Access control software not yet at full potential

London, UK

IHS analysts predict that by the end of this year, security software revenue worldwide will reach $2.55 billion, or growth of almost 9% from last year.

As of 2018, IHS Markit Technology determined that software sales accounted for less than 7% of total access control revenue worldwide in a year. "A low figure that belies the significance of the software or its potential to reap a better return," says Bryan Montany, Research Analyst at the firm. The projected 6.7% compound annual growth rate (CAGR) between 2018 and 2023 for software is also only slightly above the average expected growth rate for all access control equipment.

While advancements in access control software can potentially improve the integrity of security systems, the industry has been slow in embracing opportunities to bolster market prospects.

Access control vendors have indicated that end-users are interested in exploring the use cases enabled by access control software, but many end-users have hesitated to invest in expensive retrofit projects to support this functionality. By not following through on the projects and by withholding investment, newer applications of access control software have struggled to gain traction in the market. Such equivocation is especially prevalent among owners of commercial buildings, a sector that often does not fall under the purview of stringent government regulations requiring frequent security system audits or financially incentivised upgrades.

Even so, high demand from enterprise-level end-users is driving advancement in access control software to include features that track with current technological developments to avoid becoming irrelevant.

These features include the use of mobile credentials and mobile applications, frictionless access and movement tracking, the development of user-friendly interfaces, the implementation of highly customisable dashboards, and behavioural analytics through the integration of access control software with the video management system (VMS) software utilised in video surveillance cameras.

Meanwhile, the role has changed for vendors of access control software. Although many companies—in their position as end-users—rely on system integrators or IT departments to customise their access control software, access control vendors themselves are now developing tailored platforms for specific end-user industries. Vendors have recognised that they can increase revenue by undercutting system integrators, offering end-users the precise software features they need at a lower price than the cost of custom configuration. Such a change in dynamics, according to IHS Markit, has led, in turn, to diverse software product offerings being available on the market today.

Over the next decade, Bryan Montany believes access control software will play a critical role as the groundwork for future innovation in fields such as advanced analytics, big data processing, and machine learning. Eventually, however, most commercial buildings will rely upon centralised building management system (BMS) platforms to facilitate connectivity between domains, to aggregate data, and to implement algorithms for controlling equipment.

Many access control software providers have recognised the pivotal role to be played by access control systems in facilitating the advanced command and control analytics utilised in smart building architectures. As a result, innovative vendors have explored the possibility of expanding the capabilities of access control platforms to encompass features associated with BMS platforms.

Montany says that global industry revenue of the security software market—of which access control software is a part—can be calculated in several ways, depending on the segmentation used.

One way suggested by IHS is to analyse revenue by software type, which compares the revenue of access control software, VMS software, physical identity access management (PIAM) software, access control as a service software (ACaaS), and dedicated security integration platforms. In the chart shown above, revenue worldwide of the security software market in 2018 reached $2.34 billion, up 14% from $2.06 billion in 2017. The analysts predict that by the end of this year, security software revenue worldwide will reach $2.55 billion, or growth of almost 9% from last year.

Total access control software revenue can be further split through an analysis by pricing model, comparing revenue generated from one-off fees, annual licenses, and ongoing subscriptions.

Access control software can also be divided and analysed according to its integration capabilities with applications from other building domains. In the latest IHS report, the market is segmented by integration capability with VMS software, security integration platforms, and BMS platforms. The report also examines the percentage of access control software offering native, first-party VMS functionality. Each of these revenue models is described in greater detail in the report.


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