Security firm’s pedal to metal amid digital boom
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If the 2008 economic crisis turned Gallagher Group’s fledgling security technology division into a global gorilla, it boggles the mind to think where a new foot-to-the-floor response to the Covid-19 calamity will take the NZ Inc icon.
The Hamilton-headquartered global security, animal management and fuel systems technology company’s answer to the pandemic has been to accelerate its new digital transformation strategy intended to double and then triple the size of the business within five years.
Deputy chief executive and executive director Kahl Betham says Covid19 has sped up “everything to do with digital” in the world and the Gallagher family-owned company’s response has been to get ahead of the race.
“In the last downturn our security business was probably only a third of the size it is now. We decided through that downturn to make a couple of our platforms go faster and as a result we’ve had exceptional, highly profitable and exponential growth in the last four years.”
Betham says that decision put Gallagher in “a great position” to respond to the latest economic downturn and pursue the opportunities a crisis invariably offers.
Less than a fortnight into New Zealand’s level 4 lockdown, the company, approved as an essential service, developed and released a software feature to support organisations with contact tracing.
The “proximity and contact tracing report” utilised Gallagher’s software reporting capability to identify on-site movements of individuals and enable businesses to swiftly identify zones and areas where an employee with either confirmed or suspected Covid19 had been.
The tool can also identify which other staff have been in those areas during a specific period and may have come into contact with the virus.
While the name Gallagher is synonymous with electric fencing and animal security systems, which still bring in most of the company’s annual revenue ($310 million in FY20), the security technology division is close to matching its earnings, Betham says.
It supplies “the highest levels of national security” around the world with high-level technology, along with hospitals, universities, energy transmission sites, banks and all manner of commercial activities, he says.
The company — founded in a Hamilton shed in the 1930s by Bill Gallagher, who set out to find a “shocking” deterrent to a horse’s habit of scratching its itches on the family car — today employs more than 1200 staff around the world. More than 90 per cent of its income is from overseas sales, its biggest markets being Australia, US, and Europe including the UK.
It has a group-wide R&D team of 160 people, 72 per cent of whom are focused on security technology division work, says Betham, who’s been with the company since 1997 in roles from software engineering, business analysis to product management. From 2015 to April last year when he became deputy chief executive, he headed the security division.
This division invests 15 per cent of its annual revenues in R&D, he says.
It won’t be the only Gallagher business unit accelerating development of the next generation of digital product.
“The agriculture sector is really interesting . . . we’re seeing there a shift to more sensors, more software, the internet of things, to allow farmers to be more productive. We are investing in a lot of those technologies . . . to make use of cloud-based technologies and new communication techniques and maybe AI. [We’re] really accelerating all parts of those technologies to try to get ahead of any competitors who may not be in such a strong position to take advantage of the opportunities.”
As for Gallagher’s view of its earnings outlook in the Covid-19 recession, Betham says US sales are looking positive, although every state is responding differently — normal for business behaviour there.
The outlook for Europe and the UK where lockdowns have been more severe is more uncertain.
But the company is “cautiously optimistic”.
On the animal management side, Gallagher is well established in its markets and has a high market share, Betham says.
“From a security perspective, having ventured into very, very high level including national security, we have built a good brand and seen government spending accelerate as happens in downturns. We’ve seen good interest, certainly not drop offs”.
However in the general commercial market discretionary spending on small expansions and projects has eased off but Betham believes that will be short term.
The emergency response to Covid19 has reinforced for him the importance of a company’s culture.
“We feel so much stronger as a team as a result of having to pull together. We said from the beginning we have to look after the health and wellbeing of people — as we always do — but we have to balance that with looking after the long-term stability and interests of the business.
“That’s been really important. We’ve seen everybody coming together when there’s been an ask . . . people have opted in. The whole executive has really galvanised around this lesson in inspiration-led leadership.
“You learn to lean on your culture when you need it in tough times and that’s really shone through. How important is culture in a downturn? Probably more important than ever.”
You learn to lean on your culture when you need it in tough times and that’s really shone through.
Kahl Betham, Gallagher Group