Nedap: innovation as a strategy.
In this issue, we begin publishing a series of materials about one of the most interesting players in the TSB market — the Dutch company Nedap Security. Part of the Nedap group, it is currently promoting the AEOS access control system on the market (and recently on the Russian market) — a fundamentally new IP-oriented security system with a modular principle of building software and hardware parts.
The Nedap company motto «Innovation as a strategy» in the title very clearly defines the business model of its work over many years. The company has always tried to differentiate itself from competitive offers precisely by promptly implementing relevant innovative solutions and technologies.
At the invitation of the company's management, the visiting editorial team of TZ visited the Dutch town of Groenlo, where Nedap's headquarters are located. The materials offered to your attention are a «multi-part» report on this business trip.
First, the company's general manager Ruben Wegman gave a short presentation of Nedap:
— It all started a long time ago, in 1929, the year our company was founded. We started working in Amsterdam. By the way, the first Nedap office was in a building that had previously housed a cocaine company, its activities were banned and we rented the premises very cheaply.
After the Second World War, Nedap's headquarters were moved here, to Groenlo. Since 1949, the company has been listed on the Euronext stock exchange.
Over the past three decades, one of Nedap's key areas of activity has been the development and production of security systems.
Over its long history, Nedap has manufactured products for various purposes, mainly electromechanical devices and instruments. From the beginning of the electronic era to the present day, the core of the company's activities has been electronic engineering. Our first product was a sensor for tracking cows. By the way, we still manufacture them today — look, they are very small and light. And the first sensors could be compared in weight and size to bricks.
Our products were in stable demand, the company was growing. And in a large company, as you know, you communicate more with employees than with clients. Having realized this, we decided to radically restructure the company — we divided it into several small divisions, each of which combined technology and marketing.
Nedap was initially a technology-oriented company. But in order to sell products, you need to develop marketing. Therefore, the combination of technology and the market is the source of all our ideas.
Each of the companies that make up Nedap operates entirely independently. This approach has stood the test of time, and today it is already obvious that we have gained a very big advantage over our competitors because we have become much closer to the market.
Developing new products is a risky business, and diversification of activities is becoming almost a necessary condition for overall success. We do not invest all our money in one product. Many different products for different markets — this is Nedap's position.
5-10 years ago we were focused on the Western European market, now we have no choice, we are forced to work all over the world. The Internet has changed the world, now everyone can see the products of their competitors. Accordingly, figuratively speaking, you have to compete with the whole world. The consumer compares and chooses.
Here are some examples of how our solutions are used:
The Eiffel Tower is protected by Nedap AEOS equipment. Our security systems are also installed in the offices and at the Porsche factory.
The safest facility in the Middle East is the Israeli Diamond Exchange. Billions of dollars worth of diamonds are also protected with our equipment. An example from another industry is the University of Kuwait, where Nedap equipment is used to monitor students' personal lockers and monitor students' attendance at lectures. There are hundreds of such examples, all of them very diverse.
We are also well represented in Russia today.
If we talk about other areas of our company's activity, we can, for example, name the technology for purifying drinking water. The installations operate on solar energy and are supplied to many countries in Asia, Africa and Latin America.
Our guests are confused when they first come to the Nedap office. We are a small company, only 650 people, and we produce a very large number of different products.
What is our secret? It is simple: we want to be successful entrepreneurs and do successful business. I believe that members of the «Nedap family» have the best chance of becoming successful. The main idea is to use the same technology to produce different products. For example, our contactless chips can be used for mobile phones. Over the years, promoting and developing RFID technologies, we have been partners with Nokia, Apple, Samsung.
We have talented people working for us. We can respond to external market demands as quickly as possible, offer solutions that the market needs, and, therefore, compete with leading brands.
The other side of our business is selling services. Almost 10% of the company's annual profit comes from subscribers of our services. Our company, I repeat, is many small businesses. Nedap Security Management is one of them. Its products are based on the same technology as other divisions. This gives us a really serious advantage in the security market.
After the presentation, Ruben VEGMAN answered questions from the Technical Specifications
— Innovation as a strategy, what is it for Nedap?
— In fact, when working in any market, there is a choice of three main strategies that we share for ourselves, namely: mergers, integrations, innovations. Many American and European companies have gone down the path of mergers: they buy companies and gain market shares. This would seem to be a promising path for the rapid growth of your business. But the problem is that the acquired line of «foreign» products needs to be supported for a long time. That is, in the end, you are buying not so much a market share as the costs of service and maintenance. In addition, there is a need to transfer all «new» existing clients to one platform, and this is not always approved by them.
