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  • Good Security ROI Resources?

    If anyone knows of good ROI resources for security or LP, preferrably including the explicit methods used, etc. with regard to either security or LP, I'd appreciate knowing about them.

    (These could be case studies, explanations of principles and methods used, etc.)

    Also, if someone knows of ROI methods used in comparable areas, like safety programs or systems, emergency management, law enforcement or even healthcare compliance programs, I might be able to adapt or modify methods from those examples.

    The security industry has a long way to go in developing its own authoritative methods of performance metrics, while more and more CEOs are demanding to know what they're getting for their security dollars. This often leaves us with the difficult task of "proving a negative"...i.e., the value of what didn't happen versus the cost of countermeasures. Even certain "counting" metrics aren't very satisfactory: "We prevented 3 unauthorized entries"...yes, but what's the dollar value of accomplishing that, relative to the cost?

    We know intuitively, for instance, that a workplace where employees feel secure (compared with one where they don't) will experience higher productivity, lower turnover and will probably have a lower absentee rate, to say nothing of fewer WC and other insurance claims. It will also likely have a much lower exposure to various forms of legal risk (lawsuits, labor complaints, etc.).

    Now, the CEO knows the same thing - intuitively. The problem is, more and more of them are asking how do you prove, in dollars and cents, what security (as opposed to improved hiring practices in HR, for instance, or the improved compensation package) contributed to our net income of $100,450 this year? How much of that "belongs" to our security program?

    The question is also obviously critical when it comes time to budgeting for security programs. Every departmental budget competes with every other departmental budget, especially for discretionary dollars...and ROI has a lot to do with who gets them and who doesn't. In short, the executives are going to give the dollars to whoever can prove that they can use them best to do one thing: adding to the company's bottom line profits, and not just "keeping a bunch of possible bad things from happening".

    One approach is to use the company's history, or horizontal analysis, from one period to the next: We had 3 burglaries last year costing us $10,000 each and this year we had only one, so we saved the company $20,000. Unfortunately, this is only really valid when everything is fairly static so that comparing one period to another is appropriate. If things change - burglary rates in the immediate area, company doing business in a new location, other businesses moving into/out of the area, lower/higher employment rates, opening of a new freeway nearby, changes in LE patrol activities, and who knows what else - the historical comparison may be completely invalid because changes could be due to factors other than the security program.

    Thanks!
    Last edited by SecTrainer; 03-15-2007, 12:15 PM.
    "Every betrayal begins with trust." - Brian Jacques

    "I can't predict the future, but I know that it'll be very weird." - Anonymous

    "There is nothing new under the sun." - Ecclesiastes 1:9

    "History, with all its volumes vast, hath but one page." - Lord Byron

  • #2
    back on the main site

    Return on Investment (ROI) for security operations is something that comes up a bit as we speak with top security execs. You can use SIW's search function to get some results on this. Here's one whitepaper on the subject, but the topic of ROI comes up often in many articles on our site:
    http://www.securityinfowatch.com/onl...ers/8283SIW321

    That said, this is a great thread to post some examples of how anyone has been able to prove ROI. Tell us how you've done it, or even what keeps you from being able to prove ROI in corporate security departments.

    Also, I should note that Security Technology & Design's Editor/Publisher Steve Lasky makes sure that ROI is a big component of the articles going in his magazine. Just hit the magazines link to get to his "book". Steve and his contributing editor Ray Bernard are two guys that really understand the concept. In fact, their program at the SecureWorld Expos always makes sure that ROI is of chief importance when talking about security systems and corporate security governance.

    Great idea for a thread, SecTrainer!

    Geoff Kohl
    SecurityInfoWatch.com

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    • #3
      not to forget...CSO Executive Council

      Also, I should mention that Bob Hayes and the crew with the CSO Executive Council are doing a good job of discussing this subject with their reports. Check 'em out if you haven't yet.

      Comment


      • #4
        In the retail grocery setting I researched and presented a Electronic Article Surveillance (EAS) program to the company President. I received permission to install and test systems in 6 stores for a 6 month period. During that 6 month period we took inventory twice to gauge the effectiveness of the system. Here's what I found:

        Shoplifting arrests were greatly reduced over the 6 month testing period. I scheduled the same amount of shoplift agent hours for the six stores as I had for the prior 6 months as I wanted all the factors to remain the same. (2080 hours/$58,240) After the testing period I cut the hours and placed my resources elsewhere.

