Strategy House is something that we use since a long, long time to explain our strategy internally to our people in the first place in an easy, comprehensible way. We believe it's also a good way to explain our strategy on a higher level to other stakeholders like you, because it has the different components of our strategy comprised in that house. We start with the top, the vision. We are the global leader in providing innovative access solutions that help people feel safe and secure so that they can experience a more open world. Experience a more open world is the Amazon experience. Everybody wants everything to be smooth, easy, flawless.
I think there's two very important words in this vision: that is safe and secure, because if you want an Amazon experience for your house and you have a family of children, you want, of course, that opening to be happening in a safe and secure way. We really want to be safety and security, two words that make us different from the rest in our industry. We are a company that stands for safety and security. Innovative access solutions. We are also a company that wants to make the difference through innovation. For us, innovation is not only new products, new solutions. It's also the way we run our processes, the way we run our operations through automation, robotization, and so on. Yes, we are the global leader in many markets around the world.
We are the undisputable market leader, but there are definitely markets where we are not the market leader yet, or definitely not the undisputable market yet. If you take countries like China or India, for instance, there is still a lot of potential for us to further strengthen that global leader position. Our mission, of course, in the first place, and you will like that, we want to build sustainable shareholder value, but we also want to serve a bigger purpose. We want to provide added value to our customers, our partners, and our end users to make that shareholder value creation sustainable. We want to be a world-leading organization where people can succeed. Obviously, we want to conduct business in an ethical, compliant, and sustainable way.
If you then look on the financial targets, we want to grow 10% over a business cycle, of which 5% organic and 5% inorganic, with a continuous top and bottom line in the range of 16%-17%.
I think if you look at the 5% organic growth and 5% growth through acquisitions, we will show later that if you take the last 15 years, we have been always very close to that ambition. Perhaps we have grown a little bit more on the acquisition side and a bit less on the organic side over recent years. As a matter of fact, when I started, we have been pushing very hard to get also our organic growth closer to the 5% ambition level. We believe our targets are very ambitious, but achievable, and that's how targets should be. I think there are some of you, perhaps, that expected us today to increase our bandwidth on the EBIT side. If you look today, we are at 16.2%, so we are within the bandwidth, but we are on the lower end of the bandwidth.
Let's be clear, we definitely have the ambition to be much more comfortable in that bandwidth and more towards the upper end of the bandwidth. Let's first see how we get closer to 17%, and then perhaps one day we might think about changing our financial targets. The next part is our priorities. We have, of course, divisional local priorities, but then we have a couple of common group priorities that every division, every business works on. We have six growth accelerators and three growth enablers. If we start a bit with the growth accelerators and zoom in on the first one, Erik.
Yeah, because this is a question that we get. When is the electromechanical transition actually happening? I've been talking about it for a long time, but is it really happening? You can see here clearly on the numbers over the last 10 years, the electromechanical growth has been within the regional division has been at 9%, which is, of course, clearly the one which is growing the most for us. In reality, it grows sort of more than four and a half times more than the mechanical side. The transition is happening. We sort of see it clearly that it is happening. It is a higher value offering, and it also, for us, opens up new opportunities when it comes to pricing, when it comes to business models, as an example, then recurring revenue.
We have clearly seen an acceleration of that shift from mechanical to electromechanical after COVID, because it is clear that you can do so much more in an electromechanical way than in a pure mechanical way from an operational efficiency point of view, from a hygiene, non-touch point of view, from a control point of view, and so on. That shift to more electromechanical installed base also gives us the opportunity to sell more software as a service. Our recurring revenue software as a service is our fastest growing, let's say, product or solution. It has been growing 171% over the last five years. A couple of good examples: Hospitality Marine.
If you check into a hotel, you can, as a supplier, just sell the lock of the hotel room, or you can do like we do, build a whole ecosystem around it so that you can get into your hotel room with a card or a mobile credential. We do all the back office management for the people working in the hotel. We have a made security solution. We really have built a whole ecosystem around that lock. What does that mean in practice? If you compare with just selling the lock, we get three, four times more revenue out of that same lock by building that software ecosystem around it. That software ecosystem is growing every day because we develop more and more applications to the extent that we have a CAGR of 36% of recurring revenue in hospitality since 2021.
Another good example on healthcare in the HID space, we do real-time location services for things, so for critical equipment and for people. It can be patients, and it can be doctors. Knowing in a big hospital where doctors are is not always so evident, and if you are a patient, you want to find that doctor fast. That at the last CAGR has grown 50% since 2021. Recurring revenue is one way of realizing service revenue. The other way of realizing service revenue is a man in the van doing service on our equipment. That's mainly today a business in entrance systems, but we have also started to do service in our geographical divisions on more security doors. If you look in entrance systems, our service business today represents 29% of sales of entrance systems, and it had a CAGR of 16% over the last five years.
