Here’s some research that looks at the physical access control market and the top five dynamics influencing this market. By Brad Jarvis, Vice-President, Product Marketing, HID Global.
The physical access control market has long been characterized by what HID Global has called the “customer value equation” — a balancing act between cost, security and convenience that influences customer buying criteria and decision-making tradeoffs. Validated by a recent AVISIAN research study, this “balancing act” will continue over the coming years. However, there are new market dynamics that influence and change the interrelationship between the customer value equation factors, and new areas of consideration that present trade-offs with potentially compelling advantages. Essentially, the customer value equation remains the same, with new underlying dynamics.
At the heart of the data supporting these findings is the 2010 AVISIAN Physical Access Control Market Research Study. Additionally, HID Global hosted an industry focus group of long-time integrators and senior consultants to capture real-world examples of what industry veterans find important. Finally, our findings also were informed by the 2009 IMS PAC Research study, which provided additional insights.
According to the research, the top five dynamics influencing the physical access control market include:
· Increased government influence in both the public and private sector;
· New technologies and accelerated adoption rates, including the move to contactless technologies;
· The rapid adoption of multi-application smart cards;
· Growing importance of security-level requirements;
· Cost of ownership, and ability to invest in future-proofed solutions.
While not new, these dynamics are significantly changing the customer value equation, with key market-specific implications. Following is a count-down of the top five drivers.
Driver #5: Increased Government Influence
One of HID Global’s focus group participants echoed the sentiments of many when he said he believed government-driven standards will influence our industry more in the next three years than they have in the last three decades. Government initiatives are extending beyond the public sector to drive private-sector security implementations like never before. Many participants believed that broader government reach into the private sector will become more prevalent and cause organisations to increase their focus on security. They also indicated that, while security previously was a reasonable spend and not code-driven, government now is targeting specific industries (i.e., healthcare, food processing, water and other public utilities) to tighten privacy standards and plans, and is even mandating secure-compound directives. We may see this trend impact pharmaceuticals and education, too. It’s important to note that, even though the civilian infrastructure is mostly under private-sector control, the government is exerting an enormous influence in this area on physical access initiatives.
Driver # 4: New Technologies, Faster Adoption Rates
The migration to new technology, including IP connectivity, has significant implications. According to the IMS study, IP-enabled controller revenues are expected to surpass those of serial controllers and account for 42.7pc of the market by 2013. Driving this trend are low installation costs, reduced cabling, the desire for intelligent readers at the door, and demand for increased functionality and application convergence.
The AVISIAN research identified three reader technologies that users value most highly. The first was upgradeable readers and credentials, including the ability to download reader/credential security upgrades to proactively manage threats (viewed as highly desirable by 79pc of the respondents). The second most valued technology was upgradeable, programmable readers that would simultaneously support three or more card technologies (viewed as important by 71pc of the respondents). The third most highly valued technology was expanded programming and configuration options, including a universal programmer and reader configuration tool for controlling credential formats and securities through a supplier licensing agreement (desired by nearly two-thirds of respondents).
The AVISIAN study respondents also said they would like a credential or identity generator to assist in defining and securing card data (this was desired by almost 60pc of the respondents) and the ability to have additional credential form factors such as phones, keyfobs, stickers or tokens. Over 70pc of the end user community and 80pc of industry respondents felt the latter capability was important, and both groups acknowledged inadequate user options today.
Even as users wait for these technologies, smart card use continues to grow – with a 13.5pc CAGR from 2009-2013 according to IMS research, compared to a 2.4pc CAGR for proximity technology in the same period. IMS believes the number of smart card installations will approach that of proximity installations by 2013. As mentioned earlier, one of the biggest growth drivers is the desire to move to a single-card or credential with that can store more information for additional applications and/or security.
Driver #3: Multiple Applications on a Single Card
To highlight the importance of multi-application cards in the market, one focus group respondent pointed out that a major university customer will not consider any purchase unless it enables them to add more applications to existing physical access systems and credentials, or extend the use of existing applications.
In a similar vein, 64 per cent of respondents said they felt that it was highly or somewhat desirable to store several identity formats and applications on a single credential, including identification, physical access control, time and attendance, vending, and visitor management. Also ranked as desirable applications were parking, event management or ticketing (particularly in campus environments), as well as cost recovery applications such as print management, public transport and closed-loop payment systems.
Higher education and the health care sector are now moving to these multiple-application environments, and corporations are beginning to explore them, too. One example of a corporate adoption is US Bank’s recently move to a single employee card that could be used for traditional magnetic stripe purchases, contactless payment transactions and facility access. The selected technology combined a Visa PayWave point-of-sale (POS) contactless-payment application and HID Global’s iCLASS® smart card technology for physical access control and security. The first US card issuer to pilot the PayID program, US Bank was recognised with the 2010 Paybefore award for Most Innovative Program for this deployment.
Driver #2: Increased Card-to-Reader Security
Today’s cards carry more information that must be protected, they are used for more applications, they require more privacy protections, and they must be able to validate and secure identities. This has created demand for multiple layers of card security including two-factor authentication to validate identity, and biometric templates that must be stored on the card. Over 85pc of the user community felt that this was a very important factor and over one?third felt that they did not have adequate support in this area from the vendor community (which agreed).
Multi-Layered Security to Protect Data on Card
Privacy, validation of identity and unauthorised entry are driving need to secure data on card.
The feature that respondents said they wanted most is hardware that updates the card’s security technology if the current technology were to be hacked. This was deemed important by 91pc of user respondents, and over 52pc were dissatisfied with today’s options. The second most desired feature was software upgrades to address new security threats as they emerge, with 92pc of respondents saying this was important and almost 40pc saying they were dissatisfied in this area.
Driver #1: TCO and Future-Proofed Solutions
Total Cost of Ownership is the number 1 driver influencing the physical access control market according to the AVISIAN research. Increasingly, customers are looking beyond installation costs to base purchase decisions on total cost of ownership or operation. There are several key lifecycle management issues to consider, including the equipment’s expected useful life, how it will be depreciated over time, and the technology migration path.
The economy is obviously forcing more justification of expenditures, and companies also need to factor maintenance, upgrades and ROI into their cost calculations. Meanwhile, product lifecycles are shrinking, as illustrated by the accelerated introduction of high-frequency technologies and associated government standards and protocol requirements. Increasingly, customers must leverage existing investments (90 per cent of respondents said this was important, and 50 per cent were dissatisfied in this area). Respondents also said they wanted interoperability or ease of the migration, portability of identities to new security models, and scalable solutions.
Sustainability
One last future-proofing consideration is sustainability, as the industry begins exploring how to drive new building automation solutions for energy management. Although today’s implementations are limited, we get a sense of what’s coming by looking at early industry influencers, emerging standards, and signs that cost barriers are beginning to come down. The government’s ICMA Green Task Force is already looking at how to “green” factories and institute “eco labeling” at the manufacturer level. There is growing discussion around energy management via access control and how to integrate the two. We also can learn by studying other industries and how they have adopted and leveraged Leadership in Energy and Environmental Design (LEED) standards.
Looking Ahead: Balancing the Equation
Despite important new market dynamics, the three core elements of the customer value equation – cost, security and convenience – continue to fuel drivers for change in the physical access control space as increased convenience, lower total cost of ownership and achieving higher levels of security continue to dictate market development. At the same time, new dynamics related to government influence, technology trends, security requirements, single-card application convergence and TCO are creating new opportunities to better serve customers’ very clear and specific needs, as we help them balance their value equation for physical access control solutions.