        The net savings over the 6 month testing period was an average of $3,000 per store or roughly $108,000. This included the costs of the systems, tags (labor included), training and a small amount of liability thrown in.

        I then extended the program to an additional 35 stores. During that time I completely revamped my in-house external shoplifting program by outsourcing the entire program saving the company an additional $721,000 a year. (salary vs contract).

        Total first year savings to the company $2,197,000. The EAS figures held true for next two years. After that I don't know - I took position with another company. One of the reasons the program was so successful was we were the first in our geographic area to use EAS.
        Retail Security Consultant / Expert Witness
        Co-Author - Effective Security Management 6th Edition

        Contributor to Retail Crime, Security and Loss Prevention: An Encyclopedic Reference

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        • #5
          Thanks for the leads, Geoff.

          SecCon: Thanks very much for the case example.

          I was wondering: To what do you attribute the drop in shoplifting arrests with EAS? If I'd been asked to guess, I would have thought that arrests might be expected to rise, at least at first.

          Also, if I might, two other questions:
          1. In your experience, how good a "fit" is the number of shoplifting arrests as a proxy for actual shrink from shoplifting?
          2. What metrics if any did you apply to the contracted service by way of measuring their performance?

          Thanks again!
          Last edited by SecTrainer; 03-15-2007, 08:23 PM.
          "Every betrayal begins with trust." - Brian Jacques

          "I can't predict the future, but I know that it'll be very weird." - Anonymous

          "There is nothing new under the sun." - Ecclesiastes 1:9

          "History, with all its volumes vast, hath but one page." - Lord Byron

          Comment


          • #6
            Originally posted by SecTrainer
            Thanks for the leads, Geoff.

            SecCon: Thanks very much for the case example.

            I was wondering: To what do you attribute the drop in shoplifting arrests with EAS? If I'd been asked to guess, I would have thought that arrests might be expected to rise, at least at first.

            Also, if I might, two other questions:
            1. In your experience, how good a "fit" is the number of shoplifting arrests as a proxy for actual shrink from shoplifting?
            2. What metrics if any did you apply to the contracted service by way of measuring their performance?

            Thanks again!
            Being the first to use EAS in the Southwest, in grocery, it was a great deterrent to the non-professional shoplifter. I know this as I received the calls from the competition telling me that their shoplifting had increased and they had to hire extra people to handle it. Some even went to uniformed security officers to deter.

            1. I just wrote a chapter for a book addressing this very issue. Overall, I don't think you can "catch" your way to low shrink. There are too many factors involved. Shoplifting in the supermarket segment accounts for about 30% of a company’s overall shrink. (This figure is somewhat smaller than the retail industry in general). Employee theft is about 50% of your overall shrink.

            Chain wide our shoplift agents caught 300-500 shoplifters every month before EAS - after EAS the average was about 150 per month. My thought on this was - people just went elsewhere to steal.

            2. I put some stringent controls on the contract service. I wrote the policy and procedure manual they followed while working in our stores. One of my investigators was assigned to participate in their training. They had to work exclusively in our stores and for no other retailer. I had the ability to have them "pulled" from our stores (the contract service could use them elsewhere). If someone didn't follow our policies - they were gone.

            I never used a quota, benchmark or productivity measurement. I didn't need to; they were far more productive than my in-house staff - and zero lawsuits - which was not the case with in-house staff. Best of all I could void a contract with 30 days notice.
            Retail Security Consultant / Expert Witness
            Co-Author - Effective Security Management 6th Edition

            Contributor to Retail Crime, Security and Loss Prevention: An Encyclopedic Reference

            Comment


            • #7
              Read and understood. Very helpful - thanks much for the insights! Can you release any advance info about the book?
              "Every betrayal begins with trust." - Brian Jacques

              "I can't predict the future, but I know that it'll be very weird." - Anonymous

              "There is nothing new under the sun." - Ecclesiastes 1:9

              "History, with all its volumes vast, hath but one page." - Lord Byron

              Comment

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