A warm welcome, everyone, to Securitas Investor Day 2019, to you who have come here to our headquarters in Stockholm, and to all of you who are participating through the webcast. I am here today with a quite large part of our group management. They will present to you during this afternoon. There will also be lots of questions and answers sessions for you. By the way, my name is Micaela Sjökvist. I am Head of Investor Relations at Securitas. By that, I would like to hand over to our CEO, Magnus Ahlqvist. Thank you very much.
That was short and sweet. Good afternoon, everyone, and great to see you all here. I think we should just get started. September last year, I met many of you and back then we were talking about the fact that we were reviewing the strategy to build Securitas for the next phase. We have achieved quite a lot since September last year. Today, obviously a great moment to also give you an update about some of the things that we have been working on. What have we done? First of all, we have launched our strategy internally and we've also updated our financial targets. Also to support the strategy, we have also made a number of changes in the leadership team. Basically the team who will help and drive the strategy in the next phase of our development. Now we're talking about transformation.
This transformation we are doing to reinforce our leadership position, so not only strong today, but also that we're building significant strength for the future. Let us look at the journey that we are on. When you look at this, we have built the success in Securitas always with a long-term value creation focus, always based on good people, good values, and I think one other thing that really stands out about Securitas is that we are also fully focused on security services. We are not drifting into a lot of other industries. We have our focus. We want to be the best at what we do. When you look at the strategy, we're not really changing the direction. We are rather now transforming, like I said, to reinforce our leadership position. This transformation, you can categorize or group that in two main areas.
If you look at the first one, which is the lower part of this picture, these are the things that we are doing to modernize and to digitalize our operation. Why do we do that? Well, we do that because that will help us to drive efficiency and also enhance productivity. The upper part of this picture is the work that we are doing to strengthen our client offering. This is obviously a journey that we started five years ago when you look at our electronic security, when you look at our solutions capability, and for the next phase, we're also now building our data-driven intelligent products. I'm really proud to be here today together with the team to talk about this transformation.
I should also mention on this slide that we announced at the beginning of this year that we're doing an extensive business transformation in North America, and that work is now ongoing. We are still evaluating what we're going to do and what is the best ROI for the mid and the long term in Europe. That is also something that, Peter, you're going to talk about that in the European section in a while. I'm standing here today, like I said, and really proud of the leadership and very excited about the journey that we are taking with the team to lead into the next phase. When I look at this team, I said we made a number of significant changes in 2019.
Bart and I were saying when we were planning this day that we wanted to involve more of the leaders from Securitas, also for you to have an opportunity. I'm sure that you're going to appreciate the opportunity to also then talk to the people who are presenting, who are the people on this slide. We also have a number of other leaders in the room who are going to be here for the entirety of the day. We are entering 2020 with the strongest team in the security services industry. Right now, I would like to shift the focus then to our current position and also then some of the performance dynamics that we have in our industry.
I spend quite a lot of time with our clients and I always take the opportunity to ask them, what are the things that we're doing really well? What are the things that we can improve? The trust in our brand, a brand that stands for trust and reliability always comes out. The strength in our offering is always feedback that I'm getting as well. We might have many customers that are guarding customers or electronic security customers, but they appreciate the protective services because they see they can build with Securitas for the long term. Obviously we have all of our great people, and our people, 370,000, make a difference every day. We also have a global presence.
A global presence which is relevant for some of our customers, and that's something that a few of the team members will talk about a little bit more today. We're also staying true to the principles based on which we have built Securitas from the beginning, and that is to be close to our clients in a relationship which is never too far away. I think that is one other aspect. If you're looking then at the performance dynamics, we are growing faster than the market. That is then thanks to the offering that we have, but it's also thanks to delivering good quality to our customer base. If you're looking at margin, the margin has been stable for a number of years, but there the dynamics are a little bit different. If you're looking at the solutions in electronic security, that is really helping the margin.
We also look at North America and the tremendous achievements that we've had for a number of years in North America, driving margin expansion. That has also really contributed quite a lot to the business. We've also had some pressure on the guarding margins in Europe and partly also in Ibero-America that have then had a negative impact and that's obviously something that we're now working to address. From a margin perspective, I think one other thing which is important to highlight for me as well is that we are also investing a lot in our strategy, and that's obviously a deliberate decision that we are making because we believe that we are well-positioned and there is great opportunity for ROI in the mid and in the long term.
If you're looking at this slide on the lower part, you also see that there are some one-time effects, and those are obviously one-time effects that are related to the transformation programs that we are driving. You will also see for the first time maybe in a Securitas slide that we also highlight research and development. The R&D is very much related to the investments we are making in data-driven innovation. That is how we're leveraging information and data to invest and build intellectual property to enhance knowledge and the services that we bring but also to really distance ourselves from the competition in the next five to 10 years.
The ambition here, and I think the basic position is that we are winning in the market but also wanted to set the scene a little bit because we're going to cover all of these dimensions together with the team during the day today. In light of the strategy, we also updated our financial targets. We have three specific financial targets and then one strategic ambition. The financial targets EPS, that is unchanged, so that is the 10% over the cycle. We also then due to IFRS changes updated as well. We are now measuring net debt to EBITDA, so we've also then clarified that target, but also with a cash conversion target range as well between 70% and 80% during the years to come. The dividend policy is unchanged.
We have also announced this morning externally our ambition to double our Electronic Security and Solutions sales over the next five years. This I highlight, this is an ambition, but it is something that we are convinced we're able to make happen together with the team and also the journey and the capabilities that we now have as a company. Let us now shift the focus a bit to the external dynamics. This is a simple picture I think some of you have seen before, but the basic message here, this is a good industry to be in.
There is growth in the security services industry, but there is also good innovation opportunity, and the innovation opportunity is enabled through advancements in technology on one side, and then also we see significant opportunity in terms of leveraging the data and the information that we are generating thanks to our presence. It's not only a good industry, it's also a huge market. When you're looking at the outsource guarding business, this is a $130 billion outsource guarding market on a global level. We also see a systems integration market opportunity of around $70 billion, and that's something that Tony will talk more about later on in terms of our electronic security footprint and also the ambitions as we go forward. That is a little bit of the market but I also mention our customers because the client needs are also changing.
We are seeing in the dialogue with our customers more demand for integrated solutions, more demand for what is popularly called as a service. We're also seeing that a lot of the focus and the expectation from our clients is going from looking after assets and buildings and more looking after the entire value chain and people. There's also a number of clients who are saying, "Well, you have such good knowledge. You're investing a lot now in information and data, et cetera." We also see that there is an opportunity and there is a need as well for the entire security services industry from observing and reporting what has happened to leverage the information and data to be able to anticipate and then obviously with our presence, be in a good position to also then respond.
Those are some of the important client needs that we are seeing in the market. If you look at Securitas in this context, we have a very strong position and I'm not going to dwell on all of these areas today because we will cover this in the different parts. We believe that we have all the assets that are required to not only lead the industry and the development today but also in the future. The most important is our foundation, and that is related to our culture, our people, and the values that we have. Now we have also developed a purpose. When I talk about the purpose, this is obviously something that we decided in the group management when we set out on the strategy journey at the beginning of last year.
Not only to build the strategy for the next phase, but also to articulate why Securitas is important and the things that we are doing. For that reason, I would now like to invite Helena Andreas. Helena, you joined us at the beginning of this year. It feels like a long time ago, but it was in February. Helena comes with great experience in a number of leadership positions in customer roles, in marketing roles, most recently with Nordea, the Swedish or Nordic Bank. Before that, a number of years abroad in the U.K. with Tesco and also with Vodafone. Welcome, Helena.
Thank you, Magnus.
To talk about purpose, we have an important role in society, but we haven't really articulated this that well in the past. Now, I would really like to hear you talk a little bit about the purpose, but also then to actually share with the audience here today, what is our purpose?
With pleasure, Magnus.
Good. Do you want to click?
Thank you. This is a great moment, and it also feels a little bit special. Our purpose is we help make your world a safer place. Why? You might think, when we have so many other things on our plate, are we spending time and effort on this? Our starting point is that by having one common, clearly articulated purpose, we will be a more purpose. We will be a more successful business in the longer term. By more successful, I mean that we will be able to make better and more aligned decisions ranging from really large, big strategic business decisions to small operational decisions that our 370,000 colleagues make every day. Another really important area for us is recruitment. Recruitment is a huge effort for us as the security industry and of course also for us in Securitas.
We need to be able to clearly articulate what's special about working for us in Securitas, because if we're able to attract great people and motivate them to stay with us for a very long time, not only will we have lower recruitment and training costs, we will also be able to deliver better value to our clients.
Great. There are long term, there are short term benefits as well. How do we get here? This is obviously something that you can do in many different ways. Can you also explain a little bit what was the journey to actually identify and articulate our purpose?
Having a purpose that doesn't feel genuine has no benefits. If it's just a nice slogan or words on a wall, it's not going to make a difference. What we did was that we engaged our colleagues from every part of the business, every type of job role, every geography you can think of, through co-creation workshops. During these workshops, we talked about what makes me, the participants, proud to work for Securitas. What is the type of company that I want to be part of for the future? What's really interesting is that although these groups were so diverse, the themes that came out were really consistent. The themes were around safety in the broadest sense of the word. It was around pride in the role and the value that we add to society and it was also how we serve our clients.
Actually with those themes coming out, it was fairly straightforward to capture that into one sentence.
How has this been received, Helena, internally?
I am of course delighted that it has been received tremendously well by people across the business. People see it as a compliment and an addition to our already strong values and our management principles as outlined in our toolbox. We want our purpose to be a leadership tool, and of course, in a company of our size, that doesn't happen in weeks or even months. It takes years, and we have a very steady engagement plan in place to make that happen because we are convinced that having one common, clear way of articulating our common purpose not only makes us better decision makers, it also further strengthens our culture, and it enables us to build greater global alignment around the implementation of our new strategy.
Great. Thanks a lot, Helena. This is obviously very important to us, like Helena has highlighted but it's also part of something that we are then letting guide our strategy and the work that we are doing for many, many years to come. Thanks a lot, Helena. I'm very proud of the purpose. I've also then asked a number of our colleagues, a number of our officers as well, who are working with clients. This is something that is really resonating, like Helena said, with everyone within the business and that is obviously something for a people-intensive business like us, extremely important. This is obviously purpose, which we are then clearly relating as well to our core management principles and our values.
If you look at the success, like I said, we have built our success based on wanting to be a good company, good ethics, good values, good people, but then also the fundamental business principles and management principles that we have captured in our toolbox. That toolbox was developed in the late 1990s, but it's as relevant today as it was back then. That is also something which is really helping and defining in a clear way what is Securitas and also how we operate and how we are managing the business over time. We also putting more emphasis on sustainability because we have a big opportunity and also a big responsibility to actually influence this world in a better way. We have five main focus areas that you see on the left-hand side. I just wanted to give a few examples.
One of those being working conditions. We are working with health and safety metrics, also now activities internally to make sure that we're doing a better job every year. We also have a number of customers that are very keen on working together with us on these important areas as well. Diversity, we set clear targets at the beginning of this year to also enhance our diversity within the company, that is work that was then done in the organization, also then with strong endorsement from our board. In terms of emissions, we're obviously more of a service-based company, we're not producing and polluting that much. We have a significant fleet of vehicles with our mobile officers.
That is also something over the last 10 years that we are continuously pushing to make sure that we are improving as well the impact, and that we're then also optimizing in a better way, to limit the negative impact from those. That was really to set the foundation a little bit. We have a strong position, we have a great team, and we also now have a purpose. In the strategy work, we are now shifting to that. This is really then the meat of the presentation for the remainder of the day, what are the things that we are going to do? This slide is important because this is then highlighting our wanted position, to be the intelligent protective services partner. There is quite a lot of meaning behind all of these words.
I think one important part, you know us quite well, many of you, and you know that be a leader in protective services, that's something that we have talked about already back in 2015. This is an evolution of a winning strategy. The intelligence is more related to the added knowledge that we are bringing, leveraging the presence that we have, leveraging the data and the information that we are generating. We're also putting the clients in the middle, and that's the reason that you're then seeing two people as well in the middle of our protective services overview. We've also then identified what are the things that we need to do to reach that position, and that comes down to three main focus areas, and we're going to cover these in quite some detail today. First one is our client engagement.
We have a great offering, but we have also identified we can continuously do better in terms of how we engage with clients. Second one is how do we strengthen our protective services offering, but not only then in the individual standalone services, but also how we're combining these services into solutions for our clients and adding innovation. The third part, we are a big organization. We're also then putting a lot of emphasis on trying to find more opportunities to drive efficiency. Efficiency is important for us because that will help and free up resources that we can invest but that we can also help improve margins over time. We're going to talk a lot about this together with the team in the next couple of hours. To sum this up, we have a strong position and we have a clearly defined wanted position.
We have a growing and a dynamic market, but we've also identified the things that we believe we need to do to make sure that we are maintaining the leadership for the years to come. I also say we have clear targets and metrics and a team, organization, and leaders that are committed to really drive this development now, Securitas winning also in the next five to 10 years. With that, very happy to hand over to someone who needs no introduction, and that is our CFO, Bart Adam. Welcome, Bart.
Thank you, Magnus.
Thank you.
Thank you so much. Warm welcome also to all of you here in our head office in Stockholm, and a warm welcome to you out there at the web. I'm very proud to be standing here today and presenting to you, maybe my work, but even more important, the work of all the colleagues from the CFO team here in Sweden and around the world. Magnus explained to you our strategy, and now invite you to take a deeper look with a financial lens on that strategy. It's all about achieving our goals. The first step in achieving the goals is setting clear targets. That is what we have been doing. We have been setting clear targets, three financial targets underpinned by our strategic transformation ambition. The targets are clear, I think, by themselves. Financial performance, EPS, no change.
Financial stability, we have reworked that with a net debt to EBITDA of 2.5 on average, an operating cash flow of 70% to 80% of operating income. Dividend policy, unchanged. Clear targets, driven, as I said, also by the strategic ambition to double in billion Sweden krone measured, the part of solutions electronic security from where we were in 2018 to where we want to be going forward. These targets will set and drive our entire behavior within the company. Before we going to look at how we're going to achieve these goals, I would like to take a look at our recent performance. These are our, well, current targets, I should say as of today, our previous targets. Most of you, I think, are familiar with how we have performed against these targets.
