Why Read This Guide On VBI? VBI Defined Who Uses VBI? How Can VBI Support Loss Prevention?... 3

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2 Contents Why Read This Guide On VBI?... 2 VBI Defined... 2 Who Uses VBI?... 3 How Can VBI Support Loss Prevention?... 3 How Is VBI Helping Business Operations To Become More Effective?... 4 The Role of VBI in Merchandising... 6 How Does VBI Work Within Overall Risk Management?... 6 The Return On Investment For VBI... 7 Typical VBI Deployments... 7 Why Is VBI More Relevant Today Than Ever?... 8 Is VBI For You?... 9 Page 1

3 Why Read This Guide On VBI? The security industry is going through a major transformation. As it moves from systems which require a lot of human intervention into a more streamlined delivery process, it also provides for enhanced ways to view security, marketing and operations. This is particularly relevant for retail deployments, where technologies typically associated with security can be very easily used to help improve overall business performance. From its inception, closed circuit television (CCTV) was primarily used to review recorded data. As its use progressed, alarms were integrated in with video, which created actionable intelligence. Data was then integrated with video and information was extracted from the metadata video. That was the tipping point. What drove this? It was innovation. It was the digital chip. It was the digitalization of video and the integration of video analytics. It was the Internet and IP, the ubiquity of bandwidth, the robustness and the magnitude of that bandwidth, and finally the cost reductions both in storage and transmission technologies. With all of this advancement, a perfect storm was created to allow new solutions to be engineered. Technologies that aggregate the vast amount of disparate data video data, transactional data, structured and unstructured data that is generated today, and distils that data into relevant business intelligence that can be easily understood and acted upon; that s VBI. This Guide to VBI is intended to provide readers with an overview about this emerging technology. It will clarify what VBI is and how it can create actionable intelligence. It will also explain: How VBI can support loss prevention How VBI is helping business operations become more effective The role of VBI in merchandising How VBI works within overall risk management The return on investment for VBI Typical deployments of VBI If VBI is for you VBI Defined Video Business Intelligence (VBI) software captures, compiles and disseminates data from disparate systems presenting the aggregated results through intuitive dashboards, reports and portals. VBI serves as an information infrastructure capable of delivering specific and actionable business intelligence to users enabling them to make informed, effective and timely decisions about their business, assets and employees. Page 2

4 As its name implies, Video Business Intelligence has at its core the ability to fuse video data with structured data, typically the only data analysed in more traditional Business Intelligence (BI) solutions. This unique approach enables users to grasp the impact human interaction has on their businesses. Extensively used in retail applications, VBI s advanced algorithms enable users to leverage their video surveillance infrastructure to gain visual insight and context behind other data captured from Point of Sale (POS) systems, access control devices, central monitoring stations, and exception reporting modules, to name but a few. With VBI, the role of video surveillance has evolved from solely a loss prevention tool to a valuable asset that can be used by the entire organization to help optimize retail processes and improve business efficiencies. Who Uses VBI? Today VBI is primarily used by retail organizations, but other industries such as industrial automation, education, finance, and the transportation industry are also experiencing the advantages this technology provides. How Can VBI Support Loss Prevention? Video surveillance has played a pivotal role in loss prevention for years. To many, video is seen as an essential component to any effective loss prevention initiative. By integrating an organization s business systems with video and advanced video analytics; detection, classification and tracking of video content Page 3

5 can provide administrators real time alerts and visual (as well as audio) verification of events without the need to add additional hardware components. The ability to effectively detect and deter cashier related shrinkage is a top priority for retailers worldwide. Research has shown that employee theft remains the single largest cause of shrinkage in retail environments today.[3] Millions of dollars disappear from Point of Sale (POS) terminals in retail stores on a daily basis due to fraudulent or criminal employee activities. One way that retailers are confronting this epidemic is by identifying the telltale patterns of these crimes so called POS exceptions. POS exceptions are transactions that differ from the norm. These can include: Manually entered values, which could be an indication of system manipulation Product return transactions with no item present, no customer present, or no supervisor present No sales when the cash register is opened but no transaction is registered. The art of identifying and capturing these exceptions is the basis behind exception based reporting. Incorporating video data as a complement to the transactional data captured by the typical POS system elevates the effectiveness of these tools by delivering both video images and textual data resulting in a more complete picture of any event or transaction in question. By establishing a set of user defined exception based rules, Loss Prevention (LP) managers can receive real time alerts anytime that events or actions fall outside of these parameters. In this way, Loss Prevention can not only increase its effectiveness, it can begin to transform itself from a reactive to a responsive, proactive resource for the entire organization. Now, LP departments can leverage relevant transactional data (including cash register, time of day, employee number, dollar amount, exception kind, and transaction type) and associated surveillance video to identify trends and capture details that can lead to improved loss prevention, as well as increased operational efficiencies and overall store performance. Aberdeen Group research indicates that 76% of top performing retailers use some form of data mining and exception based reporting tools to help build a knowledge culture around loss prevention. [4] By leveraging technology and proactively driving the investigation the user can actively uncover errors, inefficiencies, and questionable or dishonest practices. As a result, detection occurs sooner allowing for a quicker response and a more timely resolution of the issues encountered. This enhanced responsiveness and effectiveness to loss prevention initiatives is not only reflected in the organization s bottom line, but in the Loss Prevention department s financial validation, as well and opens the door to new in store research methods. How is VBI Helping Business Operations Become More Effective? Video analytics is a natural extension to video supported exception based reporting, and is not limited only to loss prevention activities. Video analytics can help increase operational and employee Page 4

