This is the second in a series of guest blogs from Mike Knievel, Executive Vice President at King Rogers Group Analytics (KRGA). KRGA, an Insight Marketplace partner, provides loss prevention audits to Envysion customers through the Envysion platform.

By leveraging Envysion’s MVaaS, KRGA’s team is able to quickly identify, review and resolve potentially fraudulent employee activity for Envysion customers. Through use of Envysion’s video integrated exception reports KRGA’s veteran staff can also investigate trends and behavior patterns and pinpoint operations and training improvements needs at customer’s locations.  

E: What do you look for when searching for patterns of theft?

MK: Exception reports are an important part of our loss prevention tactics for identifying patterns of theft in our customers’ organizations. But did you know that while patterns in exception reports not only help us prevent loss for our customers, they can also lead to increased theft?

Once dishonest employees become aware of what exception reports detect, they can modify their behavior to avoid detection and continue stealing. For example, a company may review and question cashiers on all transactions under $2.00. A dishonest employee might change their pattern of under-ringing to an amount higher than $2.00 to avoid detection. Another example is a “No Sale” exception where a dishonest cashier may remove money from the register after under-ringing sales.  If they become aware that all “No Sales” are reviewed, they may switch to taking cash out on the next exact payment transaction if a customer walks away from the register because the customer is not expecting change.

E: How do you keep your exception reports from growing stale so theft does not occur through report pattern recognition?

MK: We work with our customers to adjust thresholds for items tracked, and teach customers how to rotate reports. By doing so, a company can overcome theft facilitated by employee recognition of patterns in exception reporting. Envysion’s highly-customizable and flexible reporting makes addressing exception report pattern recognition easy for our Insight MarketplaceTM customers.  With just a few clicks, we can build custom reports for a customer’s location or instruct the customer on adjusting thresholds themselves.

E: What are your best practices for incident response?

MK: In response to theft, we feel strongly that organizations should develop clear policies and procedures for addressing it, and that they communicate their policies and procedures clearly and consistently to employees. Policies and procedures should be communicated on a regular basis in all possible forms such as: formal training, emails, highly-visible placards and team meetings. Departments such as loss prevention, human resources, legal and store operations should all participate in the development of these policies and procedures because they all have a role in dealing with employees who are caught stealing.

From an investigative standpoint, we have found that the most critical item is to immediately broaden the scope of the investigation of the suspected employee.  Two key aspects must be determined:

1.            What is the impact of the theft – Are you dealing with an employee who is stealing small amounts or an employee who is seriously impacting the profits of the store?

2.            Is the suspected employee colluding with other employees or friends, or are they working alone?

Knowing these two things will drive the decision on when and how to respond.

One dynamic of the evolving managed video as a service market is the impact we have broadly on the traditonal video buying process and specifically on the individuals that are used to owning that decision.

Historically, enterprise video purchase decisions are owned and made within a specific department: typically loss prevention, security, asset protection, or sometimes IT.  Budgets for video are typically set as part of the overall corporate budget process.   These departments get whatever budget dollars allocated that they can and then have relative independence to pick solutions that meet their needs within those budgets.  It is not uncommon to see manager or director level employees making multi-million dollar commitments for large companies.

With MVaaS, video becomes a cross-departmental management tool that is used by 10-100x as many people and that touches a wide range of locations, employees and departments.  It is no longer the sole purview of that department that used to own it.  While loss prevention or asset protection may spearhead the deployment and the utilization, there are lot more interested parties involved.   Given the service has to share the company’s network and is likely interfacing with key business systems, IT has to be involved and bless the service.  Given the vast majority of potential end users are outside the LP or asset protection departments, in groups like operations, finance and marketing, there are a lot more people driving requirements and utilizing the service on a daily basis.  Given the huge financial impact, the finance organization needs to understand and believe in the effort.  All of these leads to a C-level, cross departmental decision and a project that extends deep into and across the organization.

While the impact at the corporate level is tremendously positive, what does this change mean for the project champion, the team member that used to own the decision all by themselves?  Are they better off for having given up or at least shared a bit of their domain?  It certainly takes an open-minded, company results driven person to embrace this new role, but those that do have proven to become even more meaningful contributors to their companies that are recognized and rewarded for the value that they’ve helped deliver.