I think it's fair to say that over the past five years, we have been able to deliver a strong track record. Let's take a deeper look into these numbers now. Sales, we have had on average organic sales growth of 5.2% and that has been then further supported by acquired growth on average over the period of 1.6%, adding then in total to 6.8% real sales growth. That has brought our sales from SEK 70 billion to a bit over SEK 100 billion in 2018. This has then turned into, from the top line to the bottom line, into EPS. Our EPS has grown over the period from SEK 5.67 to SEK 9.17 last year per share. That has been based then on an operating income, which has moved from SEK 3.5 to SEK 5.3.
You could say the operating margin has been stable or has seen a slight increase then over this period. More important to understand is that there have been very different dynamics behind this in the different divisions, and we will come back to that later on in quite some detail. Also it has been impacted by group investments and we will also share with you some further details around that. How has this been translated into cash flow? Well, I think over the period we have had a solid cash flow. This supports, of course, our organic sales growth and investments into the strategy. The average operating cash flow has been 75% of operating income, and the Free Cash Flow has been on 64%. I should also say that we have had good nine months of 2019 when it comes to cash flow.
I should also say when you look at these numbers here, 2016 and 2018, they were a bit on the lower side of our target range, but these were years with very good growth, respectively 11% and 8% real growth. The real growth in our industry, in our company consumes some cash. These are the numbers. Let's turn back to the strategy now. This is really also at the core of our strategy. It's fully geared towards creating value for our clients but it's also geared towards strengthening and improving our competitive position. How do we do that? Well, by providing a mix of our different protective services and ultimately combining all of these services and invest into customer site equipment. That really sets us aside, I think, from the competition. That is also driving our operating margins.
I believe you are very familiar with this chart, maybe have seen it too much already, I don't know. In any case, this is how we have been talking the last years about our margin and how it can move in a contract if you go from on-site guarding to the different services and ultimately to solution and electronic security. While this is of course a conceptual picture, we will show in a few minutes more in detail the actual reality behind this. First, how has the sales moved? Well, in solutions electronic security, we have moved from 6.5 in 2014 to 2018, in 2018 to 20.5. This is what we want to double now in the years ahead of us to 2023. There has been a strong evolution across many of our countries. Many of our countries have helped to drive this sales number.
If you look here at the table. At the top, you can see that in 2013, we had no country which had more than 40% of this targeted sales as a percentage of its total sales. Now in 2018, we had five. If you go a row below that, we had four countries in 2013, which were between 30% and 40%. In 2018, we have seven. If you go into the bottom there, we had 37 countries with 0% to 10%, and that is only 13 left. Still, it's 13 left, which means that there's also opportunity there to bring up those countries. What we learn here that 40% to 60% is possible and there is still potential left to move a lot of these countries up to the upper part of this table. More important, what does this mean to our margin?
This is a picture you have seen before as well. We have talked about that last year. Now we have plotted again for 2018 our top 15 entities on this chart. We have put them according to the operating margin, and on the other angle, we have put in Solutions E lectronic Security as a percentage of total sales. Then you can see the correlation. We have taken away three outliers, and they are well-known guarding outliers with one in green there with a very exceptional high operating margin, and I can tell you I have really studied that as well in detail, and two other ones with exceptional low operating margin. We come to an R- squared of point 82 and the correlation between those two dimensions.
I think we can say that there is a clear driver, solutions and electronic security are a clear margin driver for our entities. I shall also say that there are other drivers as well, and here they are. These are our six key performance drivers, and we need to understand them quite well, and we understand them quite well. It has to do with the type of market we are in. It has to do with our leadership and our own competitive position in that market. How well are we on top of price and production costs? The next one is how do we manage our cost base, direct and indirect? How do we develop our protective services, and how do we develop our solutions and electronic security? There are six distinct key performance drivers, I should also say that they reinforce each other.
They correlate together very well. If you are stronger in one or two or three, you will tend to become stronger also in the other ones. That is also a key thing to understand. When you look at the table, you see there the distribution of sales in SEK over operating countries and regions according to their operating margin in 2018. You see that we have SEK 16.5 billion achieving an operating margin of over 8% and SEK 29 billion achieving an operating margin between 6% and 8%. You also see that we have SEK 7.2 billion below 2%.
What we learn from this is while the majority is, of course, why you could expect them in the middle there between four and six, that there's a large part that is much higher than that, and also that we have opportunity left to move basically the low performers to the high-performance side of this slide. More than 6% and even 8% margin is possible in our industry. How does all of this play out at the group level? You are familiar with these numbers. In blue there, you see the sales, how the sales has developed. In the green, in the bottom, you see how the solutions electronic security has developed as a percentage of sales. You also see how the margin has developed in orange.
You see in the bottom basically how the operating income has developed as a number in Swedish krona. I will not dwell too long on this one. I think it is even more interesting to look at the divisions. North America, I think it is fair to say we have seen a very strong development over the last years in our North American business. This is what I would call strategy execution at scale. We have really benefited from our scale in the United States, our position, our leadership position from our focus on price wage, from our focus on indirect cost, and also from creating transformation at scale. The investments that we make there, the acquisitions that we have made there have come in at scale, and we have been able to drive the business with our strategy.
You will later on learn a lot more about that from Tony and Greg, how this has been going on in the United States. Even more important, how they will continue to drive this strategy and how they are ready for the next move. Turning to Europe, we have followed the same group strategy, but I would say with a more diversified execution. It has been outcome also on different levels. On average, this is the picture that you see. Some have really well performed, some have less performed. Going forward, and Peter will talk around that as well, is how can we further drive the sales mix? How can we optimize scale and specialization? Also taking in learnings from North America. During this period, the operating result has moved from SEK 2 billion to SEK 2.5 billion.
Turning to Ibero-America, you will later on meet Jorge, who is leading that business. We have been confronted with two different realities in this business. We have LATAM, and then we have Portugal and Spain together. You could say LATAM was going very well until 2014, 2015, and it was the other way around in Spain, Portugal, maybe. That turned around also around 2014. Spain started to take off again while Latin America was a bit more challenging. This results in this picture. What we see today, we see very good potential in LATAM based on what we have built already. We also see that the Spanish case, as such, is really an interesting one to understand its numbers, and it's almost a laboratory on how our strategy can be developed.
Jorge will talk to you about that and be happy to share more insights of that with you. Now, we have looked at the performance of the business and the three divisions. What I would like to talk to you now about is the recipes on what we will use and our actions that we will put in place to take the next step. The next section is then more about, yeah, how we will achieve actually our goals. The first real one, and probably the most important one, is this one. That is really our first line of action and focus going forward. Here also, I promise to share you a bit more in detail how our actual company looks like compared to the conceptual slide.
On-site guarding represents 72% of our group sales, and it comes in with a margin of 4% to 5%. Mobile guarding, 5% of group sales, operating margin 7% to 8%. Solutions, 11% of group sales with an operating margin of 10% to 12%. Electronic security, 10% of sales. If you add those two together, then we come to the 2021, and that comes in with an operating margin, which has a bit larger spread, 7% to 10%. Corporate risk management comes in with 8% to 10%. This is, of course, a distribution again, and I take out the relevant reference, and there are outliers in every direction. The total then is then 100%, of course, and this is then how it's built up over the different business lines.
The entire goal is to be specialized in each of these different services through knowledge, through scale, and at the same time then mixing them together in a solution and driving, of course, the sales mix forward. Also included in there is that we believe we are at a position now through this further specialization where we will focus again more on the onsite guarding. We are focused a lot on solutions electronic security. We'll continue to do that, but at the same time, we feel the opportunity is there to also talk about and look more about onsite guarding. We have very good lessons, and you will hear more about that in the next presentations. The next action then is to continue our acquisition path. We will continue, and acquisitions will continue to be a part of our growth strategy. It's a clear acquisition strategy.
We know what type of targets we would like to approach. We are mostly focusing on electronic security. We have focused on that. You can see here in the blue, that is where we have spent our money but we will mostly focus on that also going forward. The key thing is to add depth and skills in existing markets. That is really at the core of our acquisition strategy. I should say, making acquisitions is one thing, how difficult as that may sound, there's another thing, and that is to integrate them. I think we can also show that we have a good track record on integrating acquisitions. You will meet Tony later on who comes from a more recent acquisition in electronic security. Next line of action is to deliver on the transformations. We have a couple of transformations programs going on.
The European cost saving, we have executed on that. That you could say is fully reflected in our income statements, and has been executed according to plan. In the course of execution is the modernization of our global IT foundation and the business transformation in North America. Both are on track with the benefits expected to kick in in full by 2022. Greg and Martin will be happy to share more details around that. As Magnus explained, for Europe, that is still under evaluation, and Peter will also refer back to that. The next line of action is to prepare more for the future. That is when all of the global platform shall be leveraged into using and bringing intelligent services to our clients.
We have built a strong central team of 70 people, and you can probably meet them here in the offices around you. Normally, this is their space. We invaded here today into their space. That has also had a cost impact on the group level. We started out in 2017 by building this team of very capable people, and there's also central R&D included in there. That has had a cost impact at the group level of 0.18% when we compare 2019 actually compared to 2016. For 2020, we plan to further execute on that with another increase of 5 basis points in Operating Expenses compared to 2019. That is reported in our segment [order]. This is our strategy. This is the main actions that you will hear more about later on but I would also like to take a closer look again at finance by itself.
We also have a strong focus on cash flow, and you need that. To execute on the strategy that I talked about, you need to have a strong focus on cash flow. You cannot do either or one. You need to have capability to do the same together. There are two main focus areas in here. One is the biggest line in our balance sheet, surprise accounts receivable, and the other one is to make investments in line with the strategy. When it comes to accounts receivable, my message is always to the company, the job is only done when it gets paid and it gets paid on time. That is something we heavily focus on. We have no factoring as you know, we have no supply chain financing, and we want to keep a good focus here.
All of our investments, every decision there is based on Return on Investment. The target is that we shall achieve an operating cash flow of 70% to 80% of operating income. If you are more interested into the detailed definition, that is entirely according to our own financial model, which is explained actually on page 69, I think, of our annual report 2018. It refers back basically to what we call cash flow from operating activities as percentage of operating income before amortization. We have a bit special way of looking at our operating cash flow. In essence, it means that we take operating cash flow before financial items and before taxes, but after capital expenditures. That's a bit an outlier to other financial models, but it's important, I think, for you to know that.
These are the things that the operational people can impact. They cannot impact interest rates. They cannot impact tax rates. That is why we have a different definition there. This is then our target, 70% to 80% of operating income. Of course, strong cash flow, yes, but as much a strong balance sheet. We have a very strong balance sheet. We have a good track record supporting the growth, supporting the investments that we need to make, that we want to make. Paying out a good dividend, all of that is not possible without a good balance sheet. Balance sheet is equal, in my world, to discipline. If you want to have a good balance sheet, you need to be very disciplined at what you want to achieve.
How we price our services, how we agree on payment terms, how we manage our risks, all of that, at the end of the day, will be reflected in your balance sheet, and you should act with discipline. The target then is then to have net debt to EBITDA on average of 2.5x in a bandwidth of 2x to 3x, and if we would have larger acquisition opportunities, I think we would even be willing to go a little bit outside that. Good cash flow, good balance sheet, and then there's a final requirement to be able to execute on the strategy, and that is solid financing. We do have solid financing in place. We are backed up by a consortium of very strong banks, and some of them are here today, and would like to take the opportunity to thank our banking partners as well for your support.
We are committed to solid investment-grade rating. We have BBB with positive outlook, and there's ample headroom in there. We have an RCF in place, which is undrawn and ready for any backup. We have no financial governance. With that, I think we have come to the conclusion. I invited you to take a deeper look, put on the finance lens on understanding our strategy, how we can act on our strategy, and then the next picture tries to put it all together. We have set clear goals, and those are the starting point. If you want to execute on your strategy, you need to set clear goals, and these goals will drive our behavior. You need to understand. You need to understand what are your main drivers that you can work at to achieve those goals. We understand those drivers.
We have talked about the six key performance drivers, and how they fit together, how they reinforce each other. From there, you can then decide on your actions. The five key actions are specialization, driving the sales mix. We will work and deliver on the transformations. We will continue to work with acquisitions, and we have a clear acquisition strategy, and we will drive the company more towards intelligent services. That, of course, is a nice strategy but you cannot execute on it if you're not supported by focus on cash flow, strong balance sheet, and solid financing. That is really what you need from a financial perspective then to support a strategy with. If you put that together, I think we are in a position where we will be able to deliver. It's all about long-term value for our clients, for our shareholders.
That is what we are really working towards. I think with that, I can finalize here.
Good. Thank you very much, Bart. We are now opening up for the first Q&A session, and I think, Micaela, you will help me moderate. We have about 10, 15 minutes, I think, for this section, right?
Yes.
Yeah.
We have up until 2 o'clock . for the next speaker. Please, if you have a question, raise your hand and a microphone will be sent over to you. Yeah, on the second row. Karl-Johan?
Yes. Hi, Karl-Johan Bonnevier, DNB Markets. When you look at that margin differential with different markets, would you consider in the 2023 perspective that all markets are core and all service areas are core for you?
Core in what sense, Karl-Johan?
You will continue to develop them rather than disposing them to, say, increase the lower level of the organization.
If you look at the strategy that we are taking, our plan is not to expand and to keep on expanding our geographic footprints. We feel good about the footprint that we have. The strategy that we are embarking on basically requires that we are going deeper in the existing footprints. We are present in 58 countries today, and to bring the full protective services offering and intelligent services in a fairly short period of time, because four or five years in our industry is still fairly short period. That is not possible. One thing that you will hear is, in the electronic security side, we are focusing on top 15 markets, essentially.
Where we then want to build, and Tony will share more about that. We're building more of a relevant, strong position where we can really have a positive impact in terms of the business and the offering. There is focus in this but obviously over time, like Bart said, we see opportunity to be able to expand the solutions and electronic security as part of the overall mix, and that is something which is relevant and which is also expected by all the markets. We're not going to invest broadly in 58. We're really focusing on building strength in the most critical markets first.
I would like to add to that, Magnus, that we are building this network also to deliver to our global customers. This totality of the countries that we're in right now, they are important to our global customers, and we will continue basically to support better our global customers through this global network.
