Pledging Allegiance to United Technologies

Why is UTC supportive of organizations like the Electronic Security Association (ESA)? What’s the value from a corporate perspective and why might you encourage dealers who install UTC products to also be involved in those associations?

Romano: We’re supportive for a number of reasons. First of all, the associations bring perspective customers together. I think they provide a venue for bringing those customers together to really discuss areas of neutral interest, put together industry programs, such as where technology is taking us. For example, ESA is very involved in training and educating dealers and we like that. While we do a lot of training, I think there is a place for associations like ESA to provide industry-leading training. We do encourage our dealers to participate so they can be involved in these aspects of the industry that potentially impact them, whether it’s reforms, regulations or that kind of thing. From a corporate perspective, ESA really helps drive industry recognition for us and provides an opportunity for us to talk to large groups of customers at the same time. I think there is a real role for these associations to play. ESA is one of them, and we will continue to be a big participant with them.

Are you actively seeking dealer/integrator partners? If you are, what’s the best way for an interested one to get involved with UTC and forge a good partnership there?

Romano: We’re always looking for new partners. There are never enough. It’s a big industry, and there are a lot of players, so we are always looking for opportunities to expand both our product reach and our geographic reach. To do that, we need a strong channel and partners around the world. As we look at new partners, we’re looking at what is their technical competence, what’s their financial strength, do they have strong business ethics and all of those things will come into play as we evaluate a partner. We’re also looking for commitment. As we take on any new partner, we’ll make an investment in that partner, whether it be training, special programs or otherwise, and we are looking for the same commitment back.

Let’s continue on with the technology topic and looking more broadly at the industry and how that’s manifested in UTC. Could you speak to some of the technologies, like HD video, PSIM and that kind of thing, and talk about what UTC’s vision is for the opportunities now and also tomorrow, and some of the challenges with that technology?

Romano: We see a number of megatrends. Video is one of the fastest growing segments. The digital revolution is driving higher resolution needs, such as HD video into today’s IP cameras. This higher definition is providing users with an enhanced ability to really detect anomalies within a video scene, and it’s reducing the number of cameras needed to cover a facility, but it’s also driving up the network bandwidth usage and storage requirements. So we are investing in these areas and Interlogix will be launching a new line of HD cameras this year as part of our overall video offering. Video integration is also a key trend and we’re working with all of the leading video manufacturers to ensure that new cameras are integrated as soon as possible with our software platform, whether it be OnGuard Facility Commander, Alliance, etc. I think video analytics are part of a larger trend that we call security analytics that I think is the next generation of PSIM [physical security information management]. But if we first take a look at the notion of PSIM, it’s really the ability to integrate multiple security disciplines and sensors into a single, seamlessly integrated user interface. This was originally pioneered and started by Lenel, so I can argue that PSIM is part of our core. Users are looking for increased operational efficiency and actionable intelligence. I heard that in spades at ISC West where a number of big end-user customers said, “I want to tie these systems together.” But they still need disparate alarms, they need to understand threats to the facility, they want the ability to detect patterns, take individual points and tie them together with logic and create what we call actionable intelligence. I really think that that’s sort of the next level of integration that we’re bringing to market.

What about more on the residential side in terms of lifestyle enhancements, mobile apps, energy management and alarm verification? Can you speak to some of those in terms of the UTC vision in terms of the opportunities now and tomorrow and some of the challenges?

Romano: Many have seen trends in the commercial market, so the demand for integration, mobile applications, hosted solutions are the underlying technologies required to provide that lifestyle enhancement video in the home, alarm verification, etc. What we call interactive services, we’re leveraging the core competencies that we have across the organization in wireless communications, mobile development, alarm notification and then even tying in, with the advantage of having Carrier on the HVAC and energy management side, tying that in to bring a similar seamless level of integration to the residential user as we are the commercial user.

Do you think despite the housing situation and the fall off in new construction, is that really going to inject some life and growth into that part of the industry?

Romano: I think so. It won’t be overnight, but it’s going to be over time because I think with the speed of technology and the use of mobile applications and wireless communications, that’s where the industry is going and that’s going to bring opportunity.

Let’s look at vertical markets within North America. Are there any niches, especially with the backdrop of the recession, that you see as es
pecially appealing right now, or maybe as soon as the recession eases back a little bit? How does UTC expect to help its dealers and integrators succeed in them?

Romano: There are several vertical markets that we’re really focused on. We have this mobile view technology that provides security systems for buses and mobile transportation. Given the heightened security in places like big cities like New York City and Philadelphia, and different cities around Philadelphia, we’re seeing more and more interest in systems for mobile transportation. So that’s an area that we’re focused on. The Onity business, you know electronic locking, has been very strong in the hospitality industry. We see an opportunity to penetrate the higher education segment in a bigger way, so we’re focused on the education segment there. The Interlogix business, you know, the whole video and intrusion, while we have a very strong presence in residential, the commercial industry is a large industry. How do we leverage the technology and the channel that we have in place across the board to grow in that segment? And then, critical infrastructure is another area. Airports, petrochemical oil/gas and then high security government buildings are also a vertical that we’re looking at. On top of all of those individual vertical markets, I also see the whole discussion around energy becoming bigger and bigger, tying together these systems to help drive energy consumption. I mentioned earlier that we’ve done some work between Automated Logic and Lenel, and tying building management from Automated Logic together with Lenel’s access control to help drive down energy consumption in buildings. We’re seeing good results there.

Does that sort of bring together divisions or units within UTC as a whole that can sort of collaborate and break down the siloes, if you will, and work together to come up with solutions that we may see sort of effect the security space too?

Romano: Yes, we’re certainly seeing more and more collaboration. I think one of the things that UTC does well at is moving people around, and I’m a good example of that. I spent 25 years at Carrier and come over to Fire & Security. It’s very natural for me to be thinking about, “OK, based on the technology and the channel that we had at Carrier and now in the fire and security industry, how do we leverage that in a bigger way?” We’re looking for ways to do more and more of that. We’re also tying together Lenel’s OnGuard system with Otis elevators, so we have a number of instances where, and the World Trade Center is a good example, we have destination dispatch. So you badge in, in the morning and it knows who you are and where you’re going because you’re on the seventh floor in a certain office and it tells you, “OK, go to elevator bank six,” and it takes you right there and it turns your lights on and your HVAC on. We have a vision where all of that will take place, but we’re also integrating with Otis as well.

What about the makeup of the industry; do you envision a lot of consolidation? Are small dealers endangered?

Romano: The security industry is a very big segment and companies and consumers are more and more interested in being safe and secure. I look at that all as opportunity. Are our small dealers in danger? Not if they’re relevant and current and provide a superior customer experience. So I think a real strong role for the dealer, the distributor and the integrators as we move forward to really capitalize on the growing industry and how we bring security systems together.

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