6 efficiencies using video that the user may already collect. Examples of a few of the benefits that can be gained by enabling video business intelligence along with appropriate video analytics include: Alerting store managers when queues exceed pre defined thresholds at tills or customer service kiosks, allowing for rapid response in reallocating employee responsibilities to ensure optimal customer service. Monitoring the number of people entering or leaving the store during specified time periods to determine ideal staffing levels. Receiving real time alerts when aisles or exit ways are obstructed to immediately asses and remedy the situation. Video analytics can also be a valuable and effective tool helping users detect gaps in staff training or store management. They can also assist in elevating awareness of outstanding employee behaviour providing the opportunity to acknowledge and praise good performance. Operations can optimize staffing to match customer traffic, and traffic counts (people counting) combined with POS data can be used to calculate conversion rates. For customers, satisfaction is increased with more efficient service which can expand sales opportunities, optimize store performance and overall operational efficiency and profitability. In retail environments, some stores perform better than others. And, over time, any given store can have variances in day to day sales. With the right insight, which can often be provided through the use of video business intelligence, managers can view analytics to determine why certain locations are not performing as well as others. Perhaps there is not enough stock available on shelves, or employee break or lunch times are not well scheduled, leaving customers underserved during prime sales times. No matter the reason, linking this information with other available store data can assist in uncovering problems and opportunities. Weather can be a major influence on store traffic. VBI can even capture weather history as a data point when assessing outliers in traffic data. Operations departments have, with VBI, single pane awareness through user definable dashboards and reports assisting them in reviewing the health and viability of their organization. The use of these analytics then allows them to make well informed, critical decisions in a timely matter decisions based on data, not assumptions Page 5

7 The Role of VBI in Merchandising Video Business Intelligence can also serve as a valuable business tool for Marketing and Merchandising departments. Several ways that these areas can benefit include video analytics and video business intelligence that can be enabled to include: Assessing the time shoppers linger in front of an end cap or promotional poster to gauge customer interest in the product or offer. Identifying traffic patterns to determine where customers are congregating in the store, or conversely what areas of the store have little traffic to better organize store layout and arrange inventory. By using the analytics already captured, Marketing can access metrics to analyze not only customer behavior, but also the promotional effectiveness of marketing campaigns. Was a new ad or promotional offer successful in bringing people into the store? When they came in, where did they go? Was the promotional item they were searching for placed in an optimal location? Marketing can even combine this information with POS data to calculate conversion rates, once again utilizing an asset traditionally dedicated to Loss Prevention into a corporate asset that can increase sales. This enhanced understanding of buyer s behavior provides users with critical insights when designing marketing and promotional materials to optimize merchandising activities. Merchants can additionally analyze store traffic to identify patterns, gaining knowledge on premium areas for product placement. Locations that are not attracting customers can also be identified. This information can be invaluable when negotiating with consumer packaged goods companies which pay a premium to obtain the most desirable shelf space. Captured intelligence also serves as proof for management that displays are up, product is placed and stocked at optimal levels, and signage is clear and unencumbered. How Does VBI Work Within Overall Risk Management? The value that video business intelligence and video analytics can provide in the area of risk management is extensive. While the data captured by the surveillance system can be leveraged outside of the parameters typically viewed as Loss Prevention, the core responsibility does remain protecting the assets of the organization; and one way to accomplish this is through the appropriate management of risk. Organizations can benefit by enabling functions to include: Capturing data that identifies behaviors or patterns that create risk for the organization, employees or patrons such as blocked exit areas enabling staff to quickly respond to conditions requiring attention. Page 6

