What's next for Sensormatic

Sep 1, 1997 12:00 PM, TINA D'AVERSA-WILLIAMS

Sensormatic designs, manufactures, markets and services electronic article surveillance (EAS), electronic asset protection (EAP), closed-circuit television (CCTV) and access control systems. Founded in 1966, Sensormatic is a NYSE-listed (symbol: SRM) global corporation with more than 6,500 employees doing business in more than 70 countries.

During fiscal 1996, the company brought Robert Vanourek to the helm as president and CEO in a restructuring plan that included an extensive and systematic review of global operations and cost structure aimed at increasing efficiencies, and reducing operating expenses and manufacturing costs.

Sensormatic recently named Wayland R. Hicks and J. Richard Munro to its board of directors, expanding the number of seats to 10. Munro, 66, joins Sensormatic as the former CEO of Time Inc. and the former co-CEO of Time Warner. Currently, he is chairman of the biotechnology firm Genentech Inc. and a director of Mobil Corp., Kellogg Co. and Kmart Corp.

In further restructuring, Sensormatic announced in March 1997 that it would sell its Enterprise Accounts Division (EAD), and in May, the company announced discussions with Pinkerton to purchase the division. By early August, however, Sensormatic and Pink-erton had ended discussions on the proposed sale, as the parties were unable to reach agreement on material terms. A spokesperson for Pinkerton said the deal was quashed after an extensive due diligence investigation.

But by August 11, Sensormatic had found another buyer. The company announced that it had signed a letter of intent with Security Technologies Inc. (STI), Coral Gables, Fla., for the sale of EAD."We look forward to this new relationship with STI as an independent dealer and expect that Pinkerton will remain a valuable customer and major dealer of our products," Vanourek said.

Access Control & Security Systems Integration spoke with Vanourek about the past, present and future of Sensormatic.

Q Now that the 1996 Olympic Games in Atlanta are history, what benefit did Sensormatic achieve from being the official electronic security provider and a sponsor of the Games?

A Perhaps most importantly, the Games gave us the opportunity to show that an integrated electronic security system could successfully protect the largest peacetime event ever held. Our role also helped us develop new relationships with many companies which have since become valuable customers. Working with these customers, we have also developed new, integrated systems.

Finally, we gained tremendous exposure, which has the potential to result in more than $100 million in new business for our company and positioned us as a world-class provider of integrated electronic security systems.

Q What's new since the Olympics?

A 1997 has been and continues to be a year of technological breakthroughs for us. Earlier this year we introduced a new access control product, the EZ2000, that is designed for small to mid-range businesses. Our access control product line now covers the full spectrum from large, multi-site facilities to small, stand-alone buildings.

We have also introduced, this year, an intelligent digital recording device that can automatically search for events through pre-programmed instructions. Customers tell us the intelligent recorder should prove to be one of the most significant products in our line.

Plus, the RFID systems we did for the Olympics are now being enhanced to protect people and assets in companies across the country. For our retail customers, we have had several significant product announcements for our anti-theft systems.

We are also continuing our work on integrated systems, developing a platform that will encompass all components of a security management system. Our vision is to develop an open-architecture platform integrating electronic security and tracking systems.

Aside from technology, we have also made significant changes and additions in the management of Sensormatic. These changes and additions have helped us to broaden and strengthen our capabilities and given us the ability to grow toward our second billion dollars in revenue.

Q Why did Sensormatic decide to sell its commercial/industrial direct selling organization, the Enterprise Accounts Division?

A We recognized that the most efficient and effective way to deliver our range of integrated electronic security products into the marketplace is through a strong dealer network supported by equally strong sales and marketing support. We expect broader acceptance of our CCTV, video surveillance and access control products as a result of this direction.

Q Describe the strategy behind the commercial/industrial business unit's channel harmonization program between direct and dealer sales.

A Sensormatic recognizes the enormous potential in the commercial/industrial marketplace worldwide. For that reason, we have chosen to distribute our products to the market through a strong dealer and distributor network supported by an internal marketing and sales support organization. That is the best way to deliver our range of integrated security systems to the largest audience on a worldwide basis.

Q What will Sensormatic do for commercial and institutional end-users?

A We will continue to develop systems that address the security needs of a diverse segment of business and industry. Our focus will be on integrating these systems into a seamless package. Our vision is one of security accessible by any individual anywhere in the world at any time.

We will continue the integration of our various systems to deliver multi-level security on a single, open platform. We see a security manager being able to get a status check on worldwide facilities from a personal computer, whether at the office, hotel room or anywhere in the world.

Q What is Sensormatic's product development strategy for the future? How has the company's strategy changed over the last few years?

A Sensormatic's product development strategy is changing from a stand-alone product focus to an integrated systems focus. This is a fundamental departure from hardware products to software-defined systems development.

Our focus today is in addressing a broader range of needs for customers through our new products. We are also endorsing an open systems approach where we will work with customers to better adapt our products to their specific requirements. That gets back to our vision of a single integrated security platform. With the globalization of business today, integrated systems will become even more crucial. An employee who works in the United States will need access to facilities around the world, and providing that access with a single technology,a single card is becoming more and more important.

Q Where do you see Sensormatic's growth opportunities over the next five years (internationally, market share, etc.)?

A We see our growth mirroring the industry's. Estimates are that the worldwide security industry is predicted to grow at anaverage of 12 to 14 percent annually. Plus, recent acts of domestic terrorism have increased the need for security.

We are continuing to develop a strong dealer base both here in the United States and abroad. We recently opened our commercial/industrial office in the Asia-Pacific rim where we are seeing significant growth. We are also continuing to build a strong dealer network through our European operations. Our new distribution channels, coupled with our new product introductions, will provide us with continued growth opportunities in all market segments.

Q What are Sensormatic's acquisition or merger plans?

A As always, Sensormatic is interested in acquisitions and alliances that would provide a strategic advantage. With that in mind, we will continue to look actively for partners that fit areas of electronic security, sensing and tracking applications. In addition, we are always interested in developing new alliances like we have done with companies such as Micron Technologies, Texas Instruments and Motorola that will help us deliver sophisticated, integrated systems to the marketplace.

Q Characterize your target markets.

A With our array of integrated electronic security systems, we can provide solutions for all types of businesses ranging from retail shops to casinos to government facilities to hospitals and universities. We will continue to develop and bring to market security solutions for all types of business. One of Sensormatic's strongest elements is the fact that we can provide systems for nearly every security requirement.

Q What is Sensormatic's branding strategy?

A Our dual branding strategy that addresses differences between our retail and commercial and industrial markets will continue. Where appropriate, we will continue to use and promote the American Dynamics, Robot and Software House brand names, inasmuch as they carry very high recognition in the marketplace and represent brand equity for Sensormatic.

Q How independently do the product divisions operate and is that likely to change?

A The product divisions operate as independent "centers of excellence," with significant interconnection, cooperation and communications among themselves, as we further develop integrated security systems.

Sensormatic snapshot Annual Revenues-$954 million (FY97 after August 8, 1997)

Products electronic security, sensing and tracking systems including access control, CCTV, asset protection, remote monitoring, RFID, electronic article surveillance and point of sales exception monitoring software.

Number of countries operated in-more than 70

Number of employees-6,500

Distribution channels direct and indirect sales channels

Customers retail, commercial, and industrial businesses including more than half the Fortune 500 companies and 97 out of the top 100 retailers.

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 authored by Tina D'Aversa-Williams, publisher of Access Control and Security Systems Integration, whose background includes work in market research and analysis.

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