On September 11, 2001, four suicide attacks carried out by terrorist group al-Qaeda claimed nearly 3,000 lives and billions of dollars in damage, leaving the world in utter shock in the months and years that followed. Aside from the economic and political ramifications, one significant impact of the attacks was how profoundly life was changed for much of the world's population. Fear, and many other considerations, spurred massive investments in security. The security industry saw rapid growth, and overall awareness increased significantly among the general public. Today, 10 years after the 9/11 attacks, security has grown to be a multibillion-dollar, recession-resistant industry that is highly competitive and is redefining itself in many ways. Armed with funding from both the public and private sectors, the security industry was able to develop new and innovative technologies in the early 2000s. Although the 2008 recession significantly shrunk VC investments in R&D, innovation has not completely come to a halt. The advent of IP-based systems and its accelerating adoption have enabled some exciting new possibilities that deliver more for less to end users, and the movers and shakers of this industry, new and old alike, are now anticipating easier-to-use, smarter, single platforms that could manage and dictate security, building and many other systems simultaneously.
The 9/11 attacks were significant in that they were much more like an act of war, even though it was not conducted by a state actor as it traditionally is, said David Olive, Principal of Catalyst Partners. “It had very deep impacts on the economy and on a general sense of security. It is an event that one remembers throughout his or her lifetime, much the same way as one remembers the first time humans stepped foot on the moon.”
A direct effect of the attacks was the formation of the US Department of Homeland Security (DHS) one year later, in November 2002. Tens of billions of dollars were budgeted for the DHS, mainly allocated to first responders and disaster control. However, a hefty amount was also poured into the security industry through government projects or R&D funding.
In the early 2000s, there was a lot more innovation due to the resources dumped into R&D by venture capitalists and various governments, which aimed to adapt existing technologies to be used for homeland security purposes, said Dilip Sarangan, Research Team Leader for Physical Security, Frost & Sullivan. “Many new concepts and products emerged during that period. VCA, DVRs and IP-based security systems are just some examples.”
Almost from the very beginning, the Science and Technology Directorate of the DHS put out to the private sector a high-tech needs list. At the time, it was led by retired US Navy rear admiral Jay Cohen, who brought over some Department of Defense processes where they identified needs, put out announcements to the private sector and funded development of that technology, Olive said. “Resources were put into development of a wide spectrum of technologies, such as biochemical detectors, sensors, biometric systems and integration of disparate databases for easier information sharing. The DHS was very strategic in these investments in that they looked for technologies that potentially had a commercial market.” Over the past 10 years, communications between agencies have increased drastically in an effort to prioritize shrinking budgets, said Monica Heyl, CEO of Monica Heyl & Associates. “Technologies that can be reliably applied across different scenarios are what we can expect to happen more and more.”
Many of the technologies developed during that period have matured significantly in terms of commercialization. VCA, for example, was a technology that was little understood 10 years ago, Sarangan said. “Now, it's something end users do understand. They understand its capabilities and limitations, and that it is valuable to an organization when used for clearly defined functions.”
Funding from organizations like the DHS has undoubtedly played an important role in establishing and developing the market for physical security. It has led to technology innovation and increased sales, said Jon Cropley, Principal Analyst for Video Surveillance and VCA Research Group, IMS Research. “Government spending (not including education, retail or transportation) accounted for around 15 percent of the global market for VCA in security and business intelligence applications in 2010.”
In spite of this, the market for video analytics has not grown as quickly as many expected. Reasons include installation problems, false-alarm rates, lack of clear market education and the global economic downturn, Cropley said. “As the global economic environment improves, analytics providers are working hard to address these other issues. As they do, the market for VCA is forecast to grow steadily. Continued funding has provided the firm footing on which this market growth will be built.”
Another example is the proliferation of IP-based security systems. The introduction of networking has been the most revolutionary element in modern security systems, said John Moss, CEO of S2 Security. Putting it all on the network simplifies data transmission and eliminates all infrastructure costs that might be required of an analog system, Sarangan said. “This is definitely a market where there is a lot of potential. It has applications mostly in government and critical infrastructure installations, but some of those applications also benefit large organizations and make a lot of sense to use in the commercial world as well.”