A look inside the 'new' ADT

May 18, 2010 -- ADT wants you to think of them as the "new ADT". That was the message from ADT's worldwide president, Naren Gursahaney, who said that with Friday's closing of the Brink's Home Security (which conducted business as Broadview Security) acquisition, the company had reached a "pivotal point in our rich history." That pivotal point that Gursahaney mentions is partly a clear organization of ADT's two primary service divisions: residential/small business and commercial.

Residential/small business division changes

The residential/small business side of the business is largely driven by alarm sales and alarm monitoring. This is the side of ADT that most consumers in the United States are aware of from the offers for a free alarm installation (with a monitoring commitment), and this is where the acquisition of Brink's Home Security fits into the "new ADT".

The division, run by John Koch, is facing four primary business changes right now. First, it is gaining a lot of new customers, 1.3 million to be more exact. That's the number of Brink's/Broadview customers that are coming over to ADT through the acquisition, and it gives ADT's residential unit a total customer base of 6.2 million accounts. Second, it's facing a challenge of how to integrate the channel programs. Thirdly, the company is facing the technical challenges of integrating monitoring platforms for Brink's Knoxville, Tenn., and Irving, Texas, with ADT's multiple monitoring centers around the U.S. and Canada. Fourth, the company has to unify consumer marketing efforts to present a unified presence in the market.

According to Koch, the challenge of integrating the Brink's/Broadview dealers with ADT's program stems primarily from pay.

As we looked at the two dealer programs [Broadview and ADT], we realized there really are much more similarities than there are differences," Koch said. "There are differences in what we pay, but the overall economics of the programs are very similar. We pay them about the same, but we pay them in different ways. That integration [of the programs] may be easier than we initially expected."

In terms of the technical integration of monitoring programs, that may take a year or even 18 months, said Koch. The challenge is that each company has used different technology. Inside the central stations, there will be a software upgrade so that both company's monitoring centers are running the same monitoring technology platform. Until then, Broadview's monitoring operations (in Knoxville and Irving) will run in parallel to ADT's monitoring program. Broadview customers will basically still have the same monitoring experience.

Finally, the market presence unification is a key step to make, Koch said. "We will continue to look like different companies for the next 100 days," he said, but noted that a 150-person advisory team has been working to design the integration of the two firms. Broadview/Brink's operations will slowly be rebranded into ADT as they are being trained on ADT systems. Along with that move to ADT branding, Koch said that he expects to see a "gradual decrease of Broadview advertising and increasing of ADT advertising," as the market presence is solidified under the ADT brand.

Commercial division changes

On the commercial side of ADT's operations, this is where you're seeing much more than a keypad, window sensors and door sensors. This unit of ADT incorporates the company's larger commercial accounts, its Federal Systems division, as well as banking and retail verticals among others. This is the division which emphasizes that ADT is much more than an alarm company. ADT Worldwide President Naren Gursahaney notes that this division has revenues of $2 billion (compared to $2.8 billion for the residential unit).

Running this commercial division is John Kenning (see earlier profile from ISC West 2010), who has recently been promoted from being the group vice president for ADT's commercial unit to the president of ADT's commercial business unit in North America. Kenning joined ADT from the telecommunications industry side of Nortel.

Gursahaney Kenning noted three changes to the commercial unit as Gursahaney unveiled the "new ADT". First, there has been the unit's advances in integrating more complex technologies. Second, Kenning said the firm is responding to technology changes. Finally, the commercial sector is still wrestling with economic conditions around the world.

ADT's commercial unit is one of the largest systems integration firms in the industry, and ADT's ability to provide technical integration solutions primarily dates back to the acquisition of integration firm SST in June 2008. Those capabilities of SST (often called ADT's Advanced Integration unit, which is part of the commercial division) have now been fully integrated into ADT's commercial business, Kenning said.

In terms of technology, Kenning notes that the company is trying to lead with these new technologies. IP-connected video and access has received the most attention, but Kenning said he's really interested in wireless technologies. "The world is going more than IP," Kenning said. "It's going wireless. We're driving that across the ADT commercial organization." Kenning added that ADT is also studying cloud computing closely; he said that cloud computing and hosted service offerings create a great deal of opportunities for the security industry.

Gursahaney responded to the economic conditions affecting the ADT commercial organization.

He noted that economic conditions are not the same the world over. The Asia-Pacific region, Gursahaney said, is doing "very well," but he noted that Europe is facing serious problems as connected to the bankruptcy of Greece. The U.S. commercial sector, he said, is sending out "mixed signals", with some market segments starting to look promising, but with others still in the midst of a recession.

Nonetheless, his overall response provided hope of better days for commercial systems integration.

"We are clearly seeing signs of increased activity out in the marketplace," Gursahaney said. "Customers are talking about projects that may have been shelved, but we are not yet seeing a pick-up in orders activity. … It is a mixed bag out there. The leading indicators look favorable but we're waiting to see what happens to our orders activity."