Issue link: https://read.dmtmag.com/i/31501
16 NEWS www.securitysystemsnews.com APRIL 2011 SECURITY SYSTEMS NEWS VB/RESEARCH STUDY SHOWS POSITIVE GROWTH Physical security industry is ‘very poor at marketing itself to the investment community’ By Tess Nacelewicz DELRAY BEACH, Fla.—The physical secu- rity sector is growing, but not quite as fast as industry insiders believe, according to a survey conducted for TechSec Solutions by Global Security Pipeline, a division of VB/Research. Results of the survey were presented here Feb. 15 by Douglas Lloyd, CEO of VB/Research. Global Security Pipeline, a business intel- ligence, data and research provider, says the major drivers of growth in the industry are increased awareness on the part of the public about terrorist activity and lower costs for technology. Additionally, the financial sector is showing increased interest in the security space, but there is a greater interest in IT sector invest- ment as compared to physical security, accord- ing to Global Security. However, “the two [IT security and physical security] will increasingly be thought of in the same breath,” Lloyd said dur- ing an interview after the presentation. “The safety of physical security is affected by the safety of IT security,” he said. The presentation was based on 150 com- pleted surveys from what Lloyd described as “C-level executives, the decision-makers,” mostly from industry leading, established companies. The report also included insight from separate research projects, conducted by Global Security Pipeline, Lloyd said. The study focused largely on the physical security sectors and four key growth verticals: access control, alarm systems, security systems installation and video surveillance. The company asked survey participants for their market growth predictions and found the respondents made rosier forecasts than the company’s research data does. For example, Lloyd said, while respondents on average predicted the alarm systems vertical would grow about 12 percent, “we think alarm systems is growing by 6 percent max.” Also, he said, Global Security Pipeline “The safety of physical security is affected by the safety of IT security.” —Douglas Lloyd, VB/Research research data predicts the growth of security systems integration at about 7 percent, “where you respondents were closer to 9 (percent).” In other findings, the study showed that in the video surveillance market, growth is “being driven almost entirely by sales of IP camera systems.” That vertical also is an area of strong invest- ment. According to the study, total investment in the video surveillance sector was $344 million in 2010, a 46 percent increase over the $235 million invested in 2009. According to the study, investment in the physical security sector is currently running at a two-year high. “The most significant factor driv- ing growth in the industry today is an increased awareness of security threats,” the study states. “There is a clear correlation between increases in investment and recent terrorist activity.” Investment in the global security sector reached $4.4 billion in the fourth quarter of 2010, an increase of 52 percent from $2.9 billion in 4Q09, according to the study. VB/Research categorizes the global security sector into four segments: IT security; defense; physical security; and identity and security solutions. Lloyd said some companies (ones that do access control for example) fall into both the physical security segment and the identity and security solutions segment. Total investment in the global security sector in FY2010 was $17.8 billion, the study said. Global Security found that of 204 active funds that invested in the global security sector in 4Q10, 58 or 29 percent invested Douglas Lloyd for the first time. IT security companies gained the most investment in that quarter, with 50 companies or 39 percent investing in that sector. The study found that 41 companies, or 32 percent, invested in the physical security space. If the safety of physical security is affected by the safety of IT secu- rity, does increased investment in IT portend increased investment in physical security? It should, said Lloyd, but the problem is that “physical security is very poor at marketing itself to the investment community.” Based on feedback from investors, Lloyd believes the physical security industry needs to do a better job helping investors understand their business. “Where is the growth going to come from?” Lloyd said. “Well, America is still the golden goose.” He said most respondents expect growth, calculated at 7.5 percent, to come from the U.S. and North America in general. He said a lot of the capital is expected to come from California. “That’s where a lot of the weighted capital was coming from in 2010,” he said. SSN Martha Entwistle contributed to this report. meet the editors. Come meet the team behind the News: Martha Entwistle Editor, SSN Editorial Advisor, SDN We want to hear from you! Come give us the scoop on your ISC West experience. Tell us what lies ahead for your company. Share your news with the News. Wednesday, April 6th 9:00 – 10:30 AM Leischen Stelter Managing Editor, SDN Dan Gelinas Managing Editor, SSN Tess Nacelewicz Associate Editor, SSN The ISC West Studio is located at the main entrance to the show fl oor.