Optic Security Group
Investing in Your Security: When security systems deliver ROI beyond security
Updated: Jul 29, 2022
In this fifth in our series of articles on investing in security systems, we explore the potential for security systems to deliver value-add for organisations in terms of efficiencies, business intelligence, and social return on investment.
In our previous post, we explored Return on Security Investment (ROSI), which is a modified version of Return on Investment (ROI) where the net return is the annual cost of security breaches avoided minus the prevention cost incurred.
It is, in essence, a rather negative spin on the well-known concept of ROI, which is a performance measure used to evaluate the profitability of an investment. With ROI, performance is based on profit, whereas with ROSI, performance is based on the far less ambitious ‘minimisation of loss’.
Security: A Hard Sell
Using loss-minimising ROSI to make a business case for security spend is a hard sell for security managers. To a C-suite focused on profit maximising, it screams ‘overhead’.
The unattractiveness of ROSI can perhaps be best illustrated by Prospect Theory (sometimes referred to as loss-aversion theory), a behavioural economics construct developed by Amos Tversky and Daniel Kahneman (who won a Nobel Prize in Economics for his prospect theory work).
Prospect theory describes how people make decisions when presented with alternatives that involve uncertainty. According to the theory, for most people, a small yet certain gain is more attractive than the prospect of a less certain larger gain, but when it comes to losses, the reverse holds true: most people will risk the prospect of a greater loss rather than incur a guaranteed smaller one.
In the research, participants were presented with two choices: the choice between a certain gain of $500 and a 50% chance of gaining $1,000, and the choice between a certain loss of $500 and a 50% chance of losing $1,000. 84% of chose the certain $500 gain over the riskier one, while 70% chose to risk a $1,000 loss over settling for the smaller certain one.
In other words, human nature dictates that we’ll take a sure gain over a less certain bigger one, yet we’ll risk a bigger loss just to avoid a certain smaller one (known as the ‘reflection effect’). It’s no wonder then that security spend (a.k.a., the certain smaller cost) tends to be avoided in favour of chancing it!
So, what if there was more to ROSI than the humble minimisation of loss? What if security systems could actually achieve value-add for their organisations? What if security systems could push beyond their cost centre typecasting and deliver actual efficiencies and profit?
Delivering value beyond Security
Genetec’s 2022 State of Physical Security Report, which in late 2021 surveyed over 2,000 physical security leaders from across the globe, found that organisations are increasingly discovering that security systems can do more than just security.
The survey findings indicated that larger organisations in particular are increasingly seeing value in the data gathered by their physical security systems, with over 46 percent saying that they use their security systems as a way to “improve overall business efficiency, productivity and asset optimisation.”
“IP-based security systems comprise sensors and analytics that deliver not just security but also fantastic data for business intelligence,” said Optic Security Group Managing Director Mark Lloyd. “Whether it’s tracking retail customer journeys for store optimisation purposes or monitoring room usage for more sustainable air and lighting operation, security can be a value-add.”
According to Ted Wilkinson of Axis Communications, “a retail customer who deploys a security system might see improved staff retention and enhanced customer experience. For a municipality, a video surveillance system could contribute to reduced traffic congestion, minimised pollution, and reduced speeds.”
And, if the Genetec survey is any indication, the non-security value-add qualities of security systems have accelerated in the past two years following the onset of the COVID-19 pandemic.
“Before the pandemic, physical security’s role in business intelligence and operations was already growing, but over the last two years, it has proven to be a strategic asset in coping with a variety of challenges,” said Pervez R. Siddiqui Vice President, Offerings and Transformation at Genetec.
So, what does this mean in terms of selecting a security solution?
A high-performing security system that centralises the security function and is capable of enabling the achievement of other business objectives, including visitor and contractor management, attendance, environmental and building management, and business intelligence (such as mapping the retail customer experience, hot-spotting, and queue monitoring), will deliver strategic returns to an organisation beyond its primary security remit.
Additionally, ‘converged security’ practices and solutions that remove organisational and process barriers between physical, cyber, and personnel security; health and safety; and risk, resilience, and incident response functions, can provide organisations with clearer visibility over the spectrum of threats they face – and clearer paths to protecting the organisation from them.
Ultimately, a security solution will reach the end of its service life and require replacement. A future-focused solution should be designed with its ultimate obsolescence in mind, and therefore built for flexibility and longevity and informed by an appreciation of (i) future developments in technology, (ii) regulatory trends, and (iii) the evolving security threat landscape.
Lastly, in addition to the potential financial benefits a carefully selected security system can bring is the broader social, economic, and environmental value created via Social Return on Investment or SROI.
According to the SROI Network, social return on investment is “a framework for measuring and accounting for this much broader concept of value; it seeks to reduce inequality and environmental degradation and improve well-being by incorporating social, environmental and economic costs and benefits.”
Issues of eWaste, recycling, and responsible sourcing are relevant to the manufacture and management of security systems, and organisations are increasingly being challenged by stakeholders, regulators, and public perception to demonstrate the social value they are creating through their procurement, asset management, and disposal choices.
In the next (and final) article in our six-article Investing in Your Security series, we summarise the key TCO and ROI factors that can take your security procurement decisions from ‘grudge purchase’ to ‘strategic investment’.
To learn more about how a TCO and ROI-focused approach to security system procurement can benefit your organisation, please get in touch with us.