Yeah.
We do not have a big divestment idea either, if that was part of your question.
Hi, good afternoon. It's Sylvia Barker from JP Morgan. Just a question around the growth in electronic security and secure solutions, please. If we look at the last five years, how much of the organic growth in that segment was from substitutions of existing man-guarding contracts, and how much was from brand-new sales? If we look at the next five years, how do you think that will split? Then, I guess the balance, I suppose, will be M&A as well, but just maybe give us a flavor of that shape going forward. Thank you.
Yeah. The Insights are, and I will come back and talk a little bit more about this later on but the last five years we really embarked on this. We have built a lot of basic capability to be able to offer integrated solutions. It does differ quite a lot between different markets. In some markets, when we talk about solutions, it's a lot of conversions from existing guarding customers. Now we're starting to also see that we're actually converting electronic security customers to more guarding services as well, but it's primarily been a lot of conversions. We've also continuously been emphasizing our integrated solution also as a better offer to the clients. That has also meant that we are continuously looking at conversions, but also then driving new sales. To split that out in exact numbers, I think that is difficult, [thought].
It is really a combination, but the foundation from the beginning has been more converting existing guarding clients into integrated solutions. Yeah. Correct. Yeah.
To summarize, you think that the organic growth overall could actually be a little bit higher over the next five years?
We're not guiding. We're giving a pretty ambitious target, which is an indication, of course, board share, that as we are going from essentially SEK 20 billion to SEK 40 billion, if you look at the numbers. There are different factors here. One is that we also now come into a stage where we have a fairly significant part of the business being solutions, electronic security. The base is bigger. We are also learning, and we also have to make sure that all the countries are also really delivering and driving this strategy as well. There we still have opportunity and also for some to really start to get started in that process as well.
Thank you.
Hi there. Thanks. Steve Goulden from Deutsche Bank. A few, if I may. Firstly on Free Cash Flow and particularly around DSOs, can you just talk about the pressures, the issues that you've had in the last couple of years? Maybe you've been structurally under pressure, maybe in emerging markets, for example, to have longer DSOs. Is this in some cases in a negotiation process? Are longer DSOs given as a way of offsetting price pressure? What kind of issues have you had there? Obviously Q3 was better, do you see this coming back, and to what extent? Then I just wanted to dig into the higher-end technology solutions products, particularly around data that you were just talking about before. How do you see that developing?
What kind of proportion of your customers would be interested in a solution around leveraging data, and how do you see that fitting into the overall portfolio?
Should I take the first question? Yeah. I'd rather take the second. Accounts receivable is the single largest item on our balance sheet. We see pressure from mainly larger customers, and it's probably coming from their CFOs who wants to also have a nicer balance sheet, and it's part of the negotiation process, as you put it out there. It's part of the entire negotiation when you renew a contract or you sign up a new contract. I've seen it beyond almost reasonable terms. Some companies come up with 150 days, and I think that is unreasonable. We have tried to put up better measure now, also escalation procedures as to when people can approve on those terms or not, and it has to come up to my level as well in some cases. It's a matter of negotiation.
It's a matter also of focusing on it, but also a matter of explaining it to the customer. In our case, if we extend the payment terms with 30 days, it really means we can wait another two years to get in any positive cash flow from that contract. Why is that? Well, basically, we have to pay out our guards, our people every week, every two weeks, in many cases, maximum every month. As we only have 5% margin, you could say, it basically means 20 times that you have to have 20 times 5%. You add in VAT, which you also have to pay. If that, and the customer has to pay that to you, it basically means 30 days of payment terms means two years of no cash. That is how it is.
That is also what we try to explain. We have explained that to our own people, who then could explain that to our customers, our clients, and then you get some more sympathy for your argument as well. That differs among industries. There are other industries which can. We have really no suppliers to turn this to, but if you have a lot of suppliers, if you have your customers paying and you have a lot of suppliers, then you can push that on. That does not exist in our case. That in combination with in guarding and margins of 5%, it's mainly driven by large customers and we have put routines in place for that for better controlling it. I think apart from that part as well, we also have a quality offering.
We invest quite a lot in being able to deliver quality to our clients, and that is something. We are not a bank. That is also something that we're always taking fairly transparently in that dialogue as well together with the clients. To your second question, when you look at the data-driven intelligent products and services, that's really the next exciting phase for us. We started to invest in essentially 2017 and 2018, but now ramping up these investments in 2019. This is a long-term journey, and it's early days. Why do I say that? This is essentially our way of leveraging the presence that we have, all the information, the data that we are generating every day. We are becoming significantly better at starting to understand risk in a better way. To your question about what is the demand from the customers?
Well, I think it's a bit of a learning curve. Many are very excited. Many are saying that, "Well, if anyone is able to do it's got to be you, Securitas." We also have a lot of work to do internally to get our data in order to be able to get the right type of input, because we are collecting millions of data points but we also need to do that in a standardized way so we can also make it actionable. On top of that, we have a great team that are now starting to develop products on this, and that's something that Martin is going to come back and share some more concrete examples.
I think we also have a few team members in the back of the room as well that I would encourage you to talk to during the break as well to get a better flavor. It's promising, but it's very early days, so this is more the long-term impact. Obviously if you ask the question, do we have good ambitions in this space in terms of margins, et cetera? Well, absolutely, yes. We're investing because we have strong beliefs that there is return on this investment for the long term, but that ROI is basically built on real confidence that we're onto something where we believe we can drive real differentiation and value.
Thanks a lot.
Hello, Carina Elmgren from Handelsbanken. I have also two questions. The first one would be that now in the coming five years, do you expect still the Securitas solutions to have approximately the same margin, or will we see some improvement there even during the coming five years? The second question would be around addressing the man- guarding margin. Do you have any thoughts about how that could be done more than what you have announced now in these transformational programs and cost efficiency?
As you know, we are not guiding in terms of margin, but what we have shown today, and I think, Bart, you have been more transparent than what we have ever been before in terms of the margin situation that we have across what we call different business lines or services. You see that there is significant value generation to the clients, and that is obviously then explained in the better margin that we have. We continue to invest in this because we have belief in that value. Obviously, it's in our interest as well that we are preserving the margins because we're also, in many cases, investing in capital, essentially equipment for the customer as well. We also need to make sure that we have better margins so that we maintain the return on the capital employed. I think that's the first question.
I'll say yeah.
I should say, we do not have an ambition to drive that much beyond the numbers you have seen. We believe that is the right value for the customer, the right return for us as well.
True. On the guarding side, that was the second question. I will come back and talk a little bit about this to just say what are the basic themes. We will also have, especially with Greg in North America, we're talking in the strategy about strengthening our core. The core is our guarding business, which is obviously still a significant part of the entirety. When you look at those in brief terms, we are re-emphasizing our guarding in the strategy. We do that because it's such a significant part, but it's also a good business when it's well managed. That part will be more about learning now from the best practices, standardizing in terms of metrics. We become more data-driven, so we use more operational and financial Insights.
It's also very much about how do we organize ourselves in the right way to be as successful and impactful as we can with the clients. There is a few other things, but I think we should come back to that question in a couple of sessions essentially, and especially on the North America one, because there we also have some really good practices.
We will move on in the agenda now.
Yeah.
We will come back to Q&A in a little while.
Okay.
Thank you, Micaela. Thank you, Bart.
Thank you.
Now we are turning then to the first focus area, and welcoming now Henrik and Brian to the stage. Henrik is Chief Operating Officer in our European division. He is leading the Northern European part of the business and he's also been a key sponsor of our client centricity work in the strategy process. Brian is the head of our newly created function which we call Global Clients. That is a small team which is then managing the most critical clients that where we operate on a global level. Previously, Brian, you were the country president for the U.K. for five years, and then very successful as well for the Danish business for a number of years. Now it's all about the clients.
Correct.
Yeah. Welcome.
Thank you. Okay, talking about client engagement, it's all about building the client partnership. As you see in our strategy, our goal is to become the intelligent protective service partner. Where we are successful in that, we see that we drive higher margins. We see that we drive higher retentions. Before we look into how we're going to do that, let's look at where we are today. We have a very solid base. We have 150 or more than 150 clients globally today. We have 150 global clients, that means clients, some of them being the largest clients with the largest companies in the world, where we cover the security needs in multiple of divisions for them. We have a retention rate over 90%, meaning that clients today already now stay very long with us. We have recurring sales base of 80%.
Looking at where we are today, our position is very strong. The question is, how can we make this even stronger? Talking about client engagement, it all starts with the client. As Magnus said, there are changes in the expectations of the clients. They are asking more from a security partner than they used to do five years ago. In the last year, we've done a very focused activity on talking to our clients and understanding both how we're performing today but also what are the expectations for the next five years for them on us in order to meet those new expectations. The message is very clear. They want us to be a partner. That means in the sales side, we should understand the business. Previously, we've been talking about understanding risk. Now we're saying something else.
Now we need to start with the business. We need to understand what drives their value, then we can meet that. On the operational side, we need to take that understanding of the business and have common goals. Again, common goals is not only looking at the risk side, but is what type of our services drives value for them. Lastly, we talk a lot about solutions and retention, that comes from developing with the client. We need to ensure that when they develop, we develop with them. The only way for us to do this is to be close with them, close to them. Today, in many places, many areas, we are very good at this. Where we see where we are such a partner with our clients, we drive higher retention. We drive higher margin.
I think Bart showed a few example of the correlation between selling solution and providing that type of service and also how that impacts our margins. It's quite clear as well, and that was also shown by Bart, that we are not excelling in all the countries. We're not excelling in all the areas. What is the reason why we today have such a diverse approach to the market? If you look at our history, in the 1980s, we were a local security provider in Sweden. We've expanded globally. We talk a lot about our toolbox. One of the key things in our toolbox is the local ownership, that each branch manager should own his P&L. We have 2,000 branch managers today, basically running their own business. We believe this is a key driver for our success, and that will be maintained.
The problem is that if there is a problem, we have solved it locally. If you need a process, how you sell, how you operate, how you develop, that has been developed locally. If you need a system that supports you, that has been procured locally. Generally speaking, we are a global company, but with a lot of local problems solved locally. Now, we will try to bring this all together. Now, the goal is instead of providing global excellence with global consistency, but still with local delivery. How should we do that then? As I said, local delivery is key. That will not change. We are for the moment running a lot of initiatives in order to find the best practice that we have today.
I think one of the most concrete things is that we're going to roll out a global CRM, and we have for the last six months, put some of the best people we have in sales, in operations, in development together from the whole organization, identifying, okay, why are we so good in selling a certain product? Why are we so good in operating? Why are we so good in developing our clients? We're going to take all that knowledge, and when we roll out the new CRM, it's going to be based on the best practice that we have internally. As I said before, we've seen that when we do this well, we have higher margins. When we do this well, we also have higher retention. Now we're going to take that success and scale globally.
On the back of that, or as an effect of that, we will also have one system, one process, and one data model. Which means that from efficiency point of view and also from innovation point of view, we have a total different opportunity to scale. Martin will later talk about both efficiency and innovation. This is generally speaking. Looking at our client needs, they are different. In order to adapt, we need to look at those needs. Clients are different. They do different business, they do different type of size, they have different knowledge. Also, again, when we look at our business, certain places we're very good in large clients. Certain places we're very good in SME segment. We also have vertical markets where we really excel, where we've been able to bring thought leadership.
Greg will mention a few of those where you focus in North America. What we're doing now today is trying to get all that knowledge together into Securitas so everybody can benefit from the knowledge we have. Lastly, Global Clients is a growing segment, where very few people will be able to compete with us because of our footprint. If we can excel even further there, even fewer companies will be able to compete with us. I have Brian here who will talk a bit more about our strategy there.
Thank you very much, Henrik. Yes, I will go a little deeper in our Global Clients business now. As you'll see here, we have now a Global Clients business that has been growing over the last couple of years, more than 10%. We see this now being a significant part of our business. Why is that? Yeah, we have various reasons, I think. One of the key drivers, we believe, is the increased globalization. It's increased focus from our client to take us from a local partner to a global partner. That has been a key driver and in addition to this, when talking to these clients, it's a lot of areas where we see common needs and expectations. One of them is clear focus on shared values. It's also a perspective on long-term partnership.
When you build global partnership, it's not a three-month project, it's more a three-plus year project. We think these couple of drivers has also been the key driver behind our growth the last couple of years. As said before, we have also areas here where we believe we can improve. Talking to these clients, one of the common challenges we receive is, could you drive more consistent service delivery? I think it's fair to say we can improve there. We also see more and more of our dialogue being around data. How can we share data? How can we use more intelligence? Which is also quite positive when you look in our strategy. Again, the opportunity to scale from local partnership to global partnership is also heavily focused by these clients. If I should add another one here, it's interesting.
A trend we have seen recently is that some of these clients are reaching out to us and say, "Yeah, maybe we should consider, instead of a price-driven global tender, could we have a dialogue on a value-driven global partnership?" I think that is really the opening for us to talk about all our protective services and our solutions. Now I'll go in a little bit deeper in what are we now going to do to improve some of the areas where we believe we still have room for improvement. We call the common thing around these initiatives is more or less, how do we drive global consistency? As we announced in July 2019, we established the Global Clients function and structure. This was in addition to quite strong teams in our regions, in our divisions, already working with these cross-border clients.
We identified the need for strong alignment. We identified the need that this could give us what was requested by the client, more global consistency. The good thing here was we have a lot of best practice. It's really about identifying where do we have best practice that we can scale globally. We also really want to focus on driving more digital interfaces with our clients. This is not just to deliver an increased response and real-time feedback to our clients. It will also support our strategy in being more data-driven. HR, people management, training is also something that we always hear when we talk about these global clients. Magnus mentioned that also. The focus on our people. We have great focus on our people, have always had that. Again, we can see best practice in how we develop global training programs.
We have fantastic local initiatives that we are now taking globally to deliver, again, the global consistency. You hear a lot today about our strengthening in our solutions offering also, and that will, of course, also really strengthen our global service offering to these clients. This was a lot about what are we doing to strengthen the global client offering. In addition to that, you heard Henrik talk about vertical markets also. We see pockets around the world where we have built very strong vertical market expertise. We are also now identifying which of these vertical markets we are taking to the next level, going global. Some of the very exciting markets we have identified where there is potential is markets like tech data centers, pharmaceutical, logistic, and we are going deeper now to investigate where we really can see the benefit going forward.
