[IMAGE]12282[/IMAGE]Are you looking at reseller relationships outside the traditional security dealer/integrator model, say IT, telecom, etc.? Do you see erosion on the security side, or is there enough opportunity for everyone?
Romano: I think it’s how you look at it, and it depends on the segment. In the traditional commercial/residential sectors, we’re seeing significant transformation into home automation, building system environments with entrants such as Comcast, Time Warner and Cox Communications. They offer a different value proposition, and I think that’s here to stay because it’s the nature of these technologies coming together. It’s opening up other relationships, other channels. It could result in erosion for the traditional dealer. I would also argue it offers an opportunity. For those organizations that are proactive, that stay relevant with technology and innovation, that have relationships in the marketplace, I think there is a real opportunity for them to grow.
Let’s talk about standards, an area many believe the industry is lagging in. What’s your take on issues like proprietary versus open platforms?
Romano: One of our R&D missions is making integration easier because we believe that’s what customers want. So devices need to be IP-enabled and wireless. Customers increasingly expect components to work together independent of the manufacturer. They want a total security solution. So we will offer best-in-breed technology from a component and equipment level. Our goal is to tie these into the best integrated solution on the market. We will provide customers with a choice to use our components with other systems and other components with our systems.
We strongly believe that open security standards need to be established. I think when you have open standards it speeds technology development. We’re taking a leadership position in this area. We sit on the boards of both SIA [Security Industry Association] and PSIA [Physical Security Interoperability Alliance] and we’re helping to drive these open standards into all of our product lines very aggressively.
Turning to the economy, how do you think the industry has contended with the recession? How will the economy impact the industry’s growth in the near term?
Romano: First of all, I’m not convinced the recession is over. I think it’s going to take some more time before we come out of it, and we’re seeing that in many different parts of the business. We’re going to continue to see significant pressure on the stock market and we see companies, and even the government, under a lot of pressure on spending. That’s the nature of the beast we’re facing. Things have leveled out a bit, but we’re now facing increases in raw materials and transportation costs. That puts pressure on margins and we continue to see consolidation on the manufacturing and supply side. Having said all that, I’m convinced there is a lot of opportunity in the security industry.
After moving over within UTC and having now been in the security industry for roughly 18 months, is there something in particular that stands out?
Romano: When you think about what we’re doing on the security side, and even broader on the fire side, I now appreciate how we provide a tremendous, higher-level, if you will, purpose to the world. We are protecting people, property and assets, and I think we have a very noble mission. As I’ve gotten deeper into the business, I’ve talked a lot about that within our organization with our partners. There are huge opportunities for technology to create better and safer and secure environments, and also drive efficiencies for our customers.
Let’s talk about the product innovation. Lenel is certainly well-known for being an innovator in the industry. What is UTC doing to ensure that that type of innovation continues and that it gets out to the marketplace?
Romano: We’ve increased the investment in R&D in Lenel threefold this year in our strategy of consolidation in terms of backbone technology. This will make it easier and ensure that engineering resources are really focused on innovation rather than sustaining legacy platforms. So we’ve stepped up our investment in R&D for Lenel. We want Lenel to continue to lead in the industry, and I see lots of opportunity for Lenel to lead and to bring more of the security technology together, you know, integrating into full solutions.
Internally, how does UTC ensure that the sales and technical people have the right mindset and skills to effectively be the face of your company to the installing dealer and integrator customer?
Romano: I think here it’s all about training. At the end of the day, I want to be known as leading the industry, training the industry on security systems. To do that, we have to have the best sales force, the best technical staff, the best engineering organizations and the best product management organization in place. We’re doing a couple things. We have a full training program in place and we have our own training university. Since acquiring GE, we’ve expanded that to a UTC Fire & Security training university where we train our own people and we also train the industry. That’s on installation, sales, full certification and new products that are coming out. And then we’re investing more in salespeople, product management and engineers. In terms of headcount, as we invest in people, it’s in those three primary areas.
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