I’ll offer two examples to make my point:

• Our champion at one of our largest customers was one of only 5 people out of over 25,000 to receive the company’s highest possible individual annual performance review score, in part for his work deploying and managing our service, driving meaningful profits to their bottom line.
• Another champion at one of our biggest customers just received their President’s Award (out of over 7,000 employees) specifically for her work deploying Envysion services and driving profitability improvements across the organization.

MVaaS can have a profound impact both on a company’s profits and on the success and achievement of the individuals that help bring it into the organization.

Over the next few weeks, I’ve invited Mike Knievel, Executive Vice President at King Rogers Group Analytics (KRGA) to share his loss prevention insight in a series of guest blogs. As an Insight Marketplace partner, the KRGA team brings decades of experience in security management with retail organizations, corporations, government agencies and law enforcement to Envysion’s award-winning managed video solution. By leveraging Envysion’s MVaaS, KRGA’s team is able to quickly identify, review and resolve potentially fraudulent employee activity for Envysion customers. Through use of Envysion’s video integrated exception reports KRGA’s veteran staff can also investigate trends and behavior patterns and pinpoint operations and training improvements needs at our customer’s locations

Envysion: Why did you decide to partner with Envysion?

Mike Knievel: Envysion products and services are unparalleled in the market.

Their exception reporting is flexible, customizable and presents meaningful information. Furthermore, by integrating video with POS data, Envysion’s system transforms information into knowledge, resulting in better decision-making. All this information is quickly and securely shared among users of the system from anywhere in the world with Internet access.

E: What captured your attention with the Envysion platform?

MK: The first item that stood out was how easy the system was to use. The navigation, the reporting—the entire solution was so user-friendly and intuitive. The second thing was the flexibility of the Envysion solution. Envysion’s fully-customizable exception reporting from the POS system enables us to extract and present data in ways specific to our needs.

It only took one quick query to reveal how stores compare to one another in one exception area. Then one simple click later, we could see how cashiers compared to each other within a particular store. We select which cashiers we want to review and click on a particular transaction and Envysion’s system takes us directly to the corresponding point in the video. It’s amazing how powerful the system is, especially when it’s so easy to use.

E: Besides loss prevention, in what other areas does the Envysion solution excel?      

MK: Typically, POS audits are used to identify theft. However, they are also great for finding human errors that can result in losses far exceeding theft issues, such as when an item is first set up (incorrectly) in the system. An exception report will reveal the problem and the video component will show that nothing malicious is happening. This is a signal to dig deeper to uncover the problem (an item is keyed in improperly).

Consider a sale item that is improperly set up for a 1,000 store chain. Each store sells an average of 10 units = 10,000 units. If the error is entered into the system as $5.00 too low, this results in a 10,000 x $5.00 = $50,000 profit loss. That’s a lot of money lost from one typo! 

The Envysion system can also help determine if a cashier has been improperly trained. We may find a recurring, improperly applied discount that shows up on an exception report, and the video reveals who is consistently applying the discount incorrectly. Once the cashier is identified, the training issue can be corrected and the cashier can apply the discount properly.  

Had someone ask me this weekend about the recent Amazon outage and what the potential implications are for MVaaS and Managed Video solutions like the one we offer at Envysion.  For Envysion (as well as for the competitors that I am aware of) we don’t outsource our infrastructure to a provider (like Amazon) so this particular risk is doesn’t exist – we operate our own data center.  Will Rhodes over at IMS provided a similar view on his recent post.  Even for those that do leverage an outsourced provider Amazon’s outage is simply a reminder that redundancy and business continuity are areas that need to be part of your business.  Feld’s guest poster summed this up pretty well. 

