No ROI For PSIM

Author: John Honovich, Published on Nov 29, 2012

PSIM is not a bad thing. It just has no ROI. Now, that is not unique as many security solutions offer fuzzy value, at best, but it does shape how PSIM is sold and adopted. In this note, we examine the benefits and limitations of PSIM impacted by the non existent ROI.

Unfortunately, PSIM vendors generally are delusional:

"As most vendors are quick to point out though, the immediate ROI realized by the implementation of PSIM software through increased efficiencies can be enough to get the C-Suite to sign off on the purchase."

And yet after a decade, the PSIM market is still nearly negligible and the vendors tiny (seconded by IMS).

No ROI

The problem is weak ROI and certainly no 'immediate' ROI.

ROI, or Return of Investment, demands that the amount of revenue/cash/savings generated clearly exceeds the amount of costs (see our ROI tutorial).

While PSIM clearly has 'value', it is extremely rare that the value of PSIM is greater than its cost.

When you look at the benefits of PSIM, it can improve security operations and speed up response but it does not do anything that clearly delivers specific and quantitative returns:

  • It is highly unlikely that a PSIM will reduce manpower even if it makes users somewhat more efficient.
  • It does not replace or eliminate other equipment. Indeed, it is the opposite, as one typically needs to add more equipment and software for PSIM in addition to everything else that is already in place.
  • It does not alarm against crimes or threats in progress. That job remains with the intrusion detection or analytics systems that PSIM depends on for inputs.

Since PSIM is not reducing manpower nor equipment nor stopping crimes, it is incredibly challenging to justify on a hard, financial basis.

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Plus since it is a large expense that nearly no security department has historical budgeted, allocating funds is quite difficult (save for gifts grants).

Benefits Do Exist

However, PSIM does offer benefits to some security users. It is just that they tend to be 'soft' benefits. One vendor does have a very reasonable list of PSIM actual benefits. They include:

  • Migrating between vendors while managing both old and new from the same interface. While this is a clear benefit, how much is this worth? You could certainly 'get by' with switching from one app to the next but a PSIM is better. Is it X dollars better or $500,000 better? That is hard to justify.
  • Seeing all security information on a single interface can be useful in understanding threats but even PSIM vendors acknowledge that this is typically for the small percentage of users with "command and control centers that need to monitor thousands of sensor feeds." What is it worth? It's better but how can you justify that it is Y dollars better?
  • Consistent response by automating Standard Operating Procedures into the PSIM. While this may simplify things, unless an organization has a history of systematic and ongoing errors, justifying quantitative value on this is hard.
  • Managing security equipment from acquired companies. This is similar to the migration point above and suffers from the same issues. Additionally, the percentage of companies that this applies to is low.
  • Reduced training costs: PSIM vendors believe instead of learning how to use an access control management interface, VMS interface, etc., one can just learn the PSIM interface. However, the savings are not going to be that significant, especially compared to PSIM's high price tag. Plus, while users might primarily use a PSIM interface, they tend to be simplistic and will still require the use of the subsystem interfaces for many operations.
  • Operational management improvements: While PSIM vendors talk about how they can improve operations, like alerting on camera failures, most of these claims can are easily done by existing, far lower cost systems in place.

Certainly benefits do exist, especially for really big organizations that are migrating large systems, acquiring sizeable companies, managing response of guard teams against real time intrusions, etc. Yet even for them, the ROI will be fuzzy. However, the money allocated to security in such organizations often can cover the high PSIM price tag.

Postscript: PSIM Excuses

IMS has a great laundry list of excuses for PSIM's poor growth. Let's break them down:

  • "Limited awareness identified as the greatest inhibitor of market growth." This is the classic, "No, you're wonderful, everyone else is just missing it" excuse. Contrast this to our integrator survey statistics, that showed overwhelming integrator awareness, just simply dissatisfaction with the value proposition.
  • "Confusion over the definition of PSIM" Many are confused about HD vs megapixel but since the value is clear, the growth is strong.
  • "A lack of new entrants in the market." That's because growth is disappointing, profits are fairly non existent.
  • "High barrier to entry" Ironically, it is the opposite. There are dozens of little PSIM providers around the world, who grow small software development businesses into PSIM applications (e.g., a local government organization pays the local company for custom integration of a few security systems and then they package it for others). The problem is not getting in, it's scaling up to the mass market, which no PSIM provider has truly achieved.

Only two drivers make business work - increase value or decrease cost. While PSIM has been around for a long time, the value remains very limited. If PSIM is to truly go mainstream, it will have to come at dramatically lower prices, which bodes poorly for today's crop of PSIM focused providers.

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