In the bottom of all of this, as you see here, we want to improve our global capabilities in all our protective services and we have a strong foundation for that. Finally, to summarize, we will, as Henrik mentioned, keep focus on improving our local delivery. We will add to that more global consistency, deeper client engagement, and specialization, and I think we are very well-positioned to deliver on that strategy. Thank you.
Great. Thanks a lot, Brian. Thank you, Henrik. Having covered now the client dimension in terms of the three focus areas, we're then shifting to our offering. This is now then about how do we strengthen our protective services offering? Here, there are a few key questions that are important. How do we strengthen the standalone services so that they are strong by themselves? Also how do we integrate into solutions? Then how do we now embark on the journey in terms of intelligent data-driven products? These are the things that we're now going to cover in the next session here. If you look at our protective services offering today, we have an incredibly strong offering. I think you all know, and we've mentioned all the great officers that we have.
If you're also then looking at the mobile guarding, for example, we have more than 4,000 cars that are out in the streets where in this business it's basically coverage, which is important but it's also to have density so that you are quick in terms of response times. 750,000 monitored connections. Those are essentially clients where we have 24/7 surveillance into our Securitas Operations Centers. 6,000 people, technical full-time employees. These are the people who are working primarily in our electronic security part of the business with an immense amount of competence. That's something Tony will talk about in a few minutes as well. Fire and safety, we've been talking and sharing more in the past as well.
7,000 people, full-time employees who are fire and safety trained, who are also then adding more value on top of the regular guarding capabilities. If you look at our Pinkerton part of the business, that is our brand name for the corporate risk management. We have one-third of the Fortune 500 companies that we count as our clients today. Pinkerton, I will share a few more details later on about this. We have real strength, and you should read this slide, by the way, horizontally. When you're looking at guarding, for example, your on-site guarding, that is then related to the 350,000, and same with then all the way down in terms of the capabilities that we have built up.
Looking at this, we then come into the guarding question and I think that was also a highly relevant question that came up in the last Q&A session. What are we doing here? I will share the high-level points, and then like I mentioned before, we will go into a lot more detail also in terms of how we strengthen the core. When we talk about the core, this is the guarding and the on-site guarding presence that we have in 58 countries around the world. We have a strong presence, a strong capability. How do we now look after this business and optimize that and strengthen that over time? Few key points.
One of the fundamental principles that I mentioned at the beginning is that we have built all of our success by being close to our clients, and this is a fundamental principle in our toolbox. When we talk about being close to clients, that obviously means that if you have a portfolio of on-site guarding clients, that portfolio cannot be too big. That is one important part. We also then realized in the last couple of years that we can leverage data a lot more as well internally, leverage operational, leverage financial data to draw more insights in terms of how we operate in this business and making it stronger.
There we've had some great examples, and one of the best is a gentleman whose name is José Castejon, who is leading the Guarding Center of Excellence that we have also created and announced earlier this year to make sure that we are now preserving and building best practices in the guarding as we go forward. That work will also then be focused on how do we continuously sharpen our offering on the on-site guarding, the mobile guarding, and also then remote guarding, and how do we complement with better tools to equip our people in the front line with better tools to be able to plan the business, but then also the officers to have more knowledge essentially in the palm of their hands with better tools as we go forward.
That's something that Martin is going to talk about, which is also then related to the concept of the digital officer of tomorrow, which we were then looking more at the long term in that sense. One final important point about this is that we are creating a center of excellence to then not only look at guarding on a local level or within each division but now also taking an expert view, if you will, and leadership across all the divisions and all the countries to make sure that we are really focusing on strengthening the core part of our business. With that, we are now shifting to electronic security, which is another important focus area. I'm very happy to introduce Tony Byerly. Tony, like Bart said, you joined us with the Diebold acquisition in 2016.
One of the strongest electronic security leaders in the entire industry. You joined us via Diebold, then you also successfully managed the Kratos acquisition. I think you will talk a little bit about that as well.
Yeah.
Tony has now been leading Electronic Security in North America, but since July this year, also leading the global efforts that we have in terms of strengthening our Electronic Security capability and leadership on a global level. Warm welcome, Tony.
Great. Thanks, Magnus. This is an exciting time to be part of the Securitas team, and I have the pleasure to get to talk to you about our electronic security business. Before I start talking about specifically Securitas' electronic security business, I think it'd probably be very relevant to actually spend a little bit of time talking about the industry itself. The electronic security market. The market, as Magnus mentioned on an earlier slide, is expected to grow to a 70 billion USD business by 2021. If you think about the business, it's really a specialized business in and of itself. It's got its own metrics. It's got its own KPIs, it's got its own drivers. If this was an electronic security meeting, we'd probably be talking about backlog turn. We might be talking about same-day service or possibly cycle counts or something along those lines.
It's a specialized business. It's a growing market. Let me explain a little bit about the industry itself. You can see it illustrated on the slide. On the right-hand side, it's really referred to typically as the systems integration segment or sector of the business. You'll hear this commonly for people that are talking about the industry. What do we mean by system integration? Most of you may know some of these elements, but just to share a little bit more with you. It's typically more complex, more sophisticated solutions. Usually, you're integrating multiple technologies and very commonly, that's video or access control platforms. It's very similar to IT elements and other software programs as well. They really drive the solutions. If you think about it, there's a lot of installation project centricity in that side of the market.
Some skill sets you really like in this side of the market would be engineering and design project management. If you look at the left-hand side, you can see it says alarm monitoring. If you think about this side of the industry, it's really more basic or simpler systems, and a lot of times these are prepackaged solutions, and they're tied to recurring services. If you think about that side of the market, why is it called alarm monitoring? Well, quite simply, nothing more than most of those systems and services are linked to an alarm monitoring center and that kind of bridges and kind of completes the offering. If you think about in that sector, you might be talking about alarm systems that are tied to the alarm monitoring center for response and such.
Both sectors are highly fragmented sectors in the marketplace today, which is very attractive, obviously, as you think about our growth goals for the business. Two things, organically, when you have wider capabilities across this entire spectrum, you have a competitive advantage if you have a broad footprint. Secondly, it obviously lends itself to M&A opportunities and a robust pipeline with respect to growth from an acquisitive side as well. You have a growing, a sizable market, and it's very attractive to us as we think, and it ties very well with our growth strategies in the future. Where do we stand as Securitas when it comes to electronic security? Well, we have a SEK 10 billion presence in the marketplace in over 30 countries. We have over 6,000 dedicated electronic security associates already today, as Magnus mentioned previously.
We also are focused on targeting and growing 15 core markets, as was mentioned previously. To offer a comprehensive portfolio to serve our clients' needs around video, access control, intrusion, maybe fire monitoring, as well as the integration capabilities. Being able to serve that broader footprint and really from a complete portfolio for our clients. Offering the full value chain.
In this industry, the value chain is going to start with your ability to sell and engineer and design a solution, be able to then implement that solution through an installation project delivery, move on to ongoing service and support for that solution after the installation is complete with ongoing maintenance, repair, services, support, and then obviously the linkage in for other solutions, other opportunities to do manage and hosted services by linking it to our alarm monitoring centers as well as to our Securitas Operations Centers or our SOCs. We do this by partnering with the leading manufacturers of technology in this space. We don't make these products. These products are made, and because of our scale and our breadth and the Securitas brand, we have access to all the leading technology manufacturers, giving us a real competitive advantage in the space.
Allows us to focus on being that trusted, pure play, trusted advisor, specifically focused on the unique needs of our clients. We have a very strong competitive position to grow from in the future. Magnus mentioned specialization and deepening specialization, and what does that mean? If you talk about what Bart said about building skill and how does that make a difference? If you look at our business in North America, we've been able to accomplish that, and we've built a leading position in North America as one of the leading electronic security providers focused on the commercial sector. The journey began, as Magnus mentioned, in 2016 with the acquisition of Diebold's electronic security business. If you think about in North America prior to that, there really wasn't that sixth protective service.
It really rounded out our protective services offerings in North America, and it allowed us to do it in a meaningful way to the marketplace there. We also combined in 2018 the Kratos PSS acquisition, filling in our footprint, getting us deeper scale and local market presence in broader markets across the United States. We are now approximately a half a billion-dollar business in North America. We span both sectors that I explained previously, systems integration as well as alarm monitoring capabilities. We do that through over 30 offices, and we have coast-to-coast operations in the U.S., Mexico, and Canada. Able to service and really provide a full complement of security across the entire continent. Supported by four alarm monitoring centers that have really strong certifications in and of themselves.
We've been recognized as the industry leader this year by receiving two of the leading industry awards from independent trade publications. You can see we've really built a strong, highly specialized, scaled business in North America to be competitive in that marketplace. What does this matter to our clients? Well, it deepens our client engagement. Specialization strengthens your expertise in the protective services. Becoming highly skilled and specialized as an expert in electronic security will strengthen that sixth pillar of our offerings to our clients. Clients, in many cases, like to buy one-stop-shop. Being able to serve a client broadly in the security realm is an important aspect of being able to be that one-stop provider. If you think about a client's environment. Let's just pause for a minute, look at the illustration on this page.
If you think about a traditional business corporate client, they've got a multitude of different kinds of facilities. They have different security risks. They have different business operations and different security needs. Start to complement these different facilities with our expanded capabilities or our scale and our depth and our expertise when it comes to electronic security first. If you think about a corporation, most of them have a headquarters facility. I think almost everyone in this room has been in a corporate headquarters. In fact, you're in one right now. If you think about it, this environment requires certain security requirements and certain needs because of the different risk elements. You move on and say, "Okay, maybe this business has a manufacturing plant or some other physical plant facility.
Maybe they have a distribution or warehousing operation that has a much different environment, trucks coming and going, inventory. You have possibly even a data center or a call center environment. That's much a different environment, as Martin would tell you. Maybe it's regional office hubs or buildings of back office operations across a broad footprint. Maybe it's even several hundred, maybe 1,000 office locations, smaller footprints, or possibly you're a retailer, and those are retail sites. You're a financial institution, and these are bank branch locations. Your ability to serve that holistic environment of a client is really important and allows you to become a one-stop shop as a provider in electronic security. Let's take it a step further. Now start thinking about the strength of Securitas in our protective services across all six pillars.
I can envision in that office, in that headquarters building, a Securitas officer. That Securitas officer is now enrolling you as a visitor into the access control system that we installed, allowing you to get through those turnstiles, to get to the elevator, to get to the proper floor where you have a meeting. Maybe now that officer is now looking at the video surveillance of this facility and making sure we're secure in here. Taking another step further, think of a retailer. We now have a retail location, a pretty basic system, probably. Now it's tied to our alarm monitoring center or our SOC. Now we get an alarm condition, and now we're dispatching a Securitas officer, a patrol officer, who's now going as a mobile officer to that location to inspect what's happened. That's the power of Securitas.
That's the differentiation in the marketplace of the six protective services coming together in a comprehensive solution for our clients. That drives the stickiness. What's exciting about this, it's applicable across all commercial markets. What other industry is applicable to all commercial markets? Very few. Security is, and electronic security, especially. If you think about it, I've been in this industry for 30 years. There's not one business that I can't think of that isn't a prospect for an electronic security solution, whether it's a basic intrusion system or a fairly complex video and access control integrated system. If you think about that's pretty attractive. I want to end on probably the most important slide in my presentation, which is real-life client examples of how this really comes together. Take Gulfstream. I think most people are familiar with Gulfstream, but they're a subsidiary of General Dynamics.
They're a great company. They design, develop, manufacture, market, and service business jets. Gulfstream was an existing Securitas Guarding client. In 2016, with the acquisition of Diebold's electronic security business, where we built the expertise and the scale necessary in North America, we then were able to become the electronic security services provider for Gulfstream. Now, obviously providing both services and those protective services coming together. If you think about Spotify, I think most people in this room will be familiar with Spotify. Existing electronic security client, and now it's become a Guarding client. The real-life examples of what Magnus was referring to and what Bart were talking about, this is how these things kind of manifest themselves in a very powerful way and positioning us very uniquely in the marketplace.
With that, I'm going to turn things over to talk about the next exciting phase, which is intelligence services and innovation. Martin, who's our Chief Information Officer, turn it over to you.
Thank you very much, Tony. I had the pleasure of addressing you last year, laying out some early plans of what we wanted to do with regards to intelligent security. I also talked about our plans for IT. I'm very excited to be here today to give you an update on what has happened so far. We are in the early stages of a journey to become the intelligent protective services partner. It's about the transformation of the security industry from low tech to high tech. This is a true transformation journey for Securitas and the entire industry. It's a collaborative effort. We are approaching this as a team effort. Bart talked about that we are making investments in an R&D capability. I'm very proud of having these 70 people that Bart talked about. Welcome to our floor, by the way.
Some of my team is at the end of this room, I really encourage you to talk to them in the break. These are people, competencies that we haven't seen and haven't had in Securitas before, probably not too prevalent in the security industry. These individuals, together with our very experienced security experts, are now doing really exciting work to combine two tracks. How do we enhance and augment our existing services, also how do we develop and deliver new services to the market? Let me start my presentation with giving you my view on why I think that Securitas is uniquely positioned to leverage this opportunity and to win this game. I'll do that by taking an angle to a message that you heard my colleagues talk to. Data. All my colleagues have talked about data.
To become truly data-driven and to develop and deliver true intelligent services, you require big data, big amounts of data. Small amounts of data will simply not be enough to train your algorithms to make your business truly predictive. With the size that Securitas have, that gives us a unique opportunity. Our size matters. When an incident occurs, receiving an alert that something is wrong in your smart device, that doesn't really give a great client experience. To make a customer, a client happy, you need to have an adequate response. Our 340,000 guards, our Securitas Operations Centers, our electronic security capability, et cetera, are able to provide such response. Our presence matters. Our vision, we aspire to take the position as the leader of the global safety and security ecosystem. Such position requires client base, channels, and brand equity.
