The service side of system management

Sep 1, 1998 12:00 PM, TINA D'AVERSA-WLLIAMS

Organizations need technologically advanced solutions to satisfy their security requirements, and security providers such as Security Technologies Group (STG), Plantation, Fla., are rising to the occasion by providing integration, ongoing management services and delivery of products that focus on customized single source solutions to meet client needs. STG is currently the nation's largest provider of fully-integrated, electronic security systems to large commercial clients and institutions.

>From its inception, STG sought to differentiate itself by providing "security services beyond technology." As a systems integrator, it designs, installs, monitors and services integrated security systems for clients. STG also provides ongoing systems management (maintenance, video/ alarm monitoring, badge administration, database management, alarm notification and patrol/response). STG's security central stations provide either total operational service to local clients or partial service such as off-shift monitoring. The company provides badging, database management and programming services, as well as specialty guard services. STG has also expanded to provide network and telecommunications integration and total security operations to major corporations nationwide. In September 1997, Security Technologies Group acquired the Enterprise Account Division (EAD) of Sensormatic Electronics Corp., which provided STG with the professional technical capabilities to offer commercial clients consistent nationwide service. In October 1997, to complement its single source provider solution, STG acquired the SSM division of Sensormatic, a central station monitoring center then located in Rockville, Md. Access Control & Security Systems Integration spoke with the mastermind behind STG - Mark Landis, president and CEO - for his perspective on the security industry. Mark Landis has been in the security industry for 20 years. In 1982, he was managing director of Kroll Associates and led Kroll's initiative to invest in the electronic security market. In 1983, Kroll and Landis purchased Casi, and Landis became chairman and CEO until selling four years later. Striving to become a dominant force in the service end of the security business, Landis bought STG in 1986.

Q What is STG?

A Today, STG is a North American electronic security integrator with a national delivery infrastructure to answer the emerging needs of Fortune 500 accounts and large educational or quasi-governmental institutions across the country. In size and revenue, STG is the largest systems integrator in North America. STG offers the full spectrum of security services.

Q Why did STG buy the Enterprise Accounts Division of Sensormatic?

A Before answering, let me define the needs of our target clients relative to current conditions. The security market has been in development for approximately 30 years and is still arguably a cottage industry, devoid of an SIC code. There are approximately 15,000 security suppliers of which more than 85 per-cent are niche operators with yearly revenues under $5 million. Consequently, a disproportionate number of these operators have limited geographic reach, service offerings, influence with major vendors, and are at a buying disadvantage. Until the formation of STG, expectations of national clients were not being met. National clients expect and need a single-source solution to eliminate the complexity and vulnerability of multiple niche security suppliers. Such clients expect consistent installation, as well as service and response standards on a national basis. As a result, STG purchased EAD for its national delivery infrastructure, its technological capability, and its talented personnel. Bottom line: STG is positioning itself to meet the immediate and future needs of large regional and national clients.

Q What emerging trends are driving the commercial security industry?

A From a market perspective, the commercial security marketplace is a cottage industry nearing the end of its evolution. It is moving toward a better way of delivering products and services through consolidation, strong strategic alliances, and deployment of innovative service and delivery.

>From a technology perspective, the days of closed or proprietary systems architecture are numbered. Manufacturers are under pressure from the end-user to develop open architecture technology that will be network compatible, scalable, and able to communicate and interact with other functional areas of an organization. Basically, security systems are becoming more central to the operation of national organizations.

Q What is the STG philosophy on outsourcing? A We believe there is an unstoppable propensity to outsource security at the national account level, and it will continue to gain momentum. In fact, a precedent or paradigm shift is under way by national companies which already outsource a myriad of other products and services. Soon, security will roll under the same operational umbrella.

Q Where is STG's growth opportunity over the next five years?

