What Recurring Monthly Revenue Means for Integrators: As Use of the Cloud Expands, So Do Opportunities for RMR
The recurring monthly revenue concept in the security industry was once defined as integrators monitoring and managing monthly contracts with end users. With the increase of cloud-based technology, however, the RMR definition has expanded. Companies no longer just sell systems, they also provide services.
With these advancements in cloud technologies, not only do integrators benefit, but their customers do, as well.
RMR enables the integrator to develop a stronger connection with the customer, furthering business relationships and increasing the likelihood of repeat clients. In turn, the customer trusts that the integrator understands their specific needs and will be available to provide the necessary services.
Security Industry RMR 101
For any integrator who provides managed access control, a challenge that often emerges is shifting from the traditional “sell and install” model to that of RMR. This new approach demands revised billing procedures for customer support and requires sales teams to invoice on a recurring basis.
When evaluating potential manufacturer partners, it is essential for integrators to seek out one who understands the business and provides ample guidance while shifting to the RMR model. The system should be easy and quick to install, with efficient management that offers modern features important to a wide range of customers. A truly beneficial partnership needs to be in place to allow both parties to benefit and interact with each other in order to achieve successful results.
As with any new process, there may be a learning curve associated with developing an RMR business model, which is why it is helpful to work with an established access control or intrusion software provider who can provide answers to any questions that may arise as a business adopts this approach.
The Rise of Cloud-Based Services and Solutions
The cloud has radically reshaped our day-to-day lives and is increasingly accepted as a highly favorable solution for storing and accessing data, as well as offering valuable services and applications. Cloud services have become well established across almost all industry sectors, and changing customer demands have required many businesses to reinvent their offerings to harness the power, flexibility, and functionality they offer. This trend will continue as more intelligent software is developed and integrated with cloud-based systems.
So how, exactly, do cloud solutions and RMR work together? This is where software-as-a-service (SaaS) applications come into the picture. These products are a natural fit for start-ups and small businesses, as they allow organizations to hand over the management of the cloud to an integrator. The customers most likely to be interested in such services are the ones who would typically not be interested in deploying and managing on-premises infrastructure and who would prefer a service-based approach from an integrator.
SaaS Benefits – From Integrator to End User
Cloud-based RMR services provide integrators with a steady flow of revenue each month. In a business that has traditionally been built on a “per project” basis, revenue that can be regularly anticipated makes the budgeting process easier. Additionally, having a stable base of customers and nurturing those relationships over time benefits the integrator by providing opportunities to sell more products and services.
These off-premises solutions are the best option for the customer who does not want to manage their security infrastructure. By choosing a cloud-based system, the end user enjoys several benefits, including reducing the up-front investment in hardware and software by spreading the bulk of the cost out over monthly installments. In addition, a cloud-based solution that facilitates automation is always up-to-date and does not require an IT team to ensure that updates are installed.
RMR Payments and Invoicing Explained
How does the RMR pricing and invoicing structure work for integrators and end users?
For the integrator, the manufacturer charges the installer/dealer directly every month of the device’s or application’s subscription, including the service fee and a fee per device. Integrators can then charge their customers on a regular basis (monthly, quarterly, yearly, etc.) and set their own prices for each device. In some cases, service providers may offer an annual discount for paying upfront. The main advantage is that each service provider can set their own billing protocols, whether they want to do an automatic payment or bill monthly for the service to the customer.
How can integrators, dealers and installers bill the service to customers?
Many service providers that already offer alarm or central station monitoring have subscription-based tools and applications in place to help streamline the billing process on a monthly, quarterly or annual basis. One challenge that smaller locksmiths have with transitioning to an RMR model is the investment in these kinds of subscription services. Since the market seems to be trending in the direction of increased RMR opportunities, many smaller integrators are investing in software to grow that side of their business.
What if customers can only pay in their local currency or cannot pay internationally?
As with any service-based contract with integrators, dealers and installers, services can be paid for in the currency accepted in a given location. Many times, a company’s subscription tool/application has a gateway that manages different currencies. Integrators that are already set up to provide service-based solutions typically have these mechanisms in place, especially when offering alarm/central station monitoring.
Delivering Long-Term Value
For dealers, integrators and installers who are interested in offering a cloud-based service that leverages an RMR business model, there can be significant value for both them and their customers. However, it is essential to have a clear picture of what is required to build this kind of model. The future of RMR, as a whole, will depend on many factors, with the most important being the type of systems and solutions involved. As long as cloud-based technologies remain at the forefront of the security industry, more and more integrators will desire the ability to add value to their offerings by way of monthly service agreements.
Cloud-based access control empowers integrators to offer managed services to their customers. Not only does this allow integrators to provide services with RMR, but it also offers ample flexibility for the management of an organization’s access control, including the ability to update or remove permissions and view cameras or open doors from a PC, tablet or smartphone. The RMR that a cloud access control offering provides can modernize a reseller’s business, keep margins up, and produce consistent revenue, all while better serving the customer. Beyond that, having a constant source of income can provide an integrator with the financial resources to grow and expand their business.
Kim Loy is the chief product officer of ACRE. She also serves on the SIA Board of Directors Executive Committee.