Our position makes us the preferred partner, go-to-market partner, for technology incumbents, for startups, for scale-ups, to join, to complement our offering, and to go to market with their technology. That's put us in a very strong position to naturally take the ecosystem leadership position. Our market position matters. Those things together makes me comfortable that there is no one else that is better positioned than Securitas to take this and win this game and to become the leader in intelligent services. This position I'm talking about, how do we leverage this? You recall last year I was talking about how we approached this journey in four dimensions. I was talking about the officer of tomorrow, crime prediction, the future of sensors, and the intelligent SOC. Today I want to share with you what we have learned and what we have achieved in those dimensions.
Firstly, repeating also what Magnus has said, it's early days. We are at the start of a journey, but exciting one. We have developed a unique capability, I would say. We are starting to learn how to drive digitization. We are starting to learn what it takes and what it means to take and deliver new services into the market. It's early days, as I say, but we are seeing already some exciting evidence. For example, we are co-developing solutions with Lighthouse clients that are already in practical use. We have successfully accelerated our data capture and we have learned how to ensure that the data we gather is structured and utilized in a way where we aggregate it, anonymize it, and that it's in line with our data privacy strategy.
We have developed a few own microservices that we deliver to clients through APIs, but we are also starting to include partner services, such as software services, to complement our service offering and making our business and our offering richer. An important part of the transformation is how we transform our delivery model. We are starting to build out the digital service model. We're piloting it in Sweden, and the learnings we are making for what that takes and what it means to deliver digital safety and security services. Those learnings we are refining in the pilot market Sweden, and the learnings then we are implementing and putting that through into implementation at scale through our large-scale transformation programs. Me, Peter, and Greg will come back and talk about those in more detail.
Those learnings that we are now capturing in that proof of concepting, they are also informed by the client experience work and the insights that we've drawn from the work that Henrik and Brian have talked about. We are tuning that delivery model to those needs and the client types they talked about. Let me give you some examples then, a little bit more detail of what we have done. Quite fundamental, as you might understand, is to have a digital client channel. We have started to digitizing the SME channel, and we built out a solution that we call MySecuritas. MySecuritas is an end-to-end channel, digital channel, that acts as a way for our clients to consume our digital products and services. It's also a distribution channel for us to distribute our services and partner services.
In parallel to the SME channel, we are now working on the evolution of MySecuritas to large clients. We are deploying a version of MySecuritas which is freemium through our service delivery, and that is to achieve scale at pace. We are developing and acquiring third-party products. We're developing own products and acquiring third-party products to build up a premium MySecuritas. We have piloted MySecuritas in one market in Sweden. We have more than 300 clients on MySecuritas, and we have data-driven evidence that MySecuritas reduces client churn, that it drives extra sales, and we receive very positive feedback from the clients using MySecuritas that this is really what they expect to see in 2019 of a professional services company. If this is how we digitize our client experience, let me now turn to how we digitize our officer experience.
Our 340,000 officers is our most important asset in the company, and we are working on digitizing the workplace of our officers. We do that to improve the quality and efficiency of their daily work, but also to make sure that what they do in the daily work is transformed in a digital format, so to something that we can report to our clients, so that the clients can really see in a very clear and consistent way how we deliver value to them. A very important ask, as Brian laid out, especially for our Global Clients, but I would say for all our clients. We're also digitizing our officers to set them up well for the future. The digitized officer is connected to the technology that Tony talked about in the environment which they move around.
They are connected to each other, to other officers that are in the area where they move about and where they operate. They are also connected to central support resources such as the SOC, so that they can get advice, get direction, and get support. Digitizing the officer is also an important element in our product development. Having a digital interface for all our 340,000 guards means that we could deploy new products to the field very easily, very quickly, and very consistent across the world. Last but not least, digitizing the officer is part of enhancing the employee value proposition, making the officers feel that they work for a modern employer and the employer of choice, Securitas. Digitizing clients, digitizing officers, how does this digital world meet the physical services that we have in prevalence?
In our Securitas Operations Centers that Tony talked about, we capture data, and this is where the physical and the digital world of safety and security services are converging. This is where we integrate all our data sources. This is where we leverage intelligent models, where we apply AI and ML on the data. Intelligent services takes our current SOC capability to the next level by enable them to orchestrate the delivery of all our protective services in a data-driven, in an automized, and in an optimized way, in real time, and eventually globally. Now, let me talk about the first commercialized intelligent product that we have on the market. For those who listened to me last year, you will recall the picture that you see on day zero up there. Prediction of risk for crime. Over the last 12 months, we have taken major steps forward.
We have moved from solution inception, we have leveraged design thinking, we have co-developed with clients, and we have now two products in use. One we call Insights. It's an internal tool for our salespeople to make the conversation with a client much richer. The other one is external, and there we have the first paying MVP client in less than 12 months. The client is Vasakronan, a well-known, probably the largest real estate company in Northern Europe, I think they are. With the prediction solution, it allows us and Vasakronan to do real-time localized risk assessment for all their locations. It enables us to map risk to right solution and to have AI-driven maintenance alerts, which reduces unnecessary call-outs. It makes our joint security planning much more efficient. Last but not least, it allows us actually to change business model.
It allows us to change the model from pay per hour to security as a service. This is a concrete dialogue we have with that client right now. How do we move into such a model during next year, which will set a precedent also for how we can take that to other clients? In parallel to those two products, we have also built a very unique prediction capability on which we can rapidly build out new services. That capability has been proven very strong. I'll take an example. We grade risk areas on a scale of one to five, and we define areas as risks at level 4 and 5. They represent 10% of Sweden's urban area. At-risk areas stands for 83% of all criminal incidents in Sweden. We have a precision in our model of 80% of predicted incidents versus actuals.
The risk for a criminal incident in a level 5 area compared to a level 1 area is 88 times higher, you can imagine that that is valuable information for both clients and for us to design the optimal security program. Next steps is that we are moving from area, which is 250 by 250 meters, to object level. We are also expanding the scope of the service from criminal events to also safety incidents to make the use cases of the prediction model much more rich. I would say that so far so very good. We are covering all urban Sweden with real-time risk assessment with repeat patterns and seasonality. We see a very strong positive feedback from clients and from industry, and we have now built out one client vertical, real estate. As we speak, we're building out new verticals.
During next year, we will go deeper in Sweden to enrich the model and to learn what that business model build-out means and how it affects our operation and how we can make that optimal together. We will also apply those learnings and look for data sets in other markets in order to expand that capability. Summing it up then. As I said, we have started the journey, early days, to become the intelligent protective services partner. We are digitizing our core services and we're also bringing new services to the market. We have confidence in our capabilities, and we see a strong positive response for our clients. We're investing in innovation and continue to do so. We're building a unique capability. As Magnus also said, it's very early days. It's exciting, but it's early days. Hopefully much more to come.
Thank you very much for your attention. Welcome on stage back, Magnus.
Thank you for sticking to the script, Martin. I hope that those were informative parts in terms of how we strengthen some of our protective services. What I want to do now, before we go into the efficiency part, is just to talk a little bit about how this comes together as well. We have talked about our protective services, there's really two key things that you need to remember. One is how we are focusing on building strength in each standalone service so that we are the very best in each part. The other one is how, based on client risk and client needs, do we then integrate different services into one integrated solution?
When we do that, we have by far the best offering to provide to our clients and to address their needs and also to build the partnership over time. One important message that we shared at the beginning today is that we are setting out an ambition to double our electronic security and solutions business in this five-year period. The question already came up a couple of times, how do you make that happen? Well, if you look at this, you have to look at this in phases. We started in 2015. We have now grown this part to around 20% of the business, and we're then setting out, like we said, to grow from SEK 20 billion to SEK 40 billion.
We have a number of lessons learned because when you do something for the first time, it's never that easy, and we have done really well in some parts. We have also then some work to do to also get on the journey in other parts of the business. We're now taking those insights, and to accelerate and to really drive these goals now to be able to double, some of the key parts are then related to clients. How do we refine the offering based on the specific client needs? There is different segments, but there is also different types of client categories, from very local to global, but then also cutting across, like Brian and Henrik shared before, across many different segments.
Refining that, making it easier to understand, easier to sell it but also then easier to install and to serve the solution is then becoming critical. Another important part is the standardization. This is one part that Tony touched upon that as well, and one of the key expectations, obviously on Tony and the team on a global level is that we're now leveraging a lot more the great practices and the knowledge that we have in electronic security and standardizing metrics, language, targets, et cetera, so that we're building more consistent strength across that footprint of prioritized markets. We talk about 15 key markets. Same thing also in our solutions work, so that we're also becoming more efficient and that we're able to drive scale because the scalability of what we do is important so that we're also enhancing value and margin over time.
I think that is one that Bart alluded to in North America. We have been driving this strategy, but we have also been able to scale it in a really good way, and that is a critical priority for us. Organization is important, but I think that goes without saying, but we have also some lessons learned. We're then also now fine-tuning how do we organize ourselves in terms of electronic security, but also then to drive solution sales at a larger scale for on-site guarding customers, for mobile solutions, and a few other categories as well. Then the other aspect is this message that I shared earlier, that's also about impact, because we need to drive impact and really make sure that all key markets are switched on in now really driving this journey.
For that reason, we continue to also make investments organically in training and competence but also then through acquisitions, but then obviously also expecting from all leaders that they are driving the strategy and that they're really driving material impact over time. Those are the main initiatives and themes, but we will come back to some of this as well after the break in the different division updates because this is obviously something which is fundamentally important to our strategy. With that, now we're shifting to the third focus area, and that is efficiency. Today, we decided that we're going to focus more on the transformative programs that we are driving in IS/IT. Happy to welcome Martin back up on the stage, and then after that, we're going to have a Q&A session with the people and the leaders that have presented in the last hour.
Okay. Thank you.
Thank you, Magnus. Okay. You just heard me talk about investment in innovation aimed to improve our competitiveness and drive revenue. Now I'd like to update you on what we do in global IT, you could call it, to aim to drive efficiency, but also enable client value. Of course, this is not only about global IT. There are elements of activities that we do in IT that are fundamental enablers, but efficiency is much larger. It's something also that is ongoing in every day in all parts of our business. I will focus on a couple of the larger things that we do when it comes to more of transformative nature. We are investing in our IT platform. We're also investing in our business platforms to drive efficiency across our entire business. We go about this, as you would expect, I would say.
We are modernizing and standardizing what is common. We're taking good precautions to understand what is differentiating in our business, to safeguard that and free up headroom in the common areas and redirect those investments into what makes us special and what makes us stand out from the competition.
We drive this change primarily through a couple of change programs, because the journey that we are trying to explain here today in all the dimensions is fairly significant from the company that is worldwide, but all basically local in what we do, what clients we have, how we deliver services, et cetera, to the company which we want to become, where we are considering how to retain local ownership and innovation capabilities, but also leverage those in global scale and drive out synergies, but also to address new customers of global category in a more efficient way that we haven't been able to do before. It's quite a lot of transformation activities that are needed to do that, and we try to do those holding it together in a couple of strong programs in a portfolio of change. How are we doing so far?
Adding to what Bart started out talking about, in early 2019, we communicated two major transformation program that we had started. The first one was an investment in our global IT platform, IS/IT platform. It's about creating a modern, flexible, scalable, global platform as a support to our business transformation and as an enabler to both new client value and innovation. It includes activities such as consolidating our IT footprint, reducing number of data centers, leveraging new technologies such as cloud services, et cetera. Moving as much as possible from local service delivery to remote service delivery. That program, in addition to provide us with a future-proof platform, is also intended to drive out efficiency in IT.
Leveraging modern technologies from fewer places in more a remote fashion, we believe strongly that is something we can do in a more cost-efficient way. The target here is to reduce the run rate of global IT by SEK 300 million by the end of 2022. The other transformation program that we communicated, and Greg will talk much more about that, is the business transformation in North America. It is a true business transformation program, supporting and driving efficiency in our core guarding business primarily, but also the other protective services as we progress. It is about improving how we process financials in a better way, how we recruit and onboard people in a more efficient way, how we plan and schedule our officer more efficiently and how we bill for the time that they spend on service delivery in a more efficient way.
The target for that project financially is to deliver up to 0.5 operating margin improvement for Security Services North America by 2022. Of course, the qualitative benefits that we expect by freeing up massive time in the field, freeing up time in the shared services to move from transactional manual work to more value-added work, those basically comes on top and are perhaps at least as important. I'm happy to say that even those are complex programs that we actually are tracking towards the plan that we set out at this point in time. Giving you a bit more of detail, starting with the IT transformation, a critical enabler for us to move to a more modern IT platform has been how do we take care of the people in IT, about 800 people across the company? How do we right skill?
How do we create an effective operating model and organizational model for that organization? In about a year ago, we still had end-to-end IT organizations basically having most of the capabilities tailored mostly to keeping the daily operation running in 58 countries. We made a decision a year ago that we want to restructure and implement a new organization and operating model. We decided to establish a model consisting of 11 IT clusters that together supports global efforts and together also supports the local operation in hopefully an optimal way. To complement that, we established two global IT delivery hubs for our infrastructure operations, one to support Europe and Asia Pacific and the other one to support the Americas to really leverage scale and support the business for those really underlying core services. No, sorry. This reorganization is complete.
Of course, to realize all the benefits, to have it all settled in the right skilling, the capability shift, et cetera. That's a multi-year journey, and that will continue still for several years. We are operating in this model right now, and we are continuing the shift and the transition of people and skills into those shared capabilities. On top of how we organize ourselves, of course, we drive our projects now change through a portfolio. Roughly we talk about the portfolio in four dimensions. One is the IT dimension, which I just talked about, and we started that change in 2017, and it will continue still for several years. On top of that comes the business transformation portfolio, where the most notable project for the moment is this North American Business Transformation Project, which Greg will talk about.
As Magnus and Bart talked about, Europe is still under evaluation, but of course we will do activities to improve both IT and the business operation also in Europe. That's something Peter will come back to, but we will also come back at a later date with more detail. Very recently, basically in the autumn, we started in earnest in driving a project portfolio around how we improve our customer excellence platform as Henrik primarily talked about, which include how do we improve the support to our salespeople, our sales operations people, and how do we support and enhance the interaction with our clients with the digital channel rollout, for example. Those are still early days, but will have a quite significant effect, I would say, on how we are perceived on the market and by our clients.
Very recently, we are now starting to add the fourth part of portfolio into operations, and that is how we produce our services in a different way, and how we actually enable all our officers with the modern toolset. Where we started and where we were a year ago, we had only IT projects basically in our portfolio. Going into 2020, we have activity and projects in all four parts of our portfolio. Of course, it increases the complexity but we are also maturing in our capabilities, and we are also getting into a stage where all our business is more now lined up to what it means to deliver and execute on our strategy.
