[IMAGE]12281[/IMAGE]Let’s talk about the GE acquisition. GE never seemed to find its footing in security. Why is that and how will UTC deal with those brands, products and people to ensure the success and growth that eluded GE?
Romano: There has been a big commitment, $9 billion worth of investment and counting in this space. I think the fact they’ve made a big leg of UTC and said they want to continue to invest is an important part of the strategy and commitment we have behind being in the fire and security industry. At the same time, we’re also focused on driving organic growth. We’re investing more and more in R&D, and we stepped up investments in 2010 after the GE acquisition. We’ve stepped up investment in 2011, and I see that happening again in 2012.
GE is a big company and invests in a lot of different areas as well, but I think when they made the decision that maybe they were going to focus on other things there were areas we are investing more in, like residential intrusion and video, that will make us more successful. The other advantage I see is bringing to bear the UTC operating model, and it is very powerful in terms of operational efficiencies, qualities, innovation and technology.
I would argue the acquisition has really been a game-changer for us. We had some product gaps and they’ve filled a lot of those, so now we a full portfolio across security and fire. We’ve brought to bear additional brands that have great equity in this business and additional channel relationships that perhaps we didn’t have. We now have a full complement to offer customers.
Should dealers and integrators anticipate any personnel cuts being made to your sales or technical contacts?
Romano: When we did the integration early on, there was a lot of focus on the front end. We needed to make this seamless for our customers. As with any integration, we were looking for efficiencies. We were not looking for, if you will, efficiencies on the front end with customers, things like the sales organization, customer support and technical support. The feedback we’re getting is we achieved that seamless transition.
What is the plan to handle the integration of Casi with Lenel, and similar brand and product line issues?
Romano: We have business unit brands and we have product brands. On the business unit side we had Lenel, we had Onity, and GE brings in Supra. Then we brought back Interlogix, which had a lot of brand equity in the marketplace and that’s gone over very well on the channel side. On the products side, we want to leverage the strong brand equity out there. We’re aware there are opportunities to elevate certain brands and to make sure we don’t have, if you will, brand proliferations.
As we think about Casi and the whole Picture Perfect-Facility Commander migration, and the platforms that support those systems as well as the OnGuard and GoEntry systems, we’re looking at leveraging the best technology across the board. We’re looking to be able to provide things like cloud, hosted, managed, mobile PSIM [physical security information management], video management system [VMS] capabilities, bringing more technology but protecting investments that customers have already made.
Are you helping integrators through that process with their customers?
Romano: Absolutely. In fact, we’re having those conversations now. It’s generating a lot of excitement because they’re seeing we have a migration path, and we’re investing in a way that protects customers on the hardware side with what they already have installed.
Let’s talk about the Chubb and Counterforce sides of UTC’s business. How do they coexist with dealer and integrator customers that may compete with them? Is there channel conflict?
Romano: In 2009, we organized UTC Fire & Security into product businesses, so there is the Global Security Products business, the Global Fire Products business, and then we have five service regions — the Chubbs of the world. These businesses are separate P&Ls. My mission in life is to maximize global security products across the board, working with the various channels. We have a very strong and loyal channel in security products. Sometimes it’s with Chubb and many times it’s with other strategic partners. We value all sides of the equation. Because they are managed independently and my job is to maximize global security products, I don’t see a conflict per se.
I had the same situation at Carrier, where on the commercial side I was developing and selling new products to contractors, and yet I also had a service organization. Because we managed it at sort of an arm’s length, we were able to manage that channel strategy.
What are some of the ways UTC Fire & Security is reaching out to the installing dealer community?
Romano: Interlogix is the Diamond sponsor for ESA [Electronic Security Association] and participates in multiple events, including industry roundtables. We also offer programs to match the needs of the individual dealers or integrators. Our Security Pro dealer program is just one example. With each of the businesses — Interlogix, Lenel, Supra and Onity — we have a rigorous customer feedback process. Another example, Lenel has a Paradigm group where they meet with consulting engineers. They run by them where technology is going and get their input early on in product development.
We try to stay very close to our different constituents. We’re also advertising more and have created rebate programs for our dealers. This allows co-op advertising if they promote our products. We often hold events. In May, I attended a big event with Interlogix with about 300 dealers. A piece of it is around training and a piece is around introducing new products. It’s around bringing industry experts in to talk about where technology is going, how to sell, how to become more effective as a selling organization.
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