Siemens' Security Division outlook

Apr 9, 2002 12:00 PM

The outlook for Siemens' Security Division:

An exclusive interview

Looking at 20 percent annual growth and to benefit from its international ties, Siemens Building Technology's North American Security Division has an optimistic outlook on the future. The division was created through the July 2001 acquisition of Security Technologies Group (STG), Plantation, Fla., the nation's largest provider of fully-integrated, electronic security systems to large commercial clients and institutions. "More than 75 percent of what we are right now is STG and the other 25 percent comes from the other two divisions (fire safety and building integration) that were involved in security projects before the acquisition," explains Mark Landis, president of Siemens' North American Security Division (and former president of STG).

Siemens is a Munich, Germany-based conglomerate with $90 billion in yearly revenue per year. With offices in 90 countries, the company has about 450,000 employees all over the world. Siemens' building technology division generates $5 billion dollars a year in revenues. The North American market (US and Canada) is responsible for a little less than $2 billion out of the total.

Sandra Marina Johnson, editor of Seguridad Latina, our sister publication serving the Latin American market, interviewed Mr. Landis and Senior Vice President Steve E. Walin recently at their Florida offices. Here is a transcript:

MR LANDIS: "The expectation is that our business will grow dramatically over the next five years. We expect to quadruplicate our business in that period of time both by organic growth and by new acquisitions.

"Our division installs access control systems offering a variety of cards and technologies, including biometrics. We also install CCTV, intrusion and alarm systems. We have two central monitoring stations in the United States. All our clients are commercial entities to which we offer alarm monitoring. In some cases we also offer remote management of their access control systems. Since we install third parties products, we also invest in evaluating and reviewing products and technologies. We publish reports with the results of our analysis. "SBT's North America Security Division is growing the business at a rate ahead of the electronic security market growth, which is considered to be 12 per cent per year. We are growing at a 20 percent pace and we will grow more rapidly through acquisitions.

"SBT's North America Security Division works with companies such as General Motors, Sprint, Intel, Boeing, Dell Computers, which many times ask us to support them oversees. Now that we are part of a company with offices all over the world we can do it. We can install a system in a U.S. based company and offer to control their overseas facilities over global networks. STG was already known as the best company installing large-scale geographically scattered projects operating over networks, but we couldn't take that overseas. Now we have the combination of having the technology and the expertise as well as the people who can implement it and support it in overseas locations. Right now we are working with several companies who are interested in having global security systems."

Q: What about the biometrics market?

MR. LANDIS: "So far there is a lot of talking about biometrics but not a lot of sales. I think the interest in biometrics will continue to grow. There is a variety of biometric technologies, but so far the most popular is the fingerprint. We are not pushing any of these, but definitely we have already evaluated all the options available in the market."

MR. WALIN: "My point of view is that the demand for biometric products has grown. He have seen an increase in requests of biometrics but our job as a system integrator is to solve our client's specific security problems by offering the best solution in each case. We can certainly integrate biometric products in our solutions, but as a percentage of our business, biometrics is still a small but growing portion of our business."

Q: How has the security industry changed since Sept. 11:

MR. LANDIS: "In a presentation I gave yesterday I quoted a special report on workplace security published on March 11 by the Wall Street Journal. The report said: 'In the wake of September 11, security seemed to be where the money was - and companies of all stripes wasted no time trying to get a piece of the action. Thus far, the biggest winners have been consultants and other advice givers. Seminars are also popular." "For the most part, the only organizations that have shelled out for new technologies to identify potential criminals have been public-sector operations and airports." "As they say, we haven't seen a big jump in spending but we have to take into consideration that all the corporations are suffering from the economy."

Q: What are the trends?

MR. WALIN: "One of the trends we are seeing in this market is that the customer wants to deal with fewer suppliers and prefers to work with financially stable, strong companies. This is something that definitely differentiates us. We can take advantage of this trend because of the fact that we are stronger, larger and more stable than many other companies, which is a point of contrast."

MR. LANDIS: "The way we are working in order to add new vertical markets is through a Vertical Markets Team. This team is in charge of opening new possibilities within the Chemical and Government market segments. We are also trying to reach the transportation industry (with an emphasis on airports) as well as segments such as telecommunications, schools and universities. "SBT's North America Security Division buys the products we require for our client's installations, but yes, Siemens is interested in creating an area devoted to manufacturing some electronic security products or in acquiring a company that already manufactures this type of products. Right now we spend millions on buying products from third parties. This doesn't mean that we won't continue buying products from other companies, but that we will also offer a Siemens option. "Siemens is also interested in creating a global access control product that can be offered as an alternative to similar products available in the market. "The way we differentiate (ourselves) is by the quality of our field implementation programs. Because our business is more high-end, more sophisticated, our field operation personnel and project managers are trained to be more effective in sales, installations and follow up services. "The other advantage is that Siemens in general is focused on customer satisfaction. For Siemens customer satisfaction is not only a word. Every three months, a large portion of Siemens security customers (between 150 and 200) are contacted surveyed by an outside company. They do a phone interview where the customer will be asked about its satisfaction with our service. All that information is saved in a database and according to the customers' answers each of the offices gets a rate. They will also receive an explanation of why the customer is not satisfied."

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