How do you measure the return on investment for security systems when it does not generate revenue?
Return on investment (ROI) is the ratio between net income and investment. It is a measurement of the performance of an investment and is used as a way to standardize and compare potential returns in different investments.
Some investments are easy to calculate their ROI. For example, a new piece of equipment that ups production has an immediate cost as well as a measurable increase of revenue. Unfortunately, the ROI on security is not as easy to calculate. The first goal of security is to increase safety and prevent an incident from ever happening. Its second goal is to collect evidence if something happens. Ninety percent of the time, nothing happens—the guards don’t chase people off the property, the cameras see normal people doing their shopping, and no criminals vandalize your property. Whether it’s physical security or digital video surveillance cameras their value is derived when nothing happens.
Since the bulk of security is to prevent incidents from happening, how can you assign it a ROI? There is no incoming cash flow or revenue when an incident doesn’t happen, instead it focuses on what wasn’t lost. But the real question is how many losses did security prevent?
Unless you suddenly invent a flux capacitor and have a DeLorean sitting in your shipping bay, you’re never going to know an exact dollar amount to assign to thefts and criminal activity. It is impossible because, short of time travel, you have no way of knowing what would have been damaged, stolen, or vandalized if there was no security. However, you can look at historical data, estimates, and predictions to help you calculate the ROI on security.
However, there are more reasons to invest in security that can’t be measured monetarily. First, live security cameras give you a real-time understanding of what is going on at your business. This includes gaining insights into employee and customer behaviors, areas you can improve, and more.
Second, customers and employees will feel safer. After placing LVT Units in their parking lots, one national retailer noticed how employees and customers (particularly females) wanted to park next to it. Their comfort level increased because they knew someone was watching out for them.
Third, video monitoring systems can help resolve disputes. Life happens and people will disagree. Video evidence can help resolve disagreements between two customers, employees, and their interactions with each other. Even in the parking lot where LVT Units are located, recordings can help resolve car accidents and other incidents that cause disagreements.
Fourth, security cameras can help improve productivity. Some employees may be lax when they are not being directly supervised or there may be a process that can be streamlined. Anytime you have a live security feed, you will have a better idea on what is happening at your business at any time.
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