PSIM Positioning Examined
In June 2010, CNL provided a candid assessment on the competitive positioning and value of PSIM solutions. In this update, we examine and comment on the claims made.
CNL criticizes video and access control system who provide limited integration but call themselves PSIM. We agree with this concern. The overstated claims of vendors make PSIM even harder to understand or analyze. (Review our December 2009 critique of OnSSI's PSIM claims.)
CNL emphasizes what 'true' PSIMs are and how they provide deeper integration and migration from old to new technologies. While we view the term PSIM to refer to the same elements as CNL, noting something as 'true' or 'false' can mislead what real user needs are. Getting to CNL's true PSIM is quite difficult and perhaps impractical at a global level (given all the structural problems PSIM faces).
Interestingly, CNL admits these problems:
"The biggest obstacle is typically a multitude of different systems which give acceptable service at the local level, but due to the intentional proprietary nature of these systems, it is almost impossible to bring all of these systems together into a single system."
However, CNL does not seem to acknowledge that these structural problems effect everyone trying to deliver PSIM, even if the PSIM provider is both technically strong and open. This is why people who deploy PSIM continuously find that adding 3rd party support is much more of a 'custom job' than a 'plug n play' integration.
Later, CNL makes a surprising statement:
"In today's market, there are very few issues, technical or nontechnical regarding integration with VMS and other third-party systems."
Really? How about no standards for VMS interoperability? Hundreds of vendors? Many vendors with antiquated APIs and limited integration options?
One element that continues to be clear from many PSIM suppliers we speak with is how limited the number of 3rd party integrations are provided 'off the shelf'. A few dozen 3rd party integrations seems to be impressive but that's still just a fraction of the overall security market.
CNL views the NICE acquisition of Orsus as a bullish sign:
"The PSIM market is stronger than ever. In the case you are referring to we see that a key VMS provider has acquired a PSIM vendor for a sum which cannot be described as insignificant. If we asked ourselves why they have done this despite the fact that they have a very strong VMS offering, we can only come to the conclusion that the PSIM product offered them significantly more capabilities than their current products."
The acquisition price is poor relative to investment (even when one excludes the pre-PSIM Orsus). Markets cannot survive when acquisition prices are lower than funding required. Plus, NICE disclosed that Orsus revenue was less than $10 million, a paltry sum considering that large cost of each PSIM project ($500,000 per deal is not uncommon). Finally, NICE did not see Orsus as better than their VMS but as a complement to it. NICE specializes in higher end, larger enterprise projects where NICE can bundle this with their existing offerings.
Finally, CNL contends that acquisition by a VMS or access vendor goes against being a 'true' PSIM:
"As soon as they are acquired by a vendor they lose their open nature as competing vendors won't want to work with them any longer. For us at least, we see vendor independence as a key strength."
While we agree that independence has a value and ideally PSIMs should be independent, the practical problem is whether an independent PSIM provider can be profitable on its own.
There are dozens of small PSIM providers around the world (most who do not even call themselves PSIM). The ones without VC money may be able to continue to exist selling jobs as a high end integrator. What we continue to call into question is the viability of companies with large VC investments (like Vidsys) and their ability to generate revenue growth and profit matching investor's bullish expectations.