As you know, we have the ambition to grow our service business high single digit organically. That is what we have done over recent years. We complement that by acquiring distributors and service companies. That is why we have the CAGR of 16% in total. The good thing about service is that we can not only do service on our own equipment, we can also do service on competitor equipment in a very profitable way. You could say that the market is not the limiting factor for us. To grow high single digit, I would say the main drawback is finding technicians. If you want to grow, let's say, 9%, you have to grow your technician population with at least 8% because you will get a little bit of efficiency, 8% on top of the technicians that leave or that retire.
Finding technicians is not so easy in the market. Our next growth accelerator is growth in emerging markets. We have the ambition to grow faster in emerging markets than in mature markets. We realize that ambition, at least if you exclude China. If you exclude China, we have a CAGR of 11% since 2019. You know that China is a particular case. One, we have had our own internal challenges some years ago in China, and we have a very depressed residential market today in China. We have a lot of very good examples of successes in emerging markets. What is normally our plan when we enter an emerging market?
First, we always try to do an acquisition of preferably a market leader in that country that gives us a base to grow from, because we are also absolutely convinced that in every market you have to do it with local people, local people that understand local market conditions, and you have to do it also with a local product offering, because also in emerging markets, products are very different market by market. South America is a very good example where in every country, you could say in South America, we did acquisitions many years ago, and today we are, you could say, the undisputable market leader in every single market in LATAM, realizing margins very close to the EBIT bandwidth we aim for on group level. Pricing is for us also a growth accelerator, because organic growth is volume and price.
If you can do more price, you need less volume to realize the 5%. We live in a market where it is possible to pass through inflationary cost through pricing into the market. I think there is consensus that after COVID, we live in a market with higher inflation than prior to COVID. If prior to COVID our price component was around 1%, if inflation now is, let's say, a percent higher, we can also realize 2% pricing, so 1% higher. That means that we need 1% less volume to realize the 5% organic growth. We have dedicated pricing specialists in all the different markets, in all the different divisions that support our sales teams very much based on value-based pricing. Not necessarily always the highest price, but the best price to get the best value out of that product or that solution in the market.
Last but not least, we will continue with our successful acquisition strategy.
Yeah, and as you see that on the slide that we have sort of roughly about 900 potential acquisitions. It is also important that sort of when we go a little bit adjacent, like when we did the SkiData acquisition or like we went into retail more with InVue, that opens up new opportunities that we can do, let's say, in the adjacence. We still have a strong financial balance sheet, which means that we can continue our acquisition strategy. As you can also see, those years, let's say, when we are slightly lower, I would say, on the organic part, then we sort of speed up the inorganic part. You've seen 2023 and 2024 that we did 8% organic growth.
As you can also see, the number starts with a two in the last year, and that is something that I think it will continue to do also in the years to come.
Yeah, we will need a small sprint at the end of the year to beat the record.
Yeah, but we are efficient. If you then sort of look into the enablers, consolidate footprint, optimize logistics, and reduce our product cost. If we start with the first one, I mean, this is a key thing for us, is to constantly find ways of being a little bit better in finding, let's say, efficiency projects that we would have. One, of course, is the part where we talk about MFP. I'll come back to that a little bit later, but we also sort of are able to do other kinds of efficiencies in our organization. Of course, new tools like AI is something that is going to help us under the way. It's also for us, it's important, what do we want to make, what do we want to buy? That's also part of, let's say, of our daily operations.
Optimizing logistics, there you have, let's say, the two sides. One is on one side, you have the cost savings. On the other hand, you have sort of that customer satisfaction where we want to make sure that the customers are happy with the delivery time. It is sort of in both sides here. Here in reality, it is so that scale matters, because when you can sort of scale, you can start to consolidate warehouse. You would get the right competence into our organization, as well as also, like for instance, utilize containers to fill them completely, and there you would have a clear cost advantage. Last on these growth enablers is reduced product cost.
It's a lot related to, let's say, suppliers, sourcing, continuously VAVE, as well as design already in the start, design the product already for operations, and also especially then for mass organization, also design for service.
Good. Next part in our strategy house is our strategic objectives: growth through customer relevance, product leadership through innovation, cost efficiency in everything we do, and evolution through people. It's really like our compass. It guides us in everything we do. It shows us the direction. In interest of time, we will not go too much into details on the different strategic objectives, but if you start with growth through customer relevance, for every strategic objective, we have defined then specific actions. You see for growth through customer relevance, it is eight specific actions. We'll not go into the detail on all of them, but it's really to come closer with your customer, understanding what your customer really wants, what are features on a product or a solution the customer is willing to pay for.