That means that we have sort of the target position more clearly defined and that we can now start to execute in multiple dimensions in parallel. Let me sum it up and give you just a flavor of what is it that we talk about when we talk about efficiency, to give you some flavor of that. Of course on the IT transformation, we expect efficiencies in IT, more scale, more effort done for less, basically. We're also expecting improved finance and HR transactional process efficiency, addressing manual processes and workarounds. We're expecting hard dollar savings by reduced unbilled overtime by better scheduling. We are expecting significant reduction of man-hours relating to manual processes in our branches. We are expecting efficiency improvements in our 370,000-employee workforce by introducing mobile self-services.
We are looking to introduce better tools for recruitment and for onboarding. You can imagine what effect that has on a company that recruits over 100,000 people every year. Our target is to have one data-driven and AI-powered platform or platforms for our business that is driving efficiency, that is enabling client value, as well as enabling our wider industry ecosystem interaction with that and supporting our innovation efforts. We are on track. I would say again here, it's early days. This is heavy lifting, and the majority of the change is still ahead of us. Thank you very much for your attention. Magnus.
Great. Thank you, Martin. Now you can stay here because now we're going to do a Q&A session with the leaders who have been. Tony, Brian, and Henrik as well, please, for a 10, 15 minute Q&A or so.
Yeah.
That's okay.
Paul Checketts there in the middle.
Hi, everyone. It's Paul Checketts from Barclays. I've got a couple of questions around the data. Can you just enlighten us on how you work with data, given you're operating across different jurisdictions? For example, if you have your data scientists working on analyzing that for predictability, can you transfer data from the North American business to those scientists in Sweden? Anything you can say to enlighten us on that? Then on facial recognition as well in the key markets, what is the latest with the ability to use that, and how do you think it will develop?
All right. There are restrictions on how you can transfer data, of course, across. As I said, we developed a data integrity strategy that is very important for us, so that we follow. The data that we work on, we try to, as I say, aggregate it and anonymize it to the largest extent possible. We are so far having a data science practice and capability here in Sweden. We are looking also to set up a similar capability in the U.S. so that we can work on the data sets there. Applying both technology on how we anonymize and aggregate that data together with a strict governance policy is how we go about using and being able to leverage that data.
I would also say as I repeatedly said here, that it's early days and we are learning also how we can work with the data in the different jurisdictions, and that will develop over time. I think also, as you know, that's a common challenge for all industries, and it's something that we are working also together with the legislator on how we can work on those solutions. Also technology providers such as ones we use, such as Microsoft, et cetera. It's also something that we work together with them on how we can use and work with that data in the best possible way. Data sets are different in the different regions. In some regions, like in Sweden, we have rich internal data but poor external. In the U.S., we have relatively rich internal but very rich external data, which gives us different possibilities.
If I could just add as well, we are not interested in personal data as such. It's more that we are leveraging the data sets to be able to better, for example, predict crime. I think that is an important starting point. There will obviously be quite some work because we take all compliance seriously and we just have to make sure that we handle all this in a good way. That is also then one of the key factors for us as well when we're building the common IT platforms. We're also doing that so we can have scalability when we are building and driving innovation in one place. The ideal thing is that we are then able to replicate that then in other markets as well and do that quicker.
That we can only do when we have more scalable platforms as well.
When your clients sign a contract, do they agree that you can share the data if it's anonymized and aggregated? Is that part of the agreement?
Yeah, it differs. I can see different clients have very different perspective on this as well. I think it's been a realization for many, especially consumers in the last four or five years as well, that the data is valuable. This is something that we are also working with our clients, because the clients also want better prediction capability, for example. If we are then able to leverage other clients' data, this client's data, that would also then enhance the product. I think that's also something that people realize, that if you do contribute, you will also have a better product overall.
With regards to facial recognition, that is something that we haven't explored and leveraged too much yet. In certain markets, there is some legislation. In other markets, very rigorous legislation. In those markets, we have not yet started to look into facial recognition technologies. It's not a core part, at least not yet, of our roadmap.
One thing I can add to that is we are technology agnostics. We are not marrying ourselves just with one specific partner, because, to be frank, there are hundreds of technology companies that are claiming that we can do this and we can do that, et cetera. What we look at is, what are the needs of the client? What is the best technology out there? How can we integrate that in a good solution? For that reason, I think we're in a pretty good place as well. It's also not an area, face recognition, where we feel that we can make such a big difference. We want to invest in things where we can be the best, and that is the reason that we're investing more in what we define as intelligent products as well.
Thanks.
Thank you. Hi, Sylvia Barker from JP Morgan again. On monetizing the data and intelligence solution, so you said that you don't really have a case study yet to show on that, but how should we think about monetizing that? Let's say you have a man guarding contract. Is that something that the client would be, do you think, willing to pay for additionally? Let's say you have already a solutions contract where you're not paid by the hour. Is that just an additional service that you offer as part of the package? Again, is it something that you can charge for additionally? Then just second question, could you remind us your split of customers by SME and large between the different markets or some of the key markets, and what that means for the data and potentially for the demand for these intelligent solutions as well?
Thank you.
On the monetization, there is a reason that we say it's early days, because it really is early days. We are also very confident about the value that we have been able to create with the early pilots. Martin, you mentioned as well, we have a few first pilot customers that are also paying. If you look at the needs from a client perspective, everyone would like to have a better understanding of a few different things. One is how are you optimizing the security solution across different sites? Tony, for example, you made an example of many different sites of a typical customer. That is something that you can do that by knowledge that you're building up, but then you typically do that very locally.
If you're applying data, we can also then aggregate and get much better understanding of the entire situation across many different sites. Optimization is one, and that is really enabled through better knowledge, and that knowledge is very much data based from our perspective. Obviously, if you look at other value, it's also higher ability in terms of anticipating and responding. That is where the data and also then the technology that we're integrating is becoming so critical b ecause if we have connected systems with the client, but we're also better able to predict and to also then capture activity which is in a specific area, for example, together with our presence that we have, be it on-site guarding or be it mobile, through the connection to the SOC, we're also then able to respond.
I think that those values or some of examples in terms of the pain points that we're trying to solve for the clients, but it is early days. We are convinced that when we do this in a good way, we're able to provide really good value over time. The dynamics of this part of the business, they're going to become quite different from the on-site guarding, which historically is very much priced per hour. When you look at solutions, it's more than what is the value and with the integrated services we provide. With the data and the more knowledge base, that will also be a different type of revenue and margin model as well.
That's something that we are also trying to figure out, what is the best way that we actually bring that to market so we can really monetize that as well?
In addition I mentioned, for example, the MySecuritas Premium model. Of course now it's a revenue stream coming from subscriptions from there. The Vasakronan case, I talked about subscription model on that risk prediction tool. We can sell standalone risk predictions as individual products. Of course then the shift of business model to a service model, which allows us to optimize our delivery based on our understanding of the risk level and optimize that model. There are several business models that are available, but those are things that we need to learn for ourselves and together with our clients as we go through proof concepting there.
You had a second question as well. That was the SME split versus global. The simple answer is that it differs quite a lot between different countries. If you look at the Nordic region, if you look at Europe, for example, significantly stronger SME base. Some of the larger countries that we have in Europe, more focused on mid-size and maybe more larger. I would say also that is more the situation as well that we have in North America. The number that we are sharing today, it is, what do we say, Brian and Henrik, 13%?
For Global Clients.
For these Global Clients, which is then at least a proxy for how does it look across the entire footprint. It does differ quite a lot actually between different countries.
Sylvia, can you hand the mic to James behind you? Thanks.
Sorry. James Winckler from Jefferies. Just had two quick ones, hopefully. One was on the IT and the NA transformation plans. You have the obviously stated goals of savings between now and 2022. You did mention that it was a bit of a process in terms of delivering the net savings to the bottom line. I'm wondering if there was any margin benefit in this year from those programs, and if not, you could expand on how the shape you expect those coming through between now and 2022. Then in terms of M&A in the North American U.S. market, wondering if there are some pipeline of the medium-sized Diebold type assets left out in the market or if it will be more likely to be a amalgamation of a bunch of smaller bolt-ons moving into the future.
Bart, do you want to comment on the first one, then Tony and I can comment on the second one.
Yes. I will put myself here. When it comes to the cost savings, we have communicated there is SEK 300 million, and they will be gradually coming in. So far, we haven't benefited from that. They will gradually coming in, but then we really expected that it will be landing there in 2022. That is where we really see the benefit kicking in at full strength and the same goes for the North American business transformation.
Do you want to comment, Tony, on this?
Yeah. On the electronic security, specifically in North America, obviously it's a highly fragmented market, just like it is everywhere around the globe. There still are opportunities for different sizes of potential prospects, and certainly most importantly for us is that it's a good fit, that it actually meets our strategic objectives, and certainly there's obviously even with bolt-ons, there's advantages to building out scale and market presence, even within North America itself.
I think we should also highlight, under Tony's leadership, we have built up a strong electronic security presence today. We do have a strong offering that we can bring to our clients already with the existing footprint as well.
Thank you.
Okay. Henrik, in the middle back there.
Thanks. Henrik Mawby from Nordea Equity Research. Martin, it was interesting to hear the early positive findings around the KPIs from MySecuritas. As I understand it's still only being piloted. Is that in one market or with one or a few customers? How easy, or shall I say difficult, is it for you today to scale such a service across clients and markets?
We are piloting MySecuritas in Sweden. I think I mentioned it that we have 300 plus clients right now. We're looking to roll it out across the SME client base in Sweden during next year. The effort here is through our Swedish organization, together with our operations and sales people, educating them also in what it means to give such information at the fingertips of our clients. We want to ready our organization also to interact with the clients in that way. Introducing MySecuritas freemium to the client base of SMEs. That one is not really a complicated exercise. That it's the onboarding of both the client, but also our staff then to have such interaction with the client.
Bringing it further out into new markets, is that?
There is a plan that we are working on together with Peter and with Greg on what markets and how many to take it out to in next year in Europe and in the U.S. Yes.
Thank you.
Can take one more question before we go into the break. Call you on here. Right. Okay. No. That's fine. Please go ahead.
Just one question, and it's really to do with the IS/IT program. Does this include the cost related to it, some of the security elements of the data as well, and making sure that that's secure?
I can start with that. Our main focus is of course, to secure our operations. One of the actually major pushes we are making in our organization is to strengthen our cybersecurity posture next year, both in terms of how we secure our own assets but also how do we secure our externalized assets. The new services that we produce and the ones that I talked about here, those are designed with the highest aspects of cybersecurity from start on. We are investing in and we are building up cybersecurity capabilities both in all aspects of putting in place cyber emergency response teams, and et cetera. This is actually one of the areas where we're really taking a step forward, which is necessary when we go from a more manual to a more technology-based business. Significant efforts in that.
We recruited a very capable Chief Data Security Officer, is now building out those capabilities. As I said, new products, Security by Design.
This, I think it goes without saying, we have been investing, we are investing, and we will have to continue investing a lot as well as we go forward.
Yes. When we mentioned before the SEK 300 million, we have always been talking also that if we have opportunities or needs to invest, we will do that as well.
Yeah.
The investment Bart talked about on the 70 people in R&D, then, of course, we're making other investments such as the cybersecurity team, for example, that sort of comes also in addition, but those are necessary capabilities for our strategy.
Thank you.
We're now taking a break for half an hour, and the webcast will continue at 10.00AM to 4:00PM. Please take the opportunity to have some coffee and visit our demo stations around security lighting and intelligence services. Thank you.
All right. Welcome back everyone. I hope that you had a good time during the break, and also that you had a chance to see some of the great demos. We're shifting to, I shouldn't say the most interesting, but a very important part and that is the overview of our different divisions. I'm just going to say, we'll do a brief introduction to North America, and then we're handing over to Greg Anderson, who is going to talk about our guarding and how we strengthen the core in North America. If you look at the business, like I mentioned earlier, and Bart also laid that out in his presentation as well, we've had tremendously strong performance in North America in terms of growth, in terms of margin expansion.
If you look at this business today, this is less than half of the business in terms of sales but it's more than 50% of our operating results. A very strong contribution from the North American team. Nothing happens overnight and that is a little bit illustration with this slide. We made a number of important acquisitions in the late 1990s, and then under the leadership of Santiago Galaz and Bill Barthelemy, they then started in the early 2000s to integrate all these businesses to one Securitas model based on Securitas principles and really integrating all of the different acquisitions to a Securitas company. That was then based on guarding. The guarding business, they kept on building, kept on refining and driving then through specialization, the guarding business is something which is very strong today.
They also started to invest in some of the other protective services. That is what we're then seeing after this consolidation phase. You're looking then at the chart to the right, you then see that the North America business today is consisting of many different parts. The leadership is important, and significant, and I would say tremendous contribution from Santiago and Bill. Santiago is now stepping into a new role which is Executive Chairman of the North America business, at the same time that we are then promoting a number of leaders to lead the different parts of the business going forward. This is what those different parts look like and also the leaders look like. We have the guarding part of the business, that is 70% of the North America business, led by Greg Anderson, but then COO José Castejon.
Jose, who I introduced earlier, is also with us today. Jose is also leading the Guarding Center of Excellence on a global level, thanks to his expertise and proven track record of really driving strong specialization in guarding for a number of years with great results. We have the electronic security services or the electronic security business. This is led by Tony Byerly, who you now had the chance to see on the stage a couple of times, 10% of the business. We have a smaller part, and that is our corporate risk management, and that goes under the Pinkerton brand. Pinkerton has a 169-year-old history in the U.S., and this is a small, strong team which is focused on risk advisory and a number of related services to corporate risk management.
It's a small part of the business based in the U.S., but operating a global network of specialists and doing so with very strong results. That is also the business that I referenced earlier, where we have one-third of the Fortune 500 companies that we are counting as our clients of Pinkerton today. I think that is proof of all the great work that they are doing. They're growing at a fast pace and also generating really good value. That Pinkerton team, I should also mention, is led by Jack Zahran. Then the last part of the North America business, that is what we call federal services, and that is obviously then business which is more targeted towards the U.S. government and a number of different services that we are providing under the leadership starting now of Tony Sabatino.
