At the beginning of 2023, the Security Industry Association (SIA) Proptech Advisory Board released a report in partnership with CREtech called SIA Proptech Report: Inside the Real Estate Trends Impacting the Security Solutions Market. The report evaluates proptech trends, market size and buying interests affiliated with security solutions in the security industry. The key outcomes of this research report provide a conducive platform for SIA and its members to create profitable and enduring businesses geared toward growth prospects. The findings addressed the following core research questions:
- What are the security technology priorities for decision makers within the real estate sector?
- Which vertical markets have the most growth potential?
- What are the market barriers and drivers for security solutions as part of proptech investment?
The data painted a great picture of the security industry’s opportunity with the commercial real estate vertical. However, like any vertical, there are market drivers and market barriers, and they are summarized as follows.
- Tenant demand
- New construction/renovation plans
- Changing workplace culture
- Consolidation in the proptech industry drives opportunities
- Adoption by leading commercial real estate companies
- Lack of integration among tech solutions
- Lack of clear return on investment (ROI)
- Lack of specific budgets for tech investments
- Lack of personnel to vet and onboard solutions
- General lack of appetite for technology risks
- Energy management solutions are a main priority
The market barriers stood out to me. This feedback is firsthand information from a large customer base that clearly shows what is in our way as an industry in delivering what is needed to satisfy a market and provide exponential growth and adoption. But what are we going to do about it? It is time to use this information as a line in the sand moment and move to action. We can tackle each of these. We just need to have the desire to do so. A common question when discussing these barriers is, “OK, I am ready, but how?” To share more thoughts, provide feedback, and paint a picture of how we go from where we are today to where we need to be, I asked four SIA Proptech Advisory Board members and subject matter experts in the security industry to provide their thoughts and insights.
Lack of Integration Amongst Tech Solutions
By James Kendall, Director of Enterprise Engineering, SwiftConnect
Take a moment to consider how a building operates and what technology can be found within that building. There are all sorts of products in place, from physical access control to space reservation systems. Wireless networks to cafeteria vending systems. HVAC to lighting systems. But for many years, these systems and the business units that manage and deploy them have all operated in silos.
The cause for this is primarily twofold. Firstly, each business unit has experience specific to the technology they are providing and a remit to deliver upon a particular use case. For instance, an expert in wireless networking probably doesn’t know too much about physical access control and likely has little interest in ensuring someone else’s system is functional.
Secondly, budgets are departmentalized. It would not be in the interest of the HVAC team to spend too much of their resources on the cafeteria vending system; however, there is a fundamental shift happening and an ever growing and important reason for these systems and departments to work closer and become more integrated. That is the user. The single most important reason why these systems were deployed in the first place. Without the user, there is no need for any of these systems and now the user wants more. They want a great experience. They want that experience to be personalized, and they certainly don’t want any pain points on the way; otherwise, they will not be willing to use that experience.
The good news is there are plenty of ways to solve for this, but a mindset shift is required. This mindset shift needs to see cross-departmental collaboration with a focus on outcome as opposed to output. The questions everyone should be asking are “What is the user journey?”, “Where are the intersections?” and “How can we as a company solve for it?”
Lack of Personnel to Vet and Onboard Solutions
By Chris Wilson, Chief Technology Officer/Principal, MxV Security Solutions
Historically, commercial real estate has underinvested in security technology due to a lack of skilled professionals to vet and onboard these solutions, which has been driven by both a wide range of solutions and the rapid, ever-changing nature of technology. It’s a lot for anyone in the industry to stay up to date with, let alone personnel that haven’t been in the industry for years.
Personnel in the corporate security space have come from the public sector where they understand operational risk but struggle to translate that to the vast technologies that are needed on their properties – things such as access control, video surveillance and video analytics. Often, personnel responsible for the technology are coming from operations and facilities backgrounds and need assistance with understanding the complexities of the technologies they are now being asked to manage.
Understanding the why behind when a system, solution or technology is deployed will help them to navigate the interoperability that is often needed but may or may not be available. Additional assistance might be needed in selecting the best vendor to meet their need and helping to filter through the various players in the space, both the incumbents and newer entrants to market.
