Physical security market growth dependent on technology that delivers ROI

Memoori’s third annual report, The Physical Security Business in 2011, shows that growth in this market can only come about during the next three years from a stream of more innovative products and systems that deliver on meeting the customers need to drive more ROI out of its investment.

Physical security needs to move, as far as is possible, from a cost center to a profit center status, if it’s to overcome the anticipated aftershock from the 2008 financial meltdown which now looks inevitable.

This will dampen future demand but we are optimistic that as it can now deliver more attractive opportunities for clients to improve security and profit from it, demand will edge forward at a CAGR of 3.7 percent over the next five year period.

The report identifies five emerging technologies that are already creating new business opportunities and also discusses advances in their development that will further impact on the business in the future. The former include:

- Wireless technology
- IP networking technology
- Video-surveillance-as-a-service (VSaaS) and managed video
- Video management and analytics software
- Security management software, PSIM and PIAM

They all have one thing in common and that is they improve productivity and help edge security systems move towards profit center status and in some cases reduce the cost of installation.

Wireless technology is now getting traction with the highest penetration of wireless communication being in commercial and transportation verticals whilst banking and finance are still concerned that these security systems can be breached. Education and health buildings look to be the next growth markets. The main drivers for the emergence of the wireless culture, staying mobile, reducing investment cost and improving productivity has got estate managers leveraging wireless throughout their organizations.

IP network products whether for access control, intruder alarms but particularly for video surveillance grew rapidly in 2011 and they are believed to be on the verge of a long and strong run.

MSaaS and VSaaS is becoming an attractive solution to the physical security industry for it delivers a lower point cost, because providers can host multiple customers on a shared infrastructure. The cloud economies of scale and flexibility also offer both the user and supplier a better deal. The prevalence of broadband along with 3G and 4G connections is making video accessibility easier than ever.

Video Analytics is the segment of the market that appears to be the laggard. In 2010, there was a distinct lack of new products coming to market. This year looks more promising with expectations of more developments. It remains to be seen if the patience of the investors will continue long enough for them to succeed and/or if a new generation of companies enter the fray.

In the last 18 months there has been a rapid rise in demand for both physical security information management,(PSIM), and physical identity and access management, (PIAM), systems.

Both are examples of emerging software solutions that are designed to remove inefficiency and manual process within security operations. Physical identity and access management enable common policy, workflow, approval, compliance automation and life cycle management of the identity / badge holder across disparate physical security systems.

PIAM solutions offer operational cost reductions that can be delivered through this platform providing a bridge between the disparate systems without stripping out and starting again. PIAM is currently getting a lot of exposure. We are now seeing the emergence of PIAM to join together with PSIM to drive strategic and operational value for physical security departments in large operations.

All of these technologies embrace a wide divergence of skills and expertise and clearly it will require large research and development budgets to take them forward. It is unlikely that any one company in the security industry will master them all.
The traditional market leader’s shares have stagnated and the average share is less than 10 percent. Financing these developments will not in the short term improve their competitive positioning. However they have the cash to buy this expertise through acquiring companies; but seem reluctant to take the initiative at this time.
 

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