Recurring Revenue (RMR) for Remote Networking Monitoring: Are We There Yet?
Dealers are still trying to figure out the magic formula for earning customers’ monthly dollars (RMR), while manufacturers arm them with more networking tools and features like parental controls, cyber security and home automation.
For almost a decade now, dealers have been trying to generate recurring monthly revenue (RMR) from remote network monitoring and support. Today, despite vast improvements in technology that should improve RMR prospects, we’re still not there.
The reasons are plentiful, but they tend to boil down to three:
- Dealers appreciate remote monitoring and diagnostics for reducing truck rolls, but can’t articulate the value to clients.
- Dealers lack the infrastructure (people, expertise) to proactively monitor clients’ networks and take appropriate actions.
- Dealers lack the logistics to sell, bill and collect for ongoing services.
All of these challenges are being addressed with new technologies and services from vendors, including more tangible value to end users, more “as a service” opportunities for security monitoring and home automation, third-party monitoring providers, and better business tools for monetizing customer support.
Customer Value Proposition
Remote network monitoring certainly helps integrators eliminate truck rolls for simple system fixes, but how do dealers convey that value to consumers? It should be as simple as telling the client that they will save money on service costs, but in reality dealers have been unsuccessful in selling that customer “benefit.”
In response, suppliers are offering more tangible benefits to end users, keeping them engaged with the network services for which they’re billed every month or year.
For example, Luxul, a leading provider of high-performance networking gear to the home-technology channel, had never offered an RMR service prior to 2016 because the company felt dealers were not selling contracts based on remote monitoring alone. So this year Luxul introduced parental controls through a partnership with Router Limits, allowing end users to monitor and manage their family’s Internet usage.
Parental controls provide a “very tangible benefit” to clients, says Luxul CEO Jeff Curtis. “We think it’s a better way to do RMR than network management.”
Other vendors are creating customer-facing apps that remind users of the “valuable” services they’re buying from dealers. End-user engagement is a core tenet of SnapAV’s new OvrC Pro service, which includes an advanced network-monitoring portal for dealers, as well as the friendly OvrC Home app for consumers.
Customers can not only view the status of their networked devices through OvrC Home, they can also communicate real-time with their dealer for technical support. If it happens that a cable box keeps locking up, for example, the dealer can create a cable reboot button on the fly, which appears immediately in the customer’s app.
“We’ve heard dealers struggle to sell intangible services that customers don’t understand they need to pay for,” says OvrC product manager Kenny Kim. “OvrC Home is client-facing. There is an immediate benefit to the consumer.”
Industry newcomer Holistic Labs takes a similar approach with its Digital Butler platform. A consumer-facing app allows users to initiate tech-support calls with the dealer. From within the app, customers can open up the camera on their smart device and demonstrate the problem or show the gear to the installer, who can then “basically guide the consumer to fix the problem,” says Holistic Labs founder and CEO Ramanathan “Bala” Balachander.
That video log — and the errors that precipitated it — are cataloged automatically in the dealer’s record for that client. Dealers can create “cheat sheets” for their customers, reminding them how to use certain products or fix persistent issues.
Most recently, London-based Domotz announced the Violet Digital Support app that allows customers to initiate tech-support calls from within the app, and also perform everyday tasks such as parental controls, Internet speed tests and network permissions.
Domotz CEO Domenico Crapanzano says Violet is “something tangible” that Domotz PRO dealers can give to their customers and say, “Here, this is for you. This is how our organization provides unmatched client care. It’s easy, nonintrusive and leverages the best available technology to ensure you have a consistently enjoyable experience.”
Security Threat Monitoring
If consumers aren’t buying your service on the merits of remote diagnostics, then maybe you can scare them into subscriptions for network security.
In October, a widespread Internet outage was traced to the infection of some 500,000 IP cameras and DVRs that shipped with weak default passwords. A botnet had scoured the Internet for easy targets, trying 68 combinations of user names and passwords, such as “admin” and “12345,” depositing malware on vulnerable devices and then commanding the devices to flood the web.
