HID Troubles Behind CEO Ouster

By Brian Rhodes, Published May 28, 2015, 12:00am EDT

Access control is typically 'boring'.

But the biggest manufacturer in the industry shocked many with the out-of-the-blue departure of HID's CEO.

IPVM sources tell us that while the timing was sudden, the exit marks an ouster, likely based on weak financial performance, struggling growth initiatives, and problems with relocation and reorganization.

In this note, we break down each of these concerns.

Unknown Assa Executive Named Interim

Assa's CTO, Ulf Södergren [link no longer available], has been appointed to the temporary CEO position. Despite holding the highest technology position at Assa, Sweden-based Södergren has not been highly visible for either Assa or HID Global and was relatively unknown to the ex-employees and partners that IPVM spoke with. This appears to be a stop-gap solution while Assa figures out a new executive.

Even a week later, there is no official announcement or explanation from Assa. The move was only clear indirectly with ex-CEO, Denis Hebert updating his LinkedIn profile [link no longer available] and HID removing him from the management page.

Weak Financials

IPVM's contacts suggest the relative poor performance of HID is one of the root causes.

Assa in total has ~$6 billion annual revenue, and HID is in a division within Assa's hospitality unit that did ~$860 million annual revenue in 2014.

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HID's organic sales were likely down in 2014. Their division was only up 1% organically but the hospitality unit they were in had strong growth. In addition, Assa said project orders were negative for HID in 2014, blaming "Demand from institutional customers in mature markets remains restrained in the light of ongoing budget restrictions."

Struggling 'Big Growth' Initiatives

Mobile Access Floundering

Another likely contributor is the lack of success in the growth of mobile credentials, specifically HID's SEOS products. While HID has strongly marketed and promoted 'mobile' as the next big thing in access, real-world production use is limited. As we addressed in our NFC: Not Ready for Primetime post, substantial operational barriers (provisioning, IT management of phones, BYOD policy) exist with mobile device hosts that are not issues with plastic cards or fobs.  

Those barriers are in addition to limited outside manufacturer support for SEOS, given the licensing cost and closed API of HID's Mobile Access Credential Management platform, in stark contrast to the 'open' OPIN API for HID's door controllers that have widespread adoption as 3rd party controllers.

Soft Acquisitions

In addition to weak organic growth, HID's recent acquisitions have not yielded substantial returns. Despite more than 7 purchases totalling more than $250 million in the last five years (recent examples including access software developer Quantum Secure and reportedly $60MM for fingerprint sensor developer Lumidigm) none has yet resulted in significant gains for the company.

Relocating / Reorganization Issues

Signs of HID leadership troubles are evident in more than just economic decisions. Indeed, signs of dissatisfaction from ex-employees who spoke to IPVM mirrored concerns noted at the company's Glassdoor page, including comments like:

"With new upper management comes new ways of thinking. Although change is good, it is important for "new" management to fully understand individual contributor positions."

Many of the negative comments center around the addition of additional management resources from local (Austin-area) companies like Dell Computer, which indicates another trouble spot.

For more than two decades, HID was based in Irvine, California. However, the company recently relocated its headquarters, and consolidated all design, engineering, and manufacturing facilities to a new campus in Austin, Texas.

Not all employees were asked to make the relocation move, with more than 300 local hires replacing them [link no longer available].  Former HID sources tell us the transition period was turbulent, with anxiety and uncertainty being a significant distraction even before the operational 'brain drain' induced by leaving experienced workers behind.

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