The second strategy is integration. That is, when a company not only supplies equipment, but also does the entire project, as they say, on a turnkey basis.
The third way is the innovation strategy. By choosing it, we were able to offer the market an innovative idea, our intangible asset, having managed to spend a minimum amount of additional and attracted resources to obtain it.
There was also a statistical reason. We knew that on this path we would have to develop the business much longer, but if we develop a quality product, customers will come to us.
One of Nedap's advantages is that we are very patient. It took us 5 years to develop the first AEOS solution. But the second five years brought the company a lot of large clients. Today, many perceive the AEOS system as the best European product, clients choose us. Nedap's turnover and profit have grown significantly in recent years. At the same time, many of our competitors cannot wait 5 years for profit, they count in months.
— When and how did you understand that it was right to move towards the implementation of IP technologies?
— In 1997. When we made this decision, I was still very young. And I could not foresee what efforts would have to be made to achieve the desired result. We were the first to use Java and IP technologies in our security products. It was probably a big gamble. But we can afford to be adventurous in some markets, to take the liberty of making a breakthrough, — the company's diversification allows us to invest in innovation in one direction.
— What innovative solutions distinguish Nedap?
— These are precisely integration solutions. But there is a huge difference between what our competitors and we offer. Our integration platform is as simple as possible for the client, and at the same time offers more functionality at a lower price. This is the main advantage of the Nedap AEOS system.
If we recall history, Nedap, for example, was one of the first companies to develop and implement RFID technologies in security systems. We were the first to develop a contactless card for an access control system using Hands Free technology without a battery inside with a reading distance of up to 60 cm on the original Nedap reader.
— Are there any breakthroughs in ACS and what could they be?
— Judge for yourself: today the AEOS system successfully operates at several hundred large and very large facilities. Step by step, Nedap, in close cooperation with its partners and customers around the world, expands the functionality of the system. Our focus is on creating the most adaptive solutions in accordance with the requirements of a specific customer.
What will be our next step? Let me avoid answering your question directly. I have something to say, but for now it is classified information. Let's try to evaluate the near future of the technical security systems market in this vein. In my opinion, it will be, first of all, the software market. After all, its influence on the functionality of the system is already becoming decisive. Like a PC user, the customer will be able to choose for installation the software components necessary to solve the problems of ensuring the security of his particular facility. IP technology itself will most likely be viewed by consumers simply as the most standardized means of communication.
— Will your competitors also go this way?
— I won't talk about this for now either. We will be pleased if this happens. We'll live and see.
— The emergence of IP video management — a tribute to fashion or a new serious direction?
— This is a fundamental component of the security market. Video surveillance technologies are developing very quickly. Very soon you can forget about video recorders. The analytical «brain» of video surveillance is gradually moving into the camera itself, and you will only need an ordinary hard drive to record information. Compare the price of a video recorder and a hard drive. Today, for a low price, we can offer very high-quality video management. Moreover, the more functionality the customer buys for work, the more money he ultimately saves.
But we are not going to single out video surveillance as a separate area. We sell it as a very important and convenient option for our security system based on ACS. This is not the only option in the Nedap AEOS system, which already includes a security alarm, humidity, temperature and lighting control in the room, and many others.
— What are the criteria for choosing manufacturers when integrating third-party equipment?
— We do not buy or sell equipment from third-party manufacturers, this is done by our partners — system integrators. They are free to choose their «third party». Moreover, if necessary, we perform the necessary modifications for a specific object in the interests of our partners. Our platform is so universal that this is not a big deal for us. The ideology of the Nedap AEOS system, its versatility and openness, allows us to work effectively in the interests of system integrators.
— The company's employees often say that working at Nedap is very different from working in any other company in the Netherlands. What do you think are these differences?
— The main thing is motivation. Our employees can develop within the company. Moreover, we are not just talking about career growth. Everyone who has valuable ideas has the maximum opportunity to implement them in our products. The cycle of this work can be very long, but everyone knows that they can implement their boldest ideas in the company.
Innovations have become our strategy because all our employees are innovators.
(In the next issue, read the second part of the report of the visiting editorial team of TZ )