. Growth in the market, which was hitherto frustrated by capital shortages, reduced personnel, and unemployment, is forecast to rebound as liquidity issues and financial hardships begin to ease.”

While holding steady, construction isn’t improving yet, with the U.S. Census Bureau of the Department of Commerce announcing that construction spending during January 2011 was estimated at a seasonally adjusted annual rate of $791.8 billion, which is 5.9 percent below the January 2010 estimate of $841 billion. Spending on private construction fell and spending on public construction marginally increased. 

On the other hand, unemployment fell noticeably in the first two months of 2011, and by February it had fallen to below 9 percent for the first time since May 2009. Looking closer, the service sector, which employs almost 90 percent of U.S. workers, grew at the fastest pace in more than five years in February, according to the Institute for Supply Management. The manufacturing sector’s growth rate was also at a seven-year high. With six straight monthly increases in the sector, which includes a broad range of industries such as retail, health care and financial services, all of which are markets for access control, this year promises to exceed 2010.

“2011 is starting with signs of positive momentum early in the year,” Callahan says. “This would indicate that we have gained some traction over last year. We are anticipating a better year in access control systems sales in the vertical markets we service, including industrial, quick-service restaurants, commercial, retail, education, warehousing and property management. Ackerman Security Systems believes that we will see last year’s customer spending habits slowly return to pre-recessionary normalcy, but it will take some more time.”

The economy still will play a role in the 2011 market, but that is where service comes in for Matrix.

“The economy still will remain detrimental at some level to the funding many organizations hope to receive to accomplish their security goals,” Russell says. “Our particular organization finds itself benefiting from the economy pushing some organizations to lessen their support services, thus allowing for those of us still believing this is the most critical factor to an end user to ultimately benefit by providing these services and satisfying those end users.”

In addition to service, scalability is as important as ever, because businesses want to be prepared to retract or expand as needed to remain flexible competitors.
“Since the year 2000, Ackerman Security Systems has evolved into utilizing networked access control systems that are much more scalable and significantly more advanced. User-friendly software combined with a system that is modular and expandable is the norm today, realizing that ease of use is preferred from the customer, installer, service technician and end user alike,” Callahan says.

Integrators must seek and adopt solutions they can offer in all price ranges.

“Customers want online performance at an offline price, and that is the goal — keep developing different solutions that meet different budget needs across the market and still provide a better information than they’ve ever had access to before,” Duato says.

“In 2011, we see a continued move away from a technology-centered view of the market to an end-user centered view of the market — taking technology and tailoring it to meet the needs of the specific end-user requirements. For example, in the education space that would include being able to quickly integrate 10,000 freshman into an access control system at the beginning of a new semester,” Bliss says.

End users are expecting more than ever.

“Today’s end users are looking to drive the maximum amount of functionality and efficiencies into each business purchase they make. So they are expecting a lot more out of an access control platform today, whereas two years ago they were happy to be able to use the Web to lock and unlock a door or program a card. Now they don’t mind paying the services fees, but they want a little more flash,” Ito says.

Maybe something as flashy as the giant, screaming JumboTron of SaaS in access control’s front yard?