Because if the customer is not willing to pay for a feature, then it's not a feature, then it's a cost, and then we should redesign the product and take that cost away. We started a long time ago in the Americas to measure customer satisfaction through NPS score and net promoter score. We have rolled that now out in the whole organization, and we measure customer satisfaction in a very systematic way. We use that really as a tool to constantly improve, get the feedback from the customers, where do we have to do better, work on those things, and then further improve the scores. I think we have today very high NPS scores in most of our things we do in the group for most of our brands.
We have also internally been able to prove that a higher NPS score leads to better sales, better customer share, and better margins. It is really a driving KPI for us for customer satisfaction. A couple of examples where we also work together as a group across the different divisions to get a better solution to our customers: data centers are becoming a more and more important vertical for us. By combining the products and the solutions we have in the different divisions, we can really put together a unique solution for a data center that nobody else in our industry can match. We can start on the perimeter of the data center through perimeter security. We do the high security fencing for data centers. That is in the entrance systems division. When you go into the data center, we have our security doors that come through the four geographical divisions.
We manage access control. It can be mechanical, but most of the time electromechanical, to the data center and also into the place where the racks are. We do power management of the server rooms in an intelligent way so that we can also measure if something is wrong with the logs. If somebody on purpose or by accident leaves a rack open, we can see through the measurement of the currency that something is wrong, so we can also make the data centers safer. Our business in data centers has grown significantly. This is just an example of opening solutions in Americas where you see a CAGR of 75% since 2023. You see, you know better than us because you also talk to the electric guys, the big potential that data centers represent for us.
Perhaps we can take a look at a video that shows us how our solution works in practice. It is really a completely unique solution that we can offer in our industry. Nobody else can match our offering. We have also supply agreements with all the bigger people that are active in the data center field. Today, data centers represent around 1% of our sales, slightly more than 1%. If you see the data center market, if it even only grows 50%, that means that every year we can have an extra CAGR of 0.5% organic growth through data centers. 0.5% might not sound like a lot if you're talking to electric guys, but for us, of course, if we have the ambition to grow 5%, if you can add 0.5% just by data centers, it's significant.
Business comes mainly in entrance systems because also of the perimeter security aspect, and then in the geographical divisions. Some of you thought it was more an opportunity for HID. That's not true. It's indirectly true because we use, of course, the HID technology and the HID equipment in the four geographical divisions when we sell the solution. Product leadership through innovation. We are a company that wants to make a difference through innovation. We always want to be the first one with new innovative ideas. Like I mentioned earlier, innovation is for us not only new products and solutions, it's also the way we run our operations, the way we run our processes, and so on. We have more than 4,300 R&D people in the group. We have more than 10,500 patents, and we also run our R&D in a decentralized way with 183 R&D centers globally.
When I started back in 2018, our R&D spend was 3.2% of top line. Today, it's more than 4%. We increased R&D with 211% over that period. It's clearly a very strong growth driver for us. We launched more than 1,500 products over the last three years, and the products that we launched in the last three years represent 23% of top line. It works. We cannot do a presentation without talking about AI. We do a lot of things around AI. We do all the operational efficiencies. I would say that everybody is working on. Hopefully, we do a little bit better and a little bit faster than our colleagues in the market. At the end of the day, I don't think it will give anyone a competitive advantage. Everybody will do the same thing.
What we believe can give us a competitive advantage is if we can use unique data that we have and competition does not have, and then use AI to make that data for us a competitive advantage. We are working on different projects, projects that are already operational today. This is one very good example. That is the way we spec in our products and our solutions for new build on the commercial side. We normally spec in through architects, bigger commercial projects. We define the door openings in an office, a new office, a new airport, a new hospital, you name it. We spec it in in such a way, obviously, that we promote our own products.
If you can spec in a project, you have a much better chance to win afterwards the project and get better margins and better revenue out of that customer. Historically, we have only been speccing in bigger projects because architects cost money, and you need, of course, a return on investment on the work they do. Now, through AI, we have been able now to spec smaller projects fully autonomously through AI. We just give the drawing to AI. AI will define where the openings have to be and then specify all the hardware on the openings. When the AI has done the job, an architect just quickly looks at it to see if AI did not hallucinate it. If that's not the case, we send it out. We can reach now a much wider audience through our spec activities.
Therefore, increase our chances of winning new projects and improving our relative position in the market. Let's take a look at a video that explains a bit how that works in practice.
