Ask Tom Polson about the most important characteristic of a successful global company, and you will likely hear him say the word "local" numerous timeslocal as in understanding local markets, having local relationships and offering local accessibility.
In describing his business operation, Tom PolsonPresident of security and low-voltage equipment and solutions distributor ADI Globalmight sound as if he were a small business owner concentrating on his local market. In reality, ADI has 2,500 employees working in more than 240 locations in 26 countries, and has become one of the world's leading distributors of security technology. The company is firmly rooted in North America and Europe, has recently expanded to India and is in the throes of planning operations in the Asia-Pacific region.
ADI's sales have grown rapidly, and the rising demand for core security systems has helped drive ADI's success. Additionally, customers' desires to diversify security systems with a wide array of products play well to ADI's position as a total solution provider. The company carries everything from access control and CCTV to intrusion and fire detection systems, telephone systems, home theater products and more.
But as much as having a wide breadth of products under one umbrella has helped the company thrive, Polson and his regional managers believe that ADI's local expertise in each market it serves is its key differentiator in the fast-growing security industry. "We try to be a small company locally, with the efficiencies of a very large, highly productive global business," Polson said. "We have local relationships and local accessibility with a very large backroom capability."
And a large backroom it is. ADI stocks more than 70,000 security and low-voltage products from 400 manufacturers. "We have global customers who have businesses here locally in North America, but if they need 100 dome cameras in Istanbul, Turkey, they rely on ADI for our resources. We can be a strategic partner around the globe."
ADI was established as a low-voltage distribution business specializing in core security systems in 1985, with warehouses in five major North American regional markets. In 2000, global technology leader Honeywell acquired Pittway, ADI's parent company. Since the Honeywell purchase, ADI has made several strategic regional acquisitions to expand its reach. Today, the company has 99 locations in the U.S., 20 in Canada and one in Puerto Rico.
ADI had decided to take its business to the global stage, establishing locations primarily in southern Europe. In 2006, the company acquired the Gardiner Groupe, adding a strong presence in the U.K. and northern European countries. "In terms of a geographical approach, it was a very complementary move," said Jean-Francois Gazielly, Gardiner's former Managing Director who now leads ADI's EMEA operations.
The Gardiner acquisition gave ADI more than 115 locations in Europe. Then, in October 2006, ADI formally opened its doors in three India locations: New Delhi, Mumbai and Bangalore. The company plans to add five more India locations in the near future, said Anant Maheshwari, Director of ADI South Asia.
ADI's most recent global acquisition came in May when the company expanded its Canadian footprint with the purchase of Burtek Systems.
Globally, ADI's secret to success has been to evolve its business in line with changes in the overall security industry and customer demand. In its early days, ADI primarily focused on core security systems such as intrusion. As the industry grew, however, the company began adding more peripherals and technologies. As Polson put it, the success of the company's expansion has hinged on being in the correct, emerging market segments. "Our business objective is to be able to ship any low-voltage security product from anywhere in the world, to anywhere in the world," Polson said. "We represent very large commercial customers looking for a single source."
ONE-STOP SOLUTION PROVIDER
A major technology trend that is driving those commercial customers to seek out "single source" suppliers is integration particularly in developed security markets such as Europe and the U.S. That is, many companies believe that it is no longer enough to protect their assets with stand-alone CCTV and access control systems. Rather, having an integrated system where these products interact with each other is becoming the preferred method of securing premises.
"When looking at intrusion, for example, people are also looking to add video and access control," Gazielly said. "Products are now working together. Our European customers need to be able to speak to people about video control, access control, fire and intrusion all at the same time." It is the same situation across the ocean in North America where "integrated" has become a buzzword in the security industry, especially in the commercial market.
In the residential domain, dealers are also latching onto the integration trend by seeking out whole-home integration technology that can be tied together by structured cabling. As a result, ADI's North America division has added vendors in the home entertainment and consumer electronics spaces to provide products such as intercoms and home theater systems, as well as the structured cabling used to connect them.
"We are always trying to keep ahead of what the trends are in the industry," said Yvonne Hao, Vice President of ADI North America. "More of our customers are moving into the home entertainment and CE spaces, so we need to make sure we have the products to help them make that transition and grow their businesses."