He is then leading this part. When I look at North America, what started out as the guarding business after some acquisitions is now then really a combination of different services. The success that has been built in North America has been built based on a few fundamental principles. One is the power of specializing. When we talk about specialization, this is going deep. It's building real knowledge and expertise in each individual area. When we talk about these four major areas but then also sub-areas like in guarding, for example. Specialization is one, but the other dimension is also then that our North America team have been successful with is also to drive scale and synergies by combining these different services based on the client needs.
I think with that, we will now focus the North America part on the guarding today. We do that then under the description of strengthening the core, because this is obviously a big part of the business. Very happy to now welcome Greg Anderson to the stage. Greg, you have been with Securitas since 2010.
Yes.
Greg has been leading many different parts of the North America business, and most recently, in the last three, four years now.
Leader of the Pacific region. That has been with tremendous development in terms of talent and leadership, also driving really good growth and profitability. Welcome, Greg.
Excellent. Thank you.
Thank you.
Thank you, Magnus. Good afternoon. It is a great honor to be standing in front of you today as the leader of the new North American Guarding unit. I'm often asked, what is it that we do in North America that has driven such great success over many, many years? I think there's the answer to that, when you look at our track record of delivering top-line growth and margin improvement, really over the last decade plus has been pretty impressive. I think there are a lot of answers. Magnus kind of stole some of my thunder. I think one of the key elements has been really the fact that we've had really fantastic leadership with Santiago Galaz and Bill Barthelemy for the last 15 years. We have a bias towards execution with really talented people. We've developed great strategies and new product lines.
From a guarding perspective, my time in the company has always been focused on really relentlessly advancing and protecting our core guarding business. It's incredibly important and incredibly profitable business for us in North America, and we'll continue to drive that. If I look at the core kind of foundational elements of North America and success, I think there's three areas that I'd want to highlight and really share with you guys today. One is around specialization. You've heard this term several times today. You'll hear it throughout my presentation. It's everything we do at our organization. It's to drive continued specialization in the markets and clients, how we treat and work with our clients every day, the segmentation within the markets, making sure we have good experts aligned to the right clients. That is how we operate.
The protective services evolution that you've seen and what Magnus just showed in that slide up there, to go from a core guarding business to a business that's diversified with all these different protective services elements really represents specialization. For us, what's really core and important and growing part of our business is security solutions. That business, to me, we're specialized really in two ways. It's the defined products and services that we bring to market with our clients which we see have been readily accepted with our growth. It's a specialization within our markets and within our organization to really deliver these services. We've got a network of systems engineers that are embedded in the field that work closely with our branch managers and also with our clients to drive this.
They're supported by a centralized group out of our SST in Charlotte, North Carolina, that really drive all of the design, proposal development, project management, and the after-sales service and support. That group has been really instrumental to our growth in North America. I'd say if I were to look at another element that's really core to our success, it's the power of our presence. The presence has grown over many, many years for us. You see the numbers there, 600 branch managers and growing, which I'll share with you in a few minutes. Nearly 400 branch offices in North America. That's our physical leadership, our presence across the North America continent. We also have a growing mobile presence that's been a business that's grown nicely for us, and it creates another layer of presence. We're in 88 markets with our mobile division.
We service nearly 3 million unique patrol hits a year. That has grown, again, pretty significantly for us. The central part of our presence in North America really is our officers and the 100,000 officers that provide our service and represent our brand day to day. They're critical to us. We really have focused in North America to be viewed as an employer of choice. That's always a challenge when you're hiring and working with 100,000 people. We focus on two areas. One is in wage and the other is in benefits. We all know that there's been a lot of wage inflation in many markets, and North America is no different. We have really purposely make sure that we stay on top of the wage challenges.
We drive wage increases with our clients, and we work with them closely to really make sure that when we see new defined minimum wages in many states, we're always staying ahead of those. Higher wages will attract better people and will also help to retain that. On the benefits side, we did commence the study a couple of years ago and went out and looked at the Walmarts of the world and the Home Depots and the Starbucks and tried to understand what sort of benefits they had introduced to their large workforce in order to really attract and retain good people. We benchmarked against them and created a new slate of enhanced benefits that we introduced this year. That we have benefits around health management, around weight management, around financial planning.
We have college education and certification programs that we pay for our officers and mental health support, which have also been introduced. These have been very, very well received by both our officers and our clients. Remember, our goal here, really, as an employer of choice, is to attract and retain the absolute best people. Wage is important, benefits are just as important to our workforce. It remains a priority and really part of our success. The last piece here is really around innovation. Ever since I've been in this company for the last 10 years, it's been nothing but a dynamic environment where we're always innovating and introducing new products, services, and even business lines.
I go back to the protective services and that journey you saw over 15 years where we went from core guarding to these diversified services really typifies or exemplifies what we've done in innovation. We really have a formula that works for us. All of our innovation starts with our client whether it's a need they have today or an anticipated future need that we think we need to address. From the client, we make absolutely sure that the new innovation, the new business line, the new service is complementary to our core guarding because, again, I'm running the guarding business. With that, obviously, to drive the business, we have to put focused investment, we have to put purposeful investment, and sometimes patient investment in the new business lines that we're creating. We've done that quite successfully.
The secret to our specialization is we immediately put a leader over the top of any new product or business line. They have accountability, and they wake up in the morning, and all they think about is driving that new product and service. We've done that consistently as we've developed these six pillars. I think innovation has really been key to our success in North America. Now let's switch gears and talk about something that's already been introduced in previous presentation but really will position us in the future for significant long-term success. This is the business transformation for North America. This project I've been a part of for the last three years in early designs and development and most recently over some of the final design and development. Our target is to deploy this in 2020.
I give you a sense of the scale of this transformation. This is a very large, very complex transformation. Essentially at North America today, we have 28 different databases, platforms, systems that we use to run our operations. This new business transformation will convert us to a singular, consolidated platform across the entire business. The scope of this is everything you see on the screen there. The workforce management is our upfront kind of core operational platform that focuses on scheduling and timekeeping and payroll, all the operational piece. Everything around our hiring, training, recruiting, and onboarding is the HR piece, and all the HR processes is in scope as well. Of course, accounts payable, receivable, billing, and invoicing, and all of our reporting is in the finance element of this transformation.
To say that it doesn't cover every part of business would clearly be a mistake. It's everything we're doing with this transformation. As I mentioned, it's rolling out. We've already done wave 1, which is our finance reporting, and that was rolled out in October of this year. It's gone very well, and we're targeting mid-next year or so for the full operational deployment. What's exciting about this is not just the modernization and the efficiency we get, but by our estimates and by estimates from a number of our third-party partners that are assisting us with the transformation, we're anticipating a minimum of 30% productivity improvement with the team that needs it the most, which is our branch managers. How do we get this? If you think about most of our processes today with the 28 systems are fairly manual intensive, right?
Scheduling, timekeeping, payroll tends to consume a lot of time of our branch managers at a given time in a week. The automation of those processes, by our estimates and the estimates of our partners, have basically said we're going to give 30% productivity back. I'm excited about handing 30% more time in a given week back to our branch managers to allow them to be closer to their clients, to do better engagement, and really focus on service delivery. It's a very material shift in their workload in a given week. In addition to the productivity, we also have a lot of new things that I think will be our future state.
The moving from manual processes today that may be a little bit time-consuming and may be a bit delayed, to automated processes that create more of a dynamic response in our system and our services to our clients. It's really going to change, I think, how we operate with our clients. The data that we will get from this system, the data we're starting to really use now more effectively, I think will be just tremendously valuable to the organization. Early-stage analytics with all the data operations, finance, customer-driven data that we get from one system, to machine learning at some point that we're talking about now introducing to try and get predictive analytics. The future with this new modern platform for us, I think, is pretty significant and pretty positive.
While we'll get really great results from this, productivity results, really enhanced operational capabilities, my role as we step into my future role as a new leader in guarding, I believe, is to really focus on continuing to strengthen our core. Right? I have worked very closely with Santiago Galaz over the last six months in this transition and with my management team to outline a set of priorities for 2020 and beyond. These priorities, I believe, are really going to focus on continuing the transformation in North America, and I want to share a few of those priorities with you today. The first one, no surprise, is specialization, right? To me, we've had a lot of definitions of specialization and I think Magnus did a great job of talking about what it means in the organization.
I see this transition to 2020 and this new leadership transition as really something that exemplifies this. If you look in 2005, core guarding, over 14 years, the development of the diversified protective services elements, these multiple business units that have been under the remit of Santiago and Bill. Now in 2020, we're basically segmenting these businesses and applying new leaders. Right? Myself and José Castejon will now be in charge of guarding. José and myself come from the guarding world. We've been in this business for 10 and 15 years. We're operational guys. We're leaders who have actually done very well in this business. Now we're in charge of it, which is really an exciting opportunity. Specialization is applying good, deep leadership to a business unit who now can drive it even further, and that's what our plans are.
Within the guarding business itself, I've got a few other ideas. We have a number of business units where we have great specialization that I think we have further opportunities. We just carved out a couple of areas in manufacturing and oil and gas, and put new leaders over the top of those businesses, and we're expecting great specialization, great results in developing clients in those verticals. Within our global national accounts, we have additional specialization. It's a very significant part of our North American operations, a very large and successful group. We've just put a new President, Kelly Stone, in charge of our global national accounts piece, who's going to really focus on driving additional specialization and going to work closely with Brian and the global national group to make sure that we are working as one.
Security solutions and remote guarding, ultimately, this will be something that I will talk about in a few minutes but it is an extremely important element of an enhancement to our core guarding business, I think we have an awful lot of opportunities to advance our margins and a few other things by focusing on specialization there. The second area for us is one that I'm truly excited about. This is about our presence. The focus here is really on improving client engagement, which I think is fundamental to growth and long-term success. What we are on right now is we've begun a journey of really organizational transformation in North America, which focuses on the addition of 150 new branch managers across the U.S., Mexico, and Canada. This is a 30% increase in our current mix of branch managers.
At core, at the central part of this whole initiative is really focusing on getting smaller client portfolios. Why? Because history has proven to us when branch managers have smaller client portfolios, they get better results, and they tend to drive better value to their clients, right? Better client engagement, better officer engagement, better service delivery, and of course, with all of those, you get better client retention. I think you just kind of step out of context here and think if you have a branch manager that has 30 clients in a portfolio versus a branch manager that has 15 clients in a portfolio, that client engagement, that responsiveness, and that alignment with that smaller portfolio is going to be better. This journey has already started.
In 2019, we've already added, by the end of this year, a total of 70 new branch managers, and we'll have a full complement of the 150, another 80 in 2020. We'll go from 600 branch managers in our guarding unit to 750 branch managers in our guarding unit by the end of 2020. Data and being data-driven. It's been mentioned up here several times. I can tell you this, I remember the moment where I became a data-driven leader, and this was 25 years ago when I was certified as a Six Sigma quality Black Belt with another company. That changed my life. It changed the way I looked at things. It changed the way I eventually became as a leader. It's how I've operated very successfully over my career.
For the last four years in the Pacific region, we've had record growth on top line and record performance on the bottom line. A lot of it's because we've really focused on using data to drive priorities. I'm excited about the opportunity to take my skill set and my experience and the data we have in our company now and really bring it across North America. What you see there are a series of graphs that have been kind of cleaned up at early onset priorities that we've laid out for 2020. Everything around sales growth, portfolio management, remote guarding, client retention. We have data-driven priorities, tactical priorities that I've laid out for my team for 2020 in our business planning sessions that have just concluded.
I'm excited about data and the data we have today, but the data of tomorrow with our new business transformation and that consolidated system, I think, is going to be really powerful for us, and I think it will help to continue successful. The last piece here is really around the solutions side, and that solutions piece, which we've talked throughout the entire day, is really core and central to our North America plan. I think there's two real strong, compelling reasons why we need to make this a priority in North America. One is our clients continue to demand more dynamic capabilities and services, right? Our success in North America is because we've developed this over time, and we've stayed ahead of that demand and been able to fulfill that demand because we have invested in innovation. We have to continue down that path.
The other piece is somewhat selfish because ultimately, when we look at the portfolio of solutions, we tend to see better margins on clients that utilize solutions, and we most certainly see better client retention. Those are two things that I want to continue to drive in the business. Advancing solutions because it's a market demand and there's a benefit to us and to our clients, really, it's incumbent upon us to make sure that's a priority. For our tactical or strategic planning here, we actually have a number of things we've laid out for 2020. Innovation in products and services will be a priority for us because the pace of change in technology in North America and frankly, across the globe is incredible, and we have to make sure that we're actually matching our clients' needs up with the best services and products. Further specialization.
A great example of this, we have a remote guarding, which is one of our protective services offerings, and we're going to be putting a dedicated leader over the top of remote guarding to really help us to expand and grow that business. We've had great success, great adoption of remote guarding in North America. We're going to specialize in that in 2020. That SST group in North Carolina that provides our centralized support is one that we're going to focus on scaling. We've had great growth in this space but now you imagine we add 150 new branch managers that are out there generating new opportunities for us. The idea here is to ensure that we can scale for growth in the Securitas solutions piece.
The last point I made on there is really one I want to emphasize, is everything that I've presented to you so far around getting the better productivity and adding branch managers for better client engagement and client alignment is really intended to drive a better proximity to our clients and to develop the trust. Trust is absolutely necessary, in my personal experience, for a client to really consider a solution, an advancing solution from Securitas. Trust will be a continued focus for us, building the trust, building the relationships, and ensuring our service levels are there. In a summary, if I'm asked, and I have been asked, what does success continue to look like in North America? I'm filling some fairly big shoes. I have a fairly big business of operation that I have to continue to drive great results in.
I think we're really excited, I know I'm really excited about that, what's in front of me. I think success is really a function of executing on the things I've just outlined for you. The business transformation that's been ongoing for three years, we get to see the deployment of that in 2020. Modernization of our platform and improved productivity across our organization. The specialization will continue to be a priority, as it has been for the last decade, as it will be for the next decade. Innovation and focus on expertise with a good client alignment. The increased presence, to me, is a really big change for our business and it's going to bring a lot of advantages to us to basically have that many more branch managers out there, that better alignment to our clients, and smaller portfolios with better client engagement.
