Return on investment (ROI) of your CCTV system

April 2013 CCTV, Surveillance & Remote Monitoring

Return on investment, or ROI, is a performance measure which allows one to examine the efficiency of expenditure in terms of the benefits, profit or value add extracted relative to the capital expenditure put into an operation. The expenditure on CCTV systems is designed to provide, not just the worth of the system, but a return in monetary or resource terms for the organisation.

Return on investment, or ROI, is a performance measure which allows one to examine the efficiency of expenditure in terms of the benefits, profit or value add extracted relative to the capital expenditure put into an operation. The expenditure on CCTV systems is designed to provide, not just the worth of the system, but a return in monetary or resource terms for the organisation.

Typically, CCTV is seen to provide a protection role, but outcomes are often never defined. Measurement of performance of CCTV systems is one of the most difficult security challenges in many situations. For example, if there are no incidents reported, does that mean that the CCTV system is assisting in preventing any theft, or does it mean that it simply is not detecting the theft that is there.

CCTV has a potential contribution as a system standing by itself. For example, the National Retail Security Survey conducted in the US calculates that installation of a typical video or CCTV system can reduce shrinkage by about 25%. This does seem to be a somewhat arbitrary figure though, as we know that simple installation of a system does not by any means determine its effectiveness. The appropriateness of its design, quality of equipment, control systems, maintenance and most importantly, the way it is implemented are all critical aspects in what gets delivered. The value add of a CCTV system can also be greatly increased by combining CCTV with other security, process and building systems.

Using CCTV movement detection to control building lighting can similarly lead to direct cost savings. The feature enhancements of the CCTV system itself also can play a role with features such as video analytics assisting perimeter or alarm systems. Finally, ensuring the people have the skills to take advantage of the system.

CCTV can have returns from the most practical aspect of stopping items from being stolen, to facilitating auditing to enhancing image and reputation. I have tried to highlight possible ROI considerations at four different levels where return can be calculated or possibly estimated.

Deterrent value

The CCTV system’s capacity to view and record situations represents a threat to those who may want to try and commit an offence, whether criminal, procedural, or inappropriate actions. Its existence does have an impact on deterring offences, but people are likely to test the system and it does need to demonstrate its effectiveness in order to have any impact longer than the immediate short term. One aspect though, is that the act of installing the system makes the site less desirable to steal from than a site which has no video surveillance, and in relative terms it must have some kind of impact. So, for example, a comparison with other sites where loss figures are available or against typical industry standards may show the system is having an impact, although other security measures will also obviously influence these kinds of figures.

Incident detection value

The capacity for effective incident detection means that the CCTV system should be capable of identifying at least some occasions where incident conditions are arising and allow a response to prevent a more serious situation occurring. Early prevention and detection allows:

* Stopping of theft, and in some cases, quantification of the potential loss that would have been incurred.

* Identification of suspect people and removal from premises – again leading to avoidance of loss.

* The reduction or stopping of potential for emotional trauma of customers or employees.

* Preservation of image and reputation.

Besides that, actual detection and apprehension of criminals can lead to the recovery of goods for which the direct value can be directly quantified. Following surveillance skills training, my clients have reported the detection and apprehension of theft amounting to figures in the hundreds of thousands of rand, and even higher. For management, such figures show a tangible and demonstrable return on bottom line, and this often leads to even greater spend of the CCTV system to further enhance ROI.

Besides the immediate retrieval of goods, the detection and apprehension of a suspect also has a direct impact on future theft which can probably be estimated from the modus operandi and nature of the retrieved goods. Catching someone does not just address the immediate situation, it stops repeated offences which would have occurred by the same person time and time again if not stopped. Using extrapolated figures, one can estimate the potential long-term loss if somebody was not caught and removed from site.

Although the ideal of CCTV performance is the detection and apprehension of personnel, information generation of suspicious activities and information which can be used for suspect profiling can assist in preventing the potential for theft. It can also highlight suspects that can be targeted for follow up investigation. Savings gained by early removal of such situations or personnel can also sometimes be quantified.

Process value

Many operations have ways of measuring throughput or production effectiveness. In a plant environment, this may be the grade and return of final material processing. In the case of retail based operations, turnover figures and the footfall of people are both ways of evaluating production performance. Customers voting with their feet is a very real concern in retail environments. These performance figures can be compared to some extent over periods of time, and the impact of an intervention on grade values can be measured to give a CCTV value add figure, taking into consideration other aspects which may have impacted on production. This is particularly the case if one gets a sustained improvement that cannot be attributed to anything but the implementation strategy of the CCTV or security system.

Use of CCTV for audit purposes or having virtual roadblocks can be a far more time effective way of checking things than physical inspections with their labour intensive cost requirements. Such approaches can also assist in combating corruption and its impact on process and value generation. The use of CCTV evidence to combat false or fraudulent accusations can also provide a direct measure of cost saving to the business, which otherwise may have been forced to settle or endure extensive litigation costs and adverse publicity.

Image and reputation value

Crime and other incidents can have a direct impact on the reputation and perceived investor sentiment regarding a particular operation, no matter what sector it operates in. Although security and CCTV may only form a part of safeguarding the reputation of an enterprise, demonstrations of the effectiveness of CCTV as a crime prevention tool can add direct value as measured by investment and share pricing. Crises hit organisations, or those with even minor but high profile cases, tend to suffer PR effects that require substantial expenditure on PR and promotional requirements.

A shopping centre hit by a number of publicised negative events is likely to suffer relative to another competing operation down the road in both reputation and ultimately profit. Such effectiveness will also show up in industry or national surveys where the ranking of the operation can be compared to other players. These reactions can be applicable to anything from a town centre, a retail store, to a factory or mining operation, and even to national country considerations as has been the case recently.

Perhaps a concern is how little many operations put on delivery of value from their CCTV systems. Ina this sense, they are expecting return purely at a deterrent value level and often the operators of the systems are there just to fill the seat. ROI has to be worked for, and efficiencies in the system are only going to be obtained if security management is efficient themselves.

Dr Craig Donald is a human factors specialist in security and CCTV. He is a director of Leaderware which provides instruments for the selection of CCTV operators, X-ray screeners and other security personnel in major operations around the world. He also runs CCTV Surveillance Skills and Body Language, and Advanced Surveillance Body Language courses for CCTV operators, super-visors and managers internationally, and consults on CCTV management. He can be contacted on +27 (0)11 787 7811 or [email protected]


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