8 Bringing visual (and audio) verification into the equation when conducting an audit to see firsthand what actually transpired; especially valuable when confronted with a costly slip and fall claim or an employee accident. Receiving alerts on loitering activities taking place either inside or outside of a store to ensure quick response, which may assist in eliminating possible theft or damage to property. The financial losses that can occur from fraudulent claims, lawsuits, or insurance payouts may devastate a business operation. In cases where an accident has occurred, proper investigation is aided by clear identification of the severity of the situation, who (or what) is responsible, and what action needs to be taken. Liability may also be minimized if it is determined that the accident was staged. Using video business intelligence in conjunction with video analytics allows the organization the ability to mitigate risk through the discovery of situations where corporate adherence is not present or fraudulent activities are taking place. The Return on Investment for VBI Those organizations utilizing advanced video analytics find that their return on investment can be increased through noticing, and acting upon, activities that create shrinkage. By proper implementation of recommended actions, Loss Prevention managers often find that the payback of such systems may be obtained rapidly through the lessening of employee or patron theft. Managers no longer have to look for data, or make assumptions on the reasons for shrinkage, the information is provided to them through the capture of real, actionable data based on facts. For marketing and merchandising purposes, trend data allows the ability to predict or identify anomalies that can then be analyzed to assist in determining the effectiveness of marketing and merchandising campaigns; providing a valuable tool in planning future activities to strengthen sales. Typical VBI Deployments Video Business Intelligence has been widely deployed in a number of large retail organizations, where capturing and understanding data is used to provide valuable and actionable insight. Just an example of the companies that have embraced its use, and the considerable insight that is provided include; Nike USA, Sterling Jewelers, Home Depot, and 7 11 to name a few. Beyond the retail sector, VBI applications are being embraced by a number of industries such as transportation, financial services, public safety and educational institutions. Page 7

9 Why is VBI More Relevant Today Than Ever? Beginner s Guide to Video Business Intelligence (VBI) Research conducted in the area of Video Business Intelligence in 2013 confirms that Chief Financial Officers continue to emphasize business intelligence (BI)/analytics and business applications as top areas for investment and focus. As reported in a joint study conducted by Garter, Inc. and Financial Executives International (FEI) it was shown that 15 of the top 19 businesses processes that CFOs identified requiring improved technology support may be addressed and/or improved with investments in these areas.[5] The business intelligence market (including data warehousing and CRM analytics) is growing faster than other areas of the enterprise application arena at approximately nine percent annually. Valued at $57 billion in in 2010 ($30 billion from business intelligence services, $10.5 billion from BI platforms/analytics and $10.5 billion from data warehousing), and allowing for the predicted growth, the BI market could increase to $81 billion by 2014; and if current trends continue a market worth as much as $136 billion could be expected by As noted by Gartner Analyst, Rita Sallam, approximately 30 percent of users currently deal with analytics, but growth is expected to rise to around 50 percent by 2014 and could reach 75 percent by 2020.[6] Page 8

10 Is VBI For You? Use this worksheet to determine if your company is ready to use VBI. Beginner s Guide to Video Business Intelligence (VBI) For each category, select the appropriate number. If you strongly disagree, choose 1. If you strongly agree, choose 5. The numbers in between 1 and 5 correspond to your level of agreement, neutrality, or disagreement. Add up your score when you re finished, and follow the instructions at the end. Factor Disagree Agree Loss prevention is a major focus for my organization as shrinkage is a problem. We need more insight into where shrinkage is occurring. We need clearer reporting back to management on our activities to stem shrinkage. We need more intelligence on what video to watch. It would be impossible to respond to every alarm we generate. We use contracted security services, and are finding that we have a high turnover of contracted staff. We would improve the perception of security if we were able to play a bigger role within other areas of the business. We would like to ensure our investment in security systems offers value outside of security and loss prevention. Security within our organization is very reactive. We need to ensure more is done to prevent organizational risk such as fraudulent claims and litigation. To interpret your results, add up your score. If you scored > 35, you re ready for VBI. If you scored between 20 and 35, you re moving in that direction. You should consider getting started with VBI very soon. If you scored under 20, you may not be ready for VBI quite yet. But that doesn t mean you can t keep reading! Regardless of your score, there s good news: Where you are now is exactly where you need to be in order to get more from your security investment. Why delay? Call 3xLOGIC and See Your Business Differently West 91 st Avenue Westminster, CO xLOGIC, Inc. All rights reserved. Information in this document subject to change without notice. 3xLOGIC, VIGIL Trends, See Your Business Differently and the 3xLOGIC logo are trademarks of 3xLOGIC Inc. All other trademarks are the property of their respective owners. Page 9