Bryan Gorog, principal of the integration company BCG Concepts in North Hollywood, Calif., said at the recent CE Pro 100 Summit that it doesn’t matter how secure an integrator makes the network if the default credentials are not reset to strong passwords.
Gorog uses LastPass, a free network management system, to create, manage and change all his clients’ passwords on a regular basis. Access to the files can easily be cut off if an employee leaves his company.
Weak or leaked passwords may be the most obvious threat to home networks, but there are others, such as old or non-existent firewalls. In addition, open ports for accessing devices like cameras and home automation systems can invite intruders onto the network.
A recent audit conducted by Ihiji, a pioneer in remote network monitoring for the home-technology channel, found that of dealer-managed networks with active Ihiji Invision services, 40 percent had at least one port open. These ports were often associated with unsecured communication protocols and many of them were commonly used for cameras and smart devices.
“Ports are opened and left opened for a variety of reasons,” says Ihiji CEO Stuart Rench. “Some of them may be legitimate, some of them may be historical artifacts, and others may be due to human error or oversight.”
Ihiji recently launched a security scanning service that allows network administrators to stay on top of potential security threats. The company provides customer-facing reports that the dealer can then send to clients on a periodic basis to give them peace of mind. Concurrently, Ihiji is working with manufacturers through a new Vendor Insights Program (VIP) to help vendors communicate current device firmware — including important security updates — to the Ihiji Invision platform.
Similar features can be found in some of the newest IP device-discovery solutions on the market, including Krika and Domotz. Discovering and monitoring connected devices allows these services to detect any unusual activity on the network that might suggest hacks or malware. As with Ihiji, these companies can detect devices down to the firmware level and collect data about fishy activity associated with any particular firmware version. Dealers, consumers and manufacturers can then be warned about any potential threats to network security.
Even low-priced consumer-oriented products are introducing these services. The Luma app, for example, lets users know if devices on their home network pose security or privacy threats. Luma scans the network for products infected with malware or devices still set to default passwords, putting vulnerable devices in quarantine, isolated from the rest of the network.
Third-Party Monitoring & Support
The problem with so many great network-monitoring tools is that many integrators don’t have the manpower or the expertise to do the remote monitoring, trouble-shooting and support themselves, at least not on a timely basis.
“Dealers tend to have trouble monetizing network-monitoring solutions because they can’t promise immediate value to customers,” says Hagai Feiner, CEO of Access Networks, a leading network service provider for home-technology integrators.
His company recently partnered with Cenersys, a leading IT monitoring service from the enterprise market to provide “Live Monitoring” for residential integrators.
Access Networks CTO Brett Canter likens Cenersys to the “first responders” in the security domain, explaining the people and platforms that power Live Monitoring will respond quickly to any alerts and “often identify a solution for the integrator before the client is even aware of any problem in the home.”
Feiner believes dealers themselves should be taking customer-service calls, but Cenersys at least provides the proactive monitoring and quick fixes like rebooting, and informs dealers of high-priority issues that may require a service call.
Matt Walin, CEO of Costa Mesa, Calif.-based Brilliant AV, wanted to offer 24/7 support, both as a customer-service necessity as well as a recurring-revenue opportunity. The company explored ways to “provide our clients with a 24/7 help desk that does not impact sales representatives and our service department during their off-work hours,” he says.
Labor laws, he explains, make it “financially unfeasible” for Brilliant AV to afford round-the-clock staffing, so the company turned to OneVision Resources, a full-time support service for home-technology integrators.
OneVision remotely monitors client accounts for integrators, fixing some network problems before the customer is even aware of them. When the customer does report a problem, the tier-one support calls (can) go to OneVision, which can then hand off the call to the local provider if necessary.
Walin explains that eliciting recurring revenue for tech support requires proactive monitoring and a certain response time, which Brilliant AV could not provide on its own. He adds that a third-party service provides “a cultural benefit to our staff, increased revenue through an additional RMR income stream, and most importantly elevated loyalty of our clients through an excellent service experience.”
RMR Business Tools for Dealers
While many dealers embrace the idea of RMR for remote monitoring and support, they may struggle in marketing this new category of services, not to mention billing for it every month or year. Suppliers are rising to the occasion with new solutions that meld network technologies with business processes.
