Memoori’s 3rd Annual Report entitled The Physical Security Business in 2011 shows that growth in this market across the next three years can only be realised if there’s a stream of more innovative products and systems that deliver on meeting the customers’ need to drive more ROI out of any investment.
Physical security needs to move, as far as is possible, from a cost centre to a profit centre 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 at Memoori 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% over the next five-year period.
Our 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 and security management software, PSIM and PIAM.
They all have one thing in common: they improve productivity and help edge security systems move towards profit centre status (and, in some cases, reduce the cost of installation).
Focus on wireless technologies
Wireless technology is now gaining traction. The highest penetration of wireless communication lies in commercial and transportation verticals, while 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 – have seen estate managers leveraging wireless throughout their organisations.
IP network products – whether for access control or intruder alarms but particularly for video surveillance – grew rapidly in stature during 2011, and they are believed to be on the verge of a long and strong run.
Falling IP prices together with much easier to install products and improved performance have all conspired to increase the Return On Investment (ROI) and total cost of ownership of this fast-growing technology.
MSaaS/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: why the lag?
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.
For its part, Physical Identity and Access Management (PIAM) enables 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 joining with PSIM to drive strategic and operational value for physical security departments in large operations.
Wide divergence of skills and expertise
All of these technologies embrace a wide divergence of skills and expertise. Clearly, it will require large research and development budgets to take them forward.
It’s unlikely that any one company in the security industry will master them all.
The traditional market leaders’ shares have stagnated and the average share is less than 10%. 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 do seem reluctant to take the initiative at this present time.
Allan McHale is director of Memoori
The Memoori Blog focuses on business intelligence, comment and insight in relation to the physical security and smart grid industries (access the dedicated web link below)
