Physical security information management (PSIM) has experienced a severely elongated hype-cycle since its first emergence in the mid-2000s, never really able to live up to the huge potential it promised. However, a flurry of activity this month has reinvigorated the discussion around the ambitious security approach.
In this research note, we chart the history and potential future of unified security management in buildings and cities.
The Rise of PSIM
Ten years ago, the hype around PSIM was rising as funding flowed into the space. The technology’s pioneers were growing rapidly as a flurry of startups entered the market. Out of the 67 physical security industry alliances we identified in our 2014 report, 20% involved PSIM companies as many scrambled to get a piece of the action.
On September 21st 2016, Everbridge went public at an initial public offering price of $12.00 per share. Founded in 2002, initially as 3N Global, Everbridge helps governments and enterprises from across the industrial spectrum respond to a variety of emergency and security situations. Their offering is centered around the critical event management platform Everbridge 360, promising integration and a unified dashboard.
As converged building technology emerged in the 2010s, Everbridge was well-positioned to take advantage and ride the wave of hype around PSIM. To differentiate themselves, numerous other providers rebranded their technology as converged security and information management (CSIM), highlighting the broad integration potential of this family of physical security products.
Everbridge’s value continued to inflate with acquisitions of IDV Solutions in 2017 and CNL Software in 2020, reaching an all-time high market cap of $6.4 billion in September 2021 before the bubble burst. Within the following four months, Everbridge had lost two-thirds of its value and in the past six months, up to February 2024, the firm’s market cap hovered just below $1 billion with its future looking uncertain.
The Fall of PSIM
“The growth of many prominent firms in the PSIM market failed to live up to expectations,” we said in our 2022 physical security report. The study estimated the market for PSIM in 2021 was only around $150 million and forecast that annual growth will be unlikely to surpass 3% over the next 5 years. “The situation has not greatly improved over time, and the cost and complexity of installing PSIM remains high. Although the transition to more lightweight, agile, cloud-based solutions may offer some ray of hope for the market.”
Despite the hype and potential, PSIM and CSIM never really lived up to the lofty expectations that surrounded them. The excitement around the technology demonstrated the significant demand for unified security management but the market never really overcame technical complexities, leading to high capex and limited adoption, while vendor lock-in presented another major obstacle.
“The lesson learned from PSIM is that while the intent to streamline security management was valid, the execution fell short,” remarked Alan Stoddard, CEO of security management firm, Intellicene, in a recent Forbes article. “Customers found themselves entangled in a web of complexity that offered little beyond the consolidation of multiple interfaces into one view."
Our own market analysis in the mid-2010s covered the growing hype but also showed concern for the potential progression of the PSIM and CSIM markets. Our 2016 report highlighted that, “outside the regulated public and major infrastructure sectors, PSIM integration has failed to materialize.” While our article in the same year stated that, “It has become clear that developing PSIM, under any acronym, out to a broader market will take time despite the fact that it can deliver significant benefits.”
The Rise of PSIM (again) in 2024?
To the surprise of some in the industry, the PSIM market has begun 2024 with a new sense of optimism after two deals have brought the discussion back to the potential and demand for unified security management.
On February 1st 2021, connected public safety giant Axon announced the acquisition of Fusus, an AI control center technology provider. The two firms had been working in partnership since May 2022 on a live body-cam and drone video plus sensor data integration project for policing operations, but the acquisition promises similar technology convergence over a much broader set of applications, including smart buildings and cities.
Axon, formerly TASER, Inc. (a police taser manufacturer), staked its entire business on body cameras and AI since it rebranded in 2017, but the firm has faced stiff resistance to its deep surveillance techniques. Moreover, the firm’s latest acquisition, Fusus, has also been the subject of criticism over a controversial Ohio project and from rights groups like the Electronic Frontier Foundation, who raise concern over the ease and transparency of their surveillance technology.
“The concept behind Fusus’ solution is similar to technology that has been deployed in South Africa for years, and which experts have said exacerbates inequality in the country,” reads an article on Vice last week. “And, despite pushing the cameras as deterrents, data shows no evidence that Axon has been effective in reducing police violence or increasing transparency.”
Demand for their converged security solutions is likely to be initially highest in US police departments but a much greater market lies through municipal and event security, then into commercial and residential real estate. If Axon and Fusus can unlock the technical complexities of unified security management it may represent a new dawn for PSIM and a problematic association with privacy rights.
Then, on February 5th 2024, struggling Everbrige was thrown a lifeline by Thoma Bravo, a Miami-based specialist in scooping up undervalued software companies. The private equity firm has announced a $1.5 billion deal to take Everbridge private, fueling an 18% rally in software company Everbridge’s stock on Monday.
Everbridge agreed to be taken private for $28.60 a share in cash, a 32% premium over its volume-weighted average share price over the past three months. However, with a longer-term view, Thoma Bravo is getting a large discount versus the firm’s all-time high of over $160 a share in August 2021.
After completing five buyouts of public companies in 2023, the Everbridge deal is Thoma Bravo’s first of 2024 and represents at least a certain amount of faith in the near-term future of PSIM style security services. Completed within days of the Axon-Fusus deal, and within a rapidly evolving technology landscape, this business activity has put the spotlight back on PSIM and the ultimate dream of unified security management in buildings and cities.
“Despite challenges, the PSIM market continues to evolve, with new entrants such as Hivewatch attempting to revitalize the market’s fortunes by focusing on reducing complexity and cost while enhancing scalability and capabilities,” reads our 2023 access control study. “PSIM platforms are increasingly becoming the backbone of contemporary security ecosystems functioning as a central nervous system, collecting data from endpoints to make it actionable.”
“In an era where siloed solutions are rapidly being phased out, the ability of these unified platforms to integrate multiple facets of security—surveillance, access control, identity management, and real-time analytics—into a single, user-friendly interface is invaluable,” our Q4 2023 research continued.