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If we then continue with costs and everything we do, I talked about it before, is this that we constantly are targeting, let's say, ways we can be more efficient, whether it's then with operational excellence, whether it's with sourcing, whether it's with logistics. These things you can see are really paying off. If you look over the last, yeah, since Nico started, you can see that we have, this is outside of the MFP, where we then have in total accumulated saving of SEK 3.5 billion during this period. However, of course, we have the MFP projects, and here it's so that we're now on number 10. Let's say we know the drill. It's very much embedded into our organization, and we do it bottom up. Where do we get sort of the ideas from?
Yes, we get quite a few ideas coming from acquisitions, but as I said before, we're constantly trying to find ways of improving, and that means that we can also look on scale. We can also see where we can consolidate production plans or when it comes to consolidating offices or warehouses. An important thing here to mention is that the planned savings are always lower than the actual ones. If you see over the time that there is a gap between those two of SEK 2.4 billion, it always comes out better than what we initially thought. If we then look a bit on the sourcing side, you can look on the direct material. Since 2019 until today, we have been able to improve the percentage of sales on direct material with more than 3%, and also the gross margin in the same period, also with almost 3%.
This comes, of course, from Nico's favorite topic, pricing, which we talked about before, as well as lowering material prices, product engineering, et cetera, et cetera. If we dissect a bit sort of what's the mix of the direct material, 21% are electronics, 19% are traded products, components 28%, and the direct material portion is roughly one third. If you look, we have four main there, which is then steel, brass, aluminum, and zinc, where you can see the biggest one, 60% of the direct material is then related to steel. Last but not least, evolution through people. Our people are our most important asset, and I'm also absolutely convinced that our biggest competitive advantage is our people. I'm convinced that we have the best people in the industry working for us. People want to work for a market leader.
People want to be part of a winning team. We are a winning team. We're also a very stable team in a traditional conservative market we operate in. It's also very important to have stable teams and stable relations with suppliers and customers. We invest a lot in hiring the best people, developing and keeping the best people, and promoting the best people. We have made a very big shift from external promotion into internal promotion, and we really stimulate internal mobility because internal mobility also gives a cross-fertilization of experiences and cross-fertilization of our culture. If we then move into financials and look a bit over the last 20 years, I think it's quite an impressive slide.
If you see the bars represent our sales, and you see that we increased sales eight times over that period while maintaining relatively stable our EBIT margin within that 16%-17% bandwidth. If you look before 2018, we had a CAGR of 9% top line, a bit more coming from acquisitions, a little bit less from organic growth, and we improved EBIT margin a bit better because, of course, you have the efficiency gains. If you take the period 2018 to 2024, so we include also 2024 difficult year from a residential market perspective, we were growing 10%, and we have a higher portion of organic growth. In the period 2018 to 2023, our organic growth was close to 5%, so very close to our ambition level, and we also increased in that period EBIT a little bit better.
If we then look into the cash flow, we talked a lot about efficiencies that we do within, let's say, our income statement, but we also do the same then when it comes to our balance sheet, especially then on the networking capital. You can see over the last seven years that we have had a cash conversion of 106%. You can also see here, which is important, is that when the acquisitions come into the group, we utilize the same methodology, which means that they do not sort of impact this one negatively. They keep on the same trend, and as you can see, the more acquisitions come in, the higher, let's say, is the cash flow that is pouring into our company.
We also have this also result in a strong balance sheet where, of course, then when we did the HHI acquisition, net debt to EBITDA at the starting point was 2.8, but that we have been able to lower. By end of Q3, we were at 2.3 net debt to EBITDA. We're constantly managing also the balance sheet that we're having. If you then look a bit on what we are using, let's say how we are using our capital deployed, you can see that 62% is companies that we acquire. Roughly one fourth is paid in dividend, and then about 9% is in net capital. This is then financed three fourths from own operational cash flow, and then we have 24% comes from debt. What we use internally as well is OVA, which is operational value added.
Enterprise value added is probably the external term where we then take the EBIT, and then we put the interest rate that we have on capital employed, which would be the internal interest rate, which is then the WACC. You can see that over here that yes, here we did a big acquisition, but you can see that then we sort of are gradually moving up when it comes to OVA in value. As well as if you look on return on capital employed, that we are now over the last period here pretty stable on somewhere above 14%. Last is then the dividend where you can see over the years we have constantly increased our dividend.
If you look over the last seven years, you can see that we have paid 43% of EPS in dividend, which means, and you can also see that we always on the dividend have a number which is higher than 40% of our EPS. Good. That brings us to the end of the presentation. Some key takeaways. We are operating in a very good industry, an industry with very strong positive long-term market drivers. In that industry, we have a unique leading position, and we operate in that industry with a proven strategy, a strategy that has delivered very good results over the last 33 years, a strategy that is evolving, but no revolution. Therefore, we are also confident that our strategy will continue to deliver very good results going forward. Thank you.