Welcome to the fifth installment of our S.T.A.R.T.S.S.® blog series. In this series, we’re taking a deeper look at our S.T.A.R.T.S.S. Decision Methodology, which provides a framework for choosing the best security entrance. Click here to see our introductory blog.
Today’s topic: Return on Investment (ROI).
In recent years, this question seems to be coming up more and more often: “Which security entrance has the best ROI?” On the surface, it seems to be a reasonable managerial question, one that gets to the heart of today’s business. The most correct answer, however, reveals why answering is so difficult – the true answer is: “It depends.”
Examining ROI
Let’s take a step back and see why this is the case. The formula for return on investment, or ROI, is deceptively simple: ROI is merely the ratio between the net profit gained from an investment and the cost of that investment. A high ROI indicates that the expected returns from an investment are favorable relative to the cost, and a low ROI indicates a less attractive return.
Despite the apparent simplicity of ROI, there are complexities and subtleties. For example, there is no time scale built into the equation, nor is there any consideration of whether the needed resources are available, whether the organization has the required expertise, or whether the project would support the firm’s competitive strategy. Taking factors like these into account in the ROI equation can be done, but it requires care, inside knowledge and skill. For these reasons, ROI is most often used in business only to compare similar projects and timescales to help make investment decisions.
ROI for Security Entrances
That said, let’s apply the concept of ROI to security entrances. Remember that the ROI equation is the ratio of the returns from an investment to the cost of that investment.
Let’s start here with the cost of the investment. Cost elements fall into these categories:
- the cost of the entrance itself; note that depending on the amount of traffic to be accommodated, more than one unit may be required
- installation and access control system integration
- training for security staff and users, if needed
- in the longer term, maintenance costs and the life of the entrance
- and, if the entrance will be staffed, the cost of guards for 24/7 monitoring
To quantify the returns from the investment, we need to capture the value of the benefits:
- first and foremost, meeting the desired security objectives
- staff and visitor feeling of safety and security while in the protected space
- increased prestige for the facility and organization
- meeting regulatory requirements, if applicable
- decrease in level of organizational risk and liability
- reduction in need for security guards, or value of reassigning guards to more productive tasks
- increase in accurate, valuable business information, including time and attendance, who is in the facility at any time, work patterns and anomaly detection and possibly more efficient building environmental controls
A Variable Equation
As can be seen from the lists above, the cost factors for a security entrance are generally tangible and straightforward to estimate or calculate. On the other hand, some of the values of the returns in the ROI equation may be more difficult to calculate, and may be very specific and unique for each individual organization and facility. This is why the “best” ROI question is difficult to answer. There really is no “best” – only “best for the situation,” based on an understanding of the importance and values of the applicable factors.
One answer that is easy to provide is that security entrances do have many returns that flow from the investment – including both tangible and intangible items with significant value. This is one reason why it is so important to work with a manufacturer or integrator who has significant knowledge of all types of entrances and can provide consultative support to you throughout the decision-making process.
Stay tuned for Topic #5: Training
Contact us and we will be happy to work through the S.T.A.R.T.S.S. process to find the security entrance with the best ROI for you!
