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DIGITAL TRANSFORMATION & PHYSICAL SECURITY: A CALL TO ACTION

The physical security industry is extremely active right now, with an addressable market estimated at $124.9 billion for 2020 and growing to $232.5 billion by 2027.   This growth reflects the increasing demand for security as traditional threats like terrorism and crime grow exponentially in terms of variety and technical sophistication.  This trend is of course exacerbated by the global pandemic.  However, as important as growth is that digital transformation and advancements in areas such as automation, artificial intelligence, cloud computing, and blockchain are all fundamentally transforming the sector and the way security companies do business.

Digital transformation involves the integration of digital technology from all areas of the enterprise into the security infrastructure.  While digital transformation is exceptionally promising for the physical security industry today, the fact is not everyone will survive the journey.  Significant portions of the industry are seriously lagging behind their more data-driven contemporaries.  These companies risk becoming displaced and disrupting the entire security ecosystem.

The physical security industry was built upon precursors of digital transformation, which bodes well for a promising future. 

Ironically, the security industry has been transformative for quite some time, stemming from early advancements in technologies that fundamentally changed its business long ago.  IP-based cameras, for instance, were an early advent of the IOT sensor.  Access control programs of yesterday constructed some of the world’s first physical-digital identities.  Security central stations had for years monitored customers’ assets remotely and on a 24/7 basis.  However, despite these advancements, the industry historically has not leveraged the gold mine of untapped data because it failed to think creatively, and instead opted to use products and data only for the purposes for which they were originally designed and failing to apply these solutions in unique ways to address more complex problems.  A great example from the past would be only using CCTV cameras to solve a crime, but not using them for parking enforcement at the airport, as is so common today.  The security industry years ago also rarely had the tools or skills in place to solve more diverse security problems, like using access control logs to proactively discover insider threats.  To some degree, this failure had to do with architecture and purpose-built solutions as well as limitations of technology at the time.

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 Security M&A - Digital Transformation and Physical Security: A Call to Action - The McLean Group

ABOUT THE MCLEAN GROUP

The McLean Group is a 25-year-old boutique investment bank and financial services firm focused on the Defense, Government & Intelligence (DGI), Security, Critical Infrastructure and Maritime markets. Our 60+ professionals bring deep industry experience and relentless execution to every client engagement. We provide solutions that blend financial creativity with operational expertise. Whether we are providing transaction advisory, valuation opinions or growth capital, our services are unmatched in these core markets.

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