The commercial real estate space can benefit from industry training to educate their team not only to be a more informed buyer, but also to be more engaged with the daily functions of their system(s). Options available like manufacturer training on their specific platform, general industry-specific training content, as well as consultants for hire to provide specialized training unique to the team’s need and environment.
Further, consultants can be a valuable way to bridge the gap to not only help carry the technology discussion in the short term, but also train the team to then own the discussion and decision making going forward. Often, the consultant can then remain available, helping to answer the more nuanced details and ensure the property has the best solution in place for its unique and specific needs.
General Lack of Appetite for Technology Risks
By Chris Fine, Founder and CEO, Integrative Technologies LLC
Technology vendors often find that customers and prospects are reluctant to assume what seems like a normal level of technology risk when adopting a new product. IT and other groups may require a complex process to get any new product approved in the production environment.
Even if a new product or service is well designed and meets security standards, the acceptance and integration process still can be difficult. Some reasons for this are:
- A lack of clarity as to the ROI generated by taking the risk
- The variety and complexity of the risk environment, taken as a whole
- The high cost of a security breach or operational failure
- A shortage of resources to assess, manage and control new risks
Often, the ROI on a new type of risk is unclear to those who must manage and take responsibility for the risk and its costs, which can be addressed by taking two steps when submitting a new product or service for review: 1) clarifying and explaining the ROI as it applies to all stakeholders and 2) clearly understanding what the risks may be so they may be addressed, managed and mitigated.
Operating any organization entails managing a variety of technology risks. These risks are associated with a wide range of threats, such as denial of service, insider behavior and data leakage. Not only must these risks be managed and controlled individually, but they must also be treated collectively and balanced against other forms of risk, such as operational and financial risks. Taken together, the average organization must manage a complex and critical risk portfolio – to which it may be reluctant to add new risk.
The costs of a technology risk incident tend to be high, as evidenced by the many news stories about ransomware, theft, and denial of service that affect organizations large and small. Consequences are even more severe in a regulated industry such as energy, healthcare, or financial services. Thus, risk managers are inclined to take very seriously the potential exposure of adding anything new. If there’s an incident, it’s on them, as the saying goes.
Finally, technology risk management and cybersecurity require scarce and costly resources, in terms of both people and systems. Moreover, the organization cannot spend more than a certain amount to manage and control technology risks. Management is responsible for allocating these resources over a wide range of risks and technologies.
All of these factors can be addressed to create a successful outcome, but all parties must work together to meet the requirements on all sides, which requires understanding multiple perspectives and respecting other stakeholders’ needs and points of view.
Lack of Clear ROIs
By Louis Boulgarides, CPP, President and CEO, Ollivier Corporation
There are many challenges related to measuring the ROI on security technology solutions (Sec Tec), as they are either integrated into or installed along side other proptech solutions. I will discuss the three most prevalent challenges we face in helping end users appreciate the value of embracing new security technology.
The first challenge relates to measuring the ROI on Sec Tec is as old as the security industry itself: How do you measure the absence of incidents? A successful security product and/or program is designed to prevent issues from happening. Unless a technology is being installed in a situation where issues are rampant and a reduction can be shown, success can only be measured in terms of the benefit of potential issues not occurring, which can be hard to quantify and can be considered by decision makers to be a subjective rather than objective measure.
The second challenge is managing the stakeholders. For example, the security personnel team may be part of the stakeholder group. They may be reluctant to discuss security technology that is going to reduce their staffing. Additionally, property level administrators and managers may be reluctant to look at technology that reduces staffing because they feel that it will create liability at the property level.
The third challenge is telling the right story to the right people. For example, an effective visitor management system has security benefits, but it is also part of the tenant/resident experience and can help with both retaining existing tenants and attracting new ones. A dollar amount can be created around this. We recently were able to assist in transitioning a building to an access control platform that would allow for tenant self-administration of tenant identities and visitor credentials – a requirement for a new tenant’s lease. This was an easy ROI, but we had to tell the story to the right people (leasing and their operations technology team) to be able to persuade them to make the investment.
You can learn more and purchase the SIA Proptech Report here. For more conversations, idea sharing and networking like this, please consider joining the SIA Proptech Advisory Board! Reach out to Edison Shen, SIA’s director of standards and technology, to learn more.