Ihiji pushed RMR business models for years before recognizing that one key impediment for dealers was billing and collecting for ongoing client care, and charging for specific services rendered.
Last year, the company introduced ServiceManager, a cloud-based software tool that allows dealers to set up their own “Service Operations Center” for making their “entire support operations more efficient, effective and profitable,” according to Ihiji’s Rench.
Through the program, dealers can create service contracts; monitor and manage clients with different levels of service plans; track prospects to sell services; and bill clients for ongoing maintenance and technical service calls.
Holistic Labs takes a similar tack with Digital Butler, which is as much a network-monitoring tool as it is a business-process platform. Remember the service calls that customers can initiate through their app? Those calls are logged automatically to the customer’s account, so dealers can better monetize their service, with data to back up their fees.
“By tracking how much support they’re providing,” says Balachander, “they can make sure they’re getting paid.”
On the marketing side of the business, we’re seeing more tools from vendors like SnapAV. In launching OvrC Pro, the company developed end-user marketing materials that dealers can customize with their contact information and logos.
Even on the billing side, more vendors are engaged in the process, sending out renewal notices to end users and collecting payment for distribution to dealers. Control4 (Nasdaq: CTRL) has taken over collections for renewals to 4Sight, its remote-access service for end users. In the case of Luxul and its partnership with Router Limits, the supplier collects fees from the end user and pays commissions to the dealer.
Network Monitoring Plus Home Automation
In particular, more providers are tying home automation into their platforms, allowing dealers to tunnel into connected devices and smart-home networks (e.g., ZigBee and Z-Wave) for better intelligence and more options for healing systems without a truck roll.
For example, Pakedge’s new BakPak 4.0 integrates with home automation more deeply than ever, especially since the company was acquired by Control4 this year. The new service allows dealers to not only tap into routers, WAPs and other traditional networking gear, but also to home automation devices in the ecosystem.
Dealers using BakPak with Control4 can “see” all products including Control4’s own lights, thermostats and keypads, as well as third-party ZigBee, Z-Wave and IP devices. Dealers can check the health of the respective networks — Wi-Fi, ZigBee and Z-Wave — and glean certain information from devices, for example, status and performance.
“It all shows up on the dashboard,” says Brad Hintze, Control4 director of product marketing.
In fact, Control4 thinks BakPak is such an important business tool for dealers — more so than a vehicle for recurring revenue — that the company eliminated monthly service fees this year.
“We don’t want to force [dealers] into an RMR model if they’re not ready for it,” says Hintze. “We don’t need to add to the cost structure. We hope to remove any friction so dealers can use it as a tool to be successful.”
SnapAV, too, is tapping into more smart devices in the home — not just IP products connected directly to the network, but also end devices including ZigBee and Z-Wave connected through home control systems like URC and Control4. Most of the other major networking companies in the home-technology channel are following suit, integrating more tightly with connected devices.
Meanwhile, the manufacturers of those end devices are doing their part to expose data relevant to integrators. Sony, for instance, embeds Ihiji technology into its ES receivers to present status reports to integrators. Meridian is working with Access Networks to likewise expose key data points on its audio products. SurgeX, Panamax and other power-management companies are building hooks into their devices for status reports and remote power cycling.
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Julie Jacobson is founding editor of CE Pro, the leading media brand for the home-technology channel. She has covered the smart-home industry since 1994, long before there was much of an Internet, let alone an Internet of things. Currently she studies, speaks, writes and rabble-rouses in the areas of home automation, security, networked A/V, wellness-related technology, biophilic design, and the business of home technology. Julie majored in Economics at the University of Michigan, spent a year abroad at Cambridge University, and earned an MBA from the University of Texas at Austin. She is a recipient of the annual CTA TechHome Leadership Award, and a CEDIA Fellows honoree. A washed-up Ultimate Frisbee player, Julie currently resides in San Antonio, Texas and sometimes St. Paul, Minn. Follow on Twitter: @juliejacobson Email Julie at firstname.lastname@example.org
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