Market Insight

Access control software gains stature but has yet to realize full potential

September 30, 2019

Bryan Montany Bryan Montany Research Analyst II
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In the world of electronic access control systems, hardware has traditionally reigned supreme, the principal actor in granting or denying entry and passage into homes, buildings, and other physical spaces where access is sought. In this old paradigm, software typically played a secondary role, installed directly onto local control panels with its functionality limited to basic incident-reporting for security managers.

But this dynamic shifted over time as access control systems became more software-centric. Today, access control software is more accessible to a wider variety of actors, providing end-users with broader and more comprehensive data relating to patterns in building occupancy. Software has also supported integrations with other security systems, enabling security managers to respond in real time to emerging incidents and potential security breaches.

In its most advanced applications, access control software can even leverage a rudimentary form of artificial intelligence to react to changing circumstances by providing automated responses. For instance, a software platform that obtains enough data to deem a situation an emergency will automatically transmit orders for doors throughout a building to unlock, allowing emergency responders to enter the premises.

These findings are contained in my new topical, Access Control Software Report – 2019, which analyzes recent market trends and developments in the market for electronic access control software.

The global market, challenges, and shifting dynamics

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. 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. 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.

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 incentivized 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 customizable dashboards, and behavioral analytics through the integration of access control software with the video management system (VMS) software utilized in video surveillance cameras. More details on each of these features can be found in the report. 

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 customize their access control software, access control vendors themselves are now developing tailored platforms for specific end-user industries. Vendors have recognized 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 has led, in turn, to diverse software product offerings being available on the market today.

Over the next decade, 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 centralized 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 recognized the pivotal role to be played by access control systems in facilitating the advanced command and control analytics utilized 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.

Calculating revenue

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 to analyze revenue is 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 below, revenue worldwide of the security software market in 2018 reached $2.34 billion, up 14% from $2.06 billion in 2017. 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 analyzed according to its integration capabilities with applications from other building domains. In the 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.

Adoption by region

North America leads the world in the adoption of robust access control software offerings, thanks largely to the popularity of multi-site management of security systems across campuses in the United States and Canada.

There are signs that multi-site management and cloud-based software may be trending in Western Europe, but government regulations in Europe—as well as in Oceania—often undertake a significant role in encouraging the transition in their regions to more advanced software offerings.

In Asia, the complexity on average of access control software differs significantly by country. In developed markets such as Japan, South Korea, and Singapore, advanced analytics and domain integration are almost as prevalent as in North America. However, enhanced software features are not frequently implemented to accommodate small and midsize commercial facilities in emerging economies like China and India.  

Moreover, the pervasiveness of video surveillance systems in Asia has led to security system architectures that rely on VMS software rather than on access control software. As a result, many access control systems in China combine simplistic access control software with much more advanced VMS software, and the VMS platform often acts as the driver that facilitates security system interactions.

This trend toward VMS software represents a potential threat to access control software vendors, as end-users may increasingly rely on VMS platforms to holistically manage their security systems, resulting in access control applications being viewed as redundant.

Access Control Software Report - 2019 from IHS Markit | Technology is a component of the Access Control Intelligence Service. In turn, the Access Control Intelligence Service is offered in two research service areas, Building. Home & City Technology and Security Technology. In Building, Home & City Technology, the report is included in the Smart Building & Building Automation research category. In Security Technology, the report is included in the Access Control & Fire research category. IHS Markit | Technology is now a part of Informa Tech.

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