Amazon’s crash reminds me of a couple years back when Salesforce.com had an outage.  While it highlighted the need to review and establish SLA’s and performance metrics with cloud providers it certainly wasn’t a harbinger of the demise of the cloud.  The benefits that SaaS and MVaaS services can provide through increased usage & access, scalability, reduced barriers to entry, and lower IT burdens are real.  The set of potential risks and challenges of internet software, such as a salesforce.com like outage, may be different (though in my opinion no greater) than traditional software but like any risk can be mitigated with proper preparation and partnering with the cloud provider.  Its been pretty clear for a while now that the cloud is ‘enterprise ready’ and we have seen the majority of Fortune 500 hundred companies embrace cloud solutions and traditional software providers rush to adjust their models to meet that demand. 

Lastly on a different topic, thought I’d provide some links to recent articles and updates on the Managed & Hosted Video Summit that’s coming up this June 6-7.  Security Systems News had a recent article as well as a post by channel guru Dan Baldwin.

Benchmarking is a valuable Loss Prevention tool. Related to Chasing Your Tail – looking for your worst offenders across any metric – benchmarking strives to bring all your locations, employees (or whatever else you may be measuring) up to the level of your top performers – your benchmark.

Benchmarking is a method used to develop a standard to measure performance against. Based on the key metrics or KPIs which you use to determine how well your business is running, breaking down any of these given metrics by location or employee to tease out your leaders and who are your laggards. Then, extending beyond measurement, looking to the leaders who make up the benchmark, study them, learn their qualities that make them the crème de la crème and try to emulate those qualities in the under-performing locations and employees. Finally, on an on-going basis, re-measure to gauge improvements.

To effectively benchmark your locations or employees, you need to:

• Know which metrics you wish to benchmark on
  • These metrics need to be measurable and will likely need to be normalized
  • They also need to be in-line with your company values

• Know how many locations to include in the benchmark
  • Ranking your locations on a metric – include the top 5-10% of locations or employees
  • Compute the mean or average across the top locations and employees on the given metric – this will give you your Standard which you will want to strive to achieve with your other locations and employees

• Study your top locations and employees, the leaders, and study your the laggards
  • Use video to observe operations. What are the qualities of your leaders that you want your laggards to emulate?
  • Develop a plan – changes to implement amongst your laggards – and execute

• Follow-up
  • After having implemented changes, re-perform the measurement against the benchmark. How are your laggards doing? Have they improved?

At the end of the day, benchmarking is about being introspective and striving for more with an attainable goal.

At Envysion, our goal is to get our users to the video that matters to them quickly. Usually the important video is of potential fraud or theft. A key way we do this is through integrating video with point of sale (POS) and then creating custom reports to identify transaction types that can indicate fraud or theft. By integrating video with POS data, Envysion transforms information into knowledge – the data may give you a hunch that an employee is stealing from you, but Envysion quickly provides the proof. In a meeting with a multi-unit restaurant customer this week, a loss prevention professional shared a great example of how Envysion’s exception reports have uncovered one area highly susceptible to loss and helped to prevent this instance of fraud across the entire enterprise.

In the QSR/fast casual sector, many multi-unit chains incentive customers to buy more food by offering meals, which consist of an entrée, side and soda. The meal price is cheaper than buying each item separately; however, the restaurant has convinced the customer to buy three items when perhaps they only intended to buy one or two.

In this case Envysion helped the restaurant’s management team uncover an employee taking advantage of the meal incentive to subsidize her hourly wage. This particular employee realized that because of the way meals were set up in the POS system she could charge customers for a $7 meal ($4.50 entrée, $1.50 side and $1 drink), but only key the entrée and side into the register. Since the customer was expecting to pay $7, the employee knew she could short the register a dollar and pocket the $1 without anyone being the wiser. Over the course of a shift she was able to under ring 20 meals, and at five shifts a week, she was routinely defrauding the company $100 a week ($1 x 20 x 5).

Using Envysion’s video POS integration and robust exception reporting, the management team was able to build a report to detect meals without drinks and set a threshold for the excepted number of exceptions to allow for those customers who really do order a meal without a drink. When an employee surpasses the acceptable threshold, the regional manager receives an email alert and can immediately retrieve the video of the transaction. By reviewing the video of the transaction, the regional manager can easily validate whether or not the customer received a drink cup and take corrective action if necessary. Use of this report has drastically cut down on the number of meals sold without drinks, putting those extra dollars back into the register, for this restaurant.