By contrast, the Indian security market is not as mature as Europe's or North America's. The size of the Indian security market is roughly US$200 million; however, it is growing rapidly to the tune of 25 to 30 percent annually, making the market ripe for expansion. "There is growth happening in every segment of the Indian market," said Maheshwari. "We are learning a great deal from ADI's 25 years of experience."
With no other large organized distributors in the country, Maheshwari said that originally security market experts were skeptical of ADI's move into India. The installer community, however, is steadily warming to ADI's business model. Many of the smaller, regional distributors specialize in one or two product lines, and ADI's wider portfolio has started to attract installers looking to grow their businesses. "These installers realize that ADI is a professional partner there to help them," Maheshwari boasted. "They cannot get this kind of 24-hour service from anyone else. In every market where we are located, at least 50 percent of the installer community has become ADI customers."
The concept of a "one-stop shop" is certainly nothing new. As integrated systems continue to grow in popularity, more distributors in large metropolitan markets will likely follow ADI's lead in carrying multiple products and product lines. The key differentiator, though, lies in ADI's specialized skills. The company offers a wide network of comprehensive support and training services.
"When the installer is not able to finalize and commission the site, we are able to support them," Gazielly said. For example, one clear trend is that security technology is increasingly moving to software-based platforms. "Clearly, installers are not IT people, so they need more and more support from us," he added. "To continue to keep the lead of the market, we invest in a lot of people with skills in IT or expertise in smart buildings, for instance." This kind of assistance is invaluable because it helps ADI's customers smoothly transition towards IP and digital security solutions.
Likewise, in North America, ADI invests heavily in its systems group located in Louisville, Kentucky, where a large support team fields technology questions from installers on a daily basis.
Moreover, the company continues to invest in hosting training courses on new products, as well as its ADI Expo which offers extensive training sessions and face-to-face time with product experts. In 2007, 39 ADI Expos were scheduled for North America. "The value that we add is all the extra support we provide our customers," Hao stressed.
In India, the training is especially invaluable, considering the market is still maturing and many of the manufacturers are not located in the country. "ADI has to play the role of the OEM in many cases, which means we must provide a lot of guidance and training to build the business for a particular brand," Maheshwari said, adding that ADI's India management has used training best practices from Europe as a model for support services. In this regard, having the global network of resources has paid quick dividends for the new India locations.
"That is something we learned very quickly from talking to our colleagues and visiting locations in Europe. Any other business would have taken five years to get to this stage," said Maheshwari.
Global collaboration also played a key role in getting ADI's India operations off the ground. As part of the India launch, local leaders spent a couple of weeks at ADI locations in Dallas, Texas, and on the East Coast, to observe the warehouse and branch operations in action. "You learn how to serve the customer and how to create value for vendors," Maheshwari said about his visit to the U.S.
North American business leaders then paid a visit to India to get a sense of the local market. Similarly, traveling to India gave U.S. leaders a renewed appreciation for the business. "The India team was so enthusiastic; they have a fresh perspective and do not take things for granted," Hao recalled. "We loved seeing that entrepreneurial spiritit has been a great cross-cultural experience."
When Canada-based video solutions vendor Digimerge was formed in 2002, it immediately tapped ADI as a distribution resource. Since then, Digimerge has expanded alongside ADI into a global business. "It was good because it was something we had wanted to do, and it sort of paved the way for us to enter into Europe," said Allan Bass, President of Digimerge. "If ADI had not helped us, we probably would not have moved into Europe at the time."
In addition to the global reach, Bass said that ADI offers its vendors more of a partner-type relationship. "Whereas other distributors may be solely focused on extracting as much value from their vendors as possible, ADI works with its vendors to promote brand names and maximize mutual benefits," Bass clarified.
Again, this notion can be traced to ADI's core business values. "Just because we are a big company, it does not mean we are arrogant," Polson said. "We want to be effective, reliable and dependable locally." Hao echoed: "We are talking to our vendors and customers every single day. This business exists because of those local relationships."
Bass calls ADI's emphasis on those relationships a "nice and refreshing change." The fact that those relationships come with deep, global resources does not hurt either. "It makes more sense for us to devote the time, energy and resources to the horse that can get us to the finish line."