11 Dec 2007

Separate worlds come together

A combination of security and IT knowledge will be crucial for succeeding in tomorrow’s security market. A recent study identifies some pitfalls to watch out for as two industries converge.

Benjamin Weaver, a researcher at Lund University’s School of Economics and Management, says the convergence between IT security and physical security requires companies to adopt a new look at risk management. 

"A holistic approach to security is necessary in a time when most companies' core assets are no longer physical, but based on information, data and reputation," says Weaver.  

The term "convergence" applies to several dimensions. Technological convergence enables video surveillance and access control to be integrated and carried out using all-digital equipment over IP networks, while the threats to company security are also converging as criminals combine illegal entry into physical premises with IT systems encroachment.   

Stealing the invisible
A prime example is offered by the case in which burglars broke into a retail outlet without actually stealing anything, but secretly adding a device to the credit card authorization equipment. This allowed skimming of card numbers and other sensitive data, which were then sent to a hacker for fraudulent usage. "The store never even bothered to report the break-in to the police, since nothing was actually taken in the first place," Weaver notes.  

At a London bank, hackers posing as janitors attempted to steal 220 million British pounds by installing devices on computer keyboards that enabled them to obtain login data. "These cases show that IT can no longer be an isolated silo within a company," says Weaver, "but a function that must interact with physical security and vice versa."

To security equipment providers, convergence spells major challenges that can only be mustered by acquiring a set of skills and competencies that are relevant to today's environment. Those who fail to adapt, may well see their market positions captured by IT players, argues Weaver: "The crucial strategic resource needed to succeed in the converged electronic security market of tomorrow will be knowledge drawn from both the security and IT industries."

Mind the gap
As mechanical and electronic security products are IT and IP-network enabled large IT players as well as smaller, innovative entrants are increasingly targeting the security sector. They may be facing a knowledge gap when it comes to the specifics of physical security but are, on the other hand, used to working in an environment where the ability to pick up new knowledge and adapt is instrumental to survival.

In contrast, traditional security equipment solution vendors can be held back by their vested interest in legacy technology. One obvious solution for them and for IT entrants is to merge with "the other side" in order to bridge their respective knowledge gaps.  

Predicting the future winners, Weaver suggests that vendors who possess adequate competence in the security field can have an apparent advantage in creating new IP-enabled products. "In addition, systems integrators will continue to play an important role, as the adoption of new technologies has always been a part of their business."

Software developers will also benefit, as the focus within the industry will increasingly shift from hardware to software. The functionality and usefulness of electronic security depend on the interaction of hardware and software.  

New markets
Intense price pressure on digital equipment coupled with the proliferation of IP networks have combined to bring electronic security solutions within reach for new market segments like small businesses and shops.

"This is a typical greenfield market that was not even approached by surveillance solution suppliers in the past, since margins from selling just one, or a few, cameras were seen as inadequate," says Weaver.

Weaver points out that a digital solution offers end users a host of benefits. "It's highly scalable, since installing an additional camera is much easier in a networked solution. Analog cameras require running a number of dedicated coaxial cables, while network-enabled cameras can easily be connected to the data network already installed in most companies." 

Moreover, digital platforms allows for easy plug-in of software to control recordings and set parameters for the footage desired. "Theoretically, there is no limit to what you can do to control and analyze video recordings," Weaver concludes. 

While the development definitely holds an industry shakeout in the cards, few believe it will happen overnight. The security industry is extremely fragmented and a large part of the market is made up of local installers and resellers, who face a gargantuan task in adapting to security solutions that require a new set of IT skills.

Looking ahead, Weaver concludes that few end users are likely to throw away expensive investments in analog platforms. "Many end users will opt for hybrid systems that allow them to use analog and digital solutions side by side," says Weaver.