A We believe there is significant growth potential in North America that will mirror the desire of large corporations to outsource security. In addition to systems integration, we are positioning ourselves to effectively provide the end-user with a comprehensive menu of systems management services (maintenance, video/alarm monitoring, badge administration, database management, alarm notification and patrol/response). We believe there is global opportunity and we will eventually move into certain strategic international markets. During the past 12 months we have added several new employees, made strategic acquisitions, built out our internal infrastructure and deployed new services. We need to integrate these resources prior to seeking overseas opportunity.

Q What are your acquisition or merger plans?

A We intend to move into the Canadian and Mexican markets as well as acquire companies that will augment system management. In the last 12 months we have completed several acquisitions. In the next six months, we will concentrate on developing our centers of excellence and strengthening our program for internal growth.

Q What is the development strategy for the future?

A We will concentrate on the management and integration of our rapid growth. In addition, we will build a national infrastructure through investments in people, technologies, facilities/equipment and management processes. Internally, STG will focus on the fundamentals. We will implement asset management, national procurement and central reporting initiatives to stabilize purchasing patterns, manage inventory levels, and lead to just-in-time procurement cycles. We will ensure there is efficient utilization of resources to maintain financial strength and skillful deployment of STG field personnel. We will deploy centers of excellence. Finally, our national model will deliver the right blend of local knowledge and a standard national presence. Externally, STG will focus on the attainment of long-term outsource contracts from national Fortune 500 businesses, strategic acquisitions and strategic market development alliances.

Q Describe the relationship between STG and Kroll O'Gara.

A Jules Kroll, the CEO of Kroll O'Gara, is on STG's board of directors. He is STG's single largest shareholder and is an STG market development partner.

Q What is STG's definition of security systems integration?

A Integration includes the installation of disparate components of electronic security so that they work together or interoperate. STG goes beyond systems integration to systems management and outsourcing.

Q Does STG provide integrated solutions that include system design?

A STG often does the design and CAD drawings for smaller systems. Normally STG works with independent security consultants to design, install and manage the systems. STG works closely with the large electrical contractors to ensure proper specifications are met.

Q How does STG test hardware and software to ensure quality system design?

A STG created "Centers of Excellence" - a group of hardware and software expert technicians. Each center of excellence specializes on a product line. These centers are responsible for testing and the preparation of all systems for the customer - using STG's high standards on a nationwide basis. The centers are responsible for pre-testing, setup and installation of all centers. We believe the expert technical support and planning on the front-end make the ongoing installation and service components better. STG's investment in these groups is something that smaller dealers cannot afford.

Q Describe STG's system planning, risk assessment, customer evaluation and technology assessment programs.

A Risk assessment and technology assessment are intertwined. STG begins an assessment by asking the customer what they need in order to provide a solution that meets these needs. Our most successful sales people come out of the technology side of the business - they know the proper questions to ask during preliminary assessments. The bottom line is we recommend whatever works best for the client. Q What choices do national accounts have today?

A Some groups are uniting several small independent dealers, through either acquisition or association, to give a national appearance. However, they are still operating as separate independent companies often under their original names and management .

Sidebar STG snapshot Annual Revenues July 1, 1998 - June 30, 1999 $100 Million (does not include future acquisitions) Areas of Business Systems Integration Systems Management and Monitoring Maintenance Patrol Response

Countries of operation U.S. (40 offices nationwide)

Number of employees Approximately 900 throughout U.S.

Sidebar The STG chronology 1975 Guard Technologies Inc. (GTI) formed 1986 GTI acquired by current ownership 1997 GTI changed its name to Security Technologies Group Inc. (STG) to reflect increased scope of business 1997 - Sept STG acquired Sensormatic Enterprise Account Division 1997 - Oct STG acquired the SSM division of Sensormatic (central station monitoring center) 1997 - Dec STG acquired Engineered Security Solutions Inc (ESSI) 1998 - Jan STG acquired Security Concepts Inc 1998 - June STG acquired Maris Equipment Company

Offering analysis and commentary on the security industry at large, our goal is to keep readers informed of the market growth and forward move-ment within the industry. The column is written by Tina D'Aversa-Williams, publisher of Access Control & Security Systems Integration, whose background includes work in market research and analysis.

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