The data-driven piece to me is exciting for what we have today and then what we will see for the future with our platform. I think our company is very data-savvy, but I really want to lead them into more data-driven prioritization, 2020 priorities have been set based on that. Lastly, advancing solutions for the reasons I talked about, increasing the value to us, increasing the value to our clients, and really focusing on better client retention. In a nutshell, the focus in the business, if you look at these individually, will all contribute something to our organization in North America, but the collective execution on these elements here will really help to drive those things you see on the right. Thank you for your time. I'm going to hand it over to Magnus now. Thank you.
Very good. Thanks a lot, Greg. Exciting times, and obviously a very strong position in North America. Now we're shifting to Europe, and very happy to introduce you, Peter. Peter is Swedish, as you might hear from parts of his name but he spent many years working in a number of different continents and also countries, most recently leading Cisco in the Europe, Middle East, and Africa region. You've now been with us for a little bit more than nine months.
Yes.
We also said we felt it's quite good also for Peter to share a little bit, which I promise to do, some of your early impressions as well, and also some of the thoughts in terms of the strategy going forward. Welcome, Peter.
Thanks a lot, Magnus.
Thank you.
Appreciate it, great to meet you all here. I joined here in the springtime, and what I did immediately was jumping on a flight. First day, actually, I traveled to Paris, and then that continued for about three months, visiting all countries, all parts of the operation, more or less traveling every workday of the week. I spent the time to see a lot of customers. I was seeing a lot of our country presidents, but also a lot of the branch managers and also a lot of officers, really trying to learn the business. I also had, of course, the questions. What's really good with the European operations, and what are some of the challenges with operations? I learned a lot, and I came back feeling very energized and grateful and convinced I did the right decision when I joined.
As you can imagine, also after doing that, you have a lot of impressions to sort out, and I'd like to share a few with you here to get this presentation started. Let me start with the positives. First of all, I think what's really striking when you travel around and seeing, in particular, the customers is the brand and the position in the market. This is a very fragmented industry, and every customer or client has a lot of choice in terms of whom to work with. The brand of Securitas really stands out, and it is built over a long time, and is really a premium brand delivering on the promises of that brand. It really comes in a very consistent way, I would say, in the majority of the European markets. Great foundation to build from.
This about the wider protective services which you've seen here during the day. I think Europe is probably the place in the world where we managed to implement that to the fullest extent today. There is still a lot more to do, but in every market, we're more or less able to deliver on that promise of the different services. The strength of that in terms of what that can create for the clients, it really stands out as well. Thirdly, great people. It sounds like a cliché, but I really mean it. That's what you feel when you travel around and seeing people. It's friendly people, it's committed people with values, well-intended people. That was really a takeaway for myself. Lots of really great people, I would say it's throughout the organizations.
This is on the leadership level, but it goes all the way down to the guards, really passionate about the company. The purpose which Helena explained here earlier, I think it's really created by them, for them, and I think we'll just reinforce that. We are running a very decentralized business, and that's been a strength for a long time. What makes that work is that very strong ownership out in the branches of the P&L. I think it felt almost like meeting mini CEOs every time you met a branch manager, really caring about the success of the branch in a very holistic way, and both the long-term development but also really delivering the results each and every quarter. I will say also that I got the impression this is a team that is delivering on what they asked to do.
I think it was said before, we built the long time the successful model we have. I can just say the implementation of the cost program which we did in Europe is an evidence of that. I think it's a tough thing to do as leader, but implemented more or less flawlessly. Difficult, if that's what we want to do, we just do it. I would say a lot of really good things to build from, and there were of course way more than this but these were some of the things that stood out for myself. You, of course, observe us, and you observe us with a critical mind, which is exactly what you should do. So did I when I travel around. I really wanted to understand also what do we need to address to become better.
I'd like to be quite transparent also with some of the challenges I think I discovered as well. The first one is quite obvious, not least to you, that are following from a financial lens in many different perspectives. With all this greatness, why hasn't the operating margin improved over the last five years? It's even been slightly declining. That was a real question I asked myself over and over when I was really learning the business. Perhaps amplified the last year, there's also been some extra problems. Contract losses in a few markets, talking about France, U.K., and Sweden, and also some challenges with price wage in a couple of important markets for us, really making this even more challenging.
I would say that solution progress in Europe has been really, really good and probably been meeting the expectations, exceeding them in terms of goals that were set out. The progress is still quite uneven. You can say that's a potential, but there are countries today that I think have not done as much as they could have, and some have done a really good job. The average is looking, of course, very nice. The last one, and this is an important point, and I will come back to that a bit later reflecting on it, Europe is inherently fragmented. We are, of course, many different countries in Europe. It's not like one country. We all know that. The way Securitas has been growing with this level of decentralization means that it's one company, one brand, and one culture, that's the same everywhere.
The way we operate, the way we have organized, what the branch manager is doing, how we organize HR, finance, IT, all these things in the details is actually implemented quite differently in the different countries across Europe. It's a quite fragmented starting point. I took all this, and I can say that while there were some positives and some challenges from this kind of experience and learnings in the initial phase, I felt really reassured that this is a great opportunity to create a stronger Europe for the future. I will share some of the thoughts on what that means. Before doing that, I like to take you on a few different more elements of reflections. The first one is this, which is the position of Securitas in Europe. You immediately see there is a lot of blue on the map.
Yes, we are in a good way covering Europe, more or less every country in Europe. What I think is even stronger is the white in the blue which is our position in the different markets. Here you can see that in the Nordics, where we started from, we are the number one in the key markets. We are also the number one in the biggest European markets like Germany and like France as examples. Huge markets where we are the number one and also the leader in the same way. When you come there, they know it's an international company, but it's so big. A lot of people in these countries almost think it's a German company or a French company because it's really the market leader. That's a great strength to build from, that strong presence across Europe.
Some of the stats. You have some of them, but perhaps a few would be new for you. There's around 128,000 employees really with that passion. We have close to 800 branch managers caring about the business every day. We have more than 3,000 cars out on the streets, more or less 24/7, with different officers in them. We have more than 6,000 people working in fire and safety. We don't talk so much about that. That's a huge market in itself. We have more than 100,000 clients if we exclude the monitoring clients. In addition to that, we have 600,000 monitoring clients. We actually have more than 20,000 solution contracts. I think that's impressive because we said we will work with solutions a few years ago, and now we've been striking 20,000 contracts.
I think that this, for me, is a great position to build from, and we can do a lot with this as we're building the business going forward. I would also say that the position is very appreciated by the customers in the countries, of course, but also, as was said before, international companies and large companies. I also like to highlight a few contracts which we have won or advanced in the last period. The first one is the airport of Berlin. Most of you probably know that it's been a long way to get the new airport in Berlin, and now it's supposedly going to open in the fall time. This is one of the largest security contracts, probably worldwide, that have been awarded recently. We are very pleased to have been awarded.
We are perhaps even more pleased how we was awarded because they had a major focus on the quality in the award, because they know that this transition will be very complex. After this long wait and opening airport, you like that to happen flawlessly. We managed based on our experience and what we do to come across strong enough to be getting the trust of the client in this case. The work has started to begin with a lot of recruitment and training, and then we will also do the quite difficult transition from Tegel into this new airport. I think it's a good evidence of how this kind of strength and quality in the operations and brand is translated also into customer success.
If I take a very different example, but also a very important one, is that we work with some of the largest companies in the world, and some of the largest ones are technology companies. This is a global partnership with Microsoft, but in Europe, also a very successful partnership. It's a partnership. As you can imagine, Microsoft, it's a very good company, a very demanding company. They demand a lot in terms of quality of service. Their requirements are very advanced. Of course, they're also very tough to negotiate. It's also about doing that in a cost-efficient way. The greatest thing with this is the joint innovation we're doing with Microsoft.
It's a very open dialogue how to push the limits of what we're doing together in terms of security, in terms of security service, but as you can imagine, also fueled by technology and the know-how of Microsoft. We are doing work with other technology companies also, another large one, and Microsoft was kind enough to allow us to mention them today, which I think is great and something we're grateful for. These segments of very large companies and global companies is already today growing faster than the rest of the business for us. I think there's huge potential to continue to fuel that for us in Europe and globally as well. The different side of the spectrum. There's been good excitement and some discussions today about the future of services and what will happen in the security industry in the future.
Vasakronan, you hear it a lot because it's probably the case we are able and allowed to talk about openly. We have joint innovations with around 10 companies in different aspects and new digital models. Today, we're focusing a lot on the co-innovation and shaping the service and learning. Over time, we should be able to scale this into good business opportunities. What I also will say is that it's a standalone business in itself, but it's also fantastic learnings that likely would fuel our capabilities, which we can work with across all clients. We can probably see it as incremental revenue but also as a way to strengthen our value proposition. What's exciting here is that you're strengthening that based on our skills, our size, and our know-how.
The industry is very fragmented, but I think there are few companies that are able to do this at scale what we're doing, because Magnus explained there's quite some investments going in here also. We believe that this is a capability which we can differentiate with in a very nice way. Let me move to the services. You've seen this picture a few times today, and this is the symbol of the protective services. Every icon is a different service, of course. If we go through this for Europe, on-site guarding is still 65% of our portfolio. I think we should be very proud of this business and take very good care of it. In some countries in Europe, this business is very well-performing. In some countries, we're seeing some kind of deterioration of, in particular, margins.
We would like to recommit to this business and really take that into the future. What that is about is to digitize our workforce, to work on the efficiency, to work on the processes, to make sure that we can really take this and innovate more on the processes and way we're working and let this continue to be very successful. I actually think that in Europe, we've been very successful in building a lot of the other things. This is an area, if you look back, we could probably have done better on. I don't think it's too late in any way. I mean, we have a great opportunity to now go in and strengthen this part of the business together with other things, and that's something which we commit to do, is really part of what we like to do going forward.
Of course, mobile guarding, it's very interesting. It's a quite complex business actually. I mean, to see so many different clients and do that in a way that create a differentiated value for the clients. We have a very good mobile presence in Europe, which is a great business in itself, but also when you combine that with solutions and sensors, and you know about IoT and everything. Whenever a sensor is triggered and something scary happens or something unexpected happens, of course, you like someone to come there and do some kind of checkup or intervention. As a technology link to the mobile network is a great opportunity for us. Solutions, and we announced our ambition here earlier today, and Europe is a major part of that ambition.
We are very committed to drive that in a successful way and we have a huge opportunity to do so. Where we are is that we've been very successful taking us to the point we are today, but now we need to think through how can we really double that, getting on the next S curve. We need to institutionalize the way we work with it slightly more. It's about how do we organize the support for our organization to sell this at even broader scale. This has been almost like an incremental additional sell in the past. Now it needs to really get into the core, where every salesperson out in the field need to be able to sell solutions. That's something we're working on thinking through how to do that in the best way.
Electronic security, Tony laid out the global landscape and strategy very well. In Europe, we are following that. What we like to do is to grow that also organically but also complement with some acquisition. It's a great business when we do it well. We are looking at Europe also in the same way as we've done a global center of excellence, how to align our business and specialize that business a bit more. We also here see pockets of absolutely fantastic success, but also areas where we possibly could do better. This is another area we're really aligning Europe in a dimension, almost like a matrix way, on top of the countries that still will have an important role in this. Lastly, fire and safety. Quite small for us in terms of sales.
As you probably know, many of you, this is a huge market in itself, and we're quite intrigued to think through could this be an area of further growth and expansion. We're also looking on this and evaluating. If we find the right way here is another axis of real exciting growth for us. We're taking a close look on this one as well. As you can see here, this is really a story about each of them being a very significant market that we can drive a lot of improvements in each of these services. On top of that, as it was said before, also, when you combine them, there are also good synergies and the clients can get even more value out of the combination of them.
There are a combination of standalone and good synergies, and that's why we think we can really create a good value creation strategy around it. I spent a lot of time now with my leadership team which is essentially the country presidents from all the countries, to discuss, okay, how do we now take Europe to the next level? We are not completely done in that strategy work and formation work on creating the plan for the future, but we're starting to understand quite well what needs to be done. I will share some of the high-level areas with you. The first one is, just as Greg very well laid out for the U.S., this about being the best place to work is something that we would like to take to the next level.
We already very appreciate the company, and we already have a lot of people that have been with us a long time, and we already have a lot of loyalty in our workforce. I still believe we can take this a few notches up to the next level. How can we strengthen the value proposition for the guards and for the whole organization? How can we better work with recruitment and retention? I think it's really about those processes, because how do we, at scale, work with this process in a good way? We're probably one of the most people-intense companies in Europe, and I think we can take those processes to the next level to become even better. Benefits for the guards, also for us as a company if we do this well.
When it comes to planning the workforce, this is done today with great care of the branches. We have an opportunity here to give them better tools, to really give them the tools of the future. This is another good opportunity. We have Grainne Kelly here sitting and listening in in the back, and Grainne has been appointed to be our people leader for Europe. You should wave here, Grainne. Part of building our European division, we wanted to have a strong leader to really drive this together with the country, people leaders, and HR leaders. Grainne, we wish you well in the role. Commercial excellence is another area. We are operationally very strong, and a lot of customers are coming to us and working with us because of that.
As we're expanding our portfolio, and as you can see this portfolio becoming richer, we also need to increase our ability to commercially work with these services. I think we can do the sales and the customer processes even stronger. We are investing in this also. Look on everything from cross-country clients, which is really an opportunity for us, but also looking on how we can leverage CRM in a stronger way. Lastly, this about the price wage balance is very important. We're doing this well, and we have done it well for a long time. Of course, we've got an awakening from some of the missteps that have happened here in the last year. Putting a lot of focus on how we can do that in a thoughtful way so we are always on top of it. Solutions.
I talked about it before, and you heard it many times here before but it's such an important value creation lever and area for us. Bart's slide, which you got here in the beginning of the sessions, the correlation between solution success and our profitability is very significant and real. To drive this and really do this well, we're thinking through how to work with the organization, maybe augment it in different ways, possibly also different type of partnerships but this is really about living up to the ambition and a great opportunity here. The last area is this about leveraging scale of Europe. I highlighted that Europe is a bit difficult. I mean, with all our great countries. We love Europe, I'm sure many of us. I do. The setup is difficult because we are not one big countries. It's actually 28 countries.
We do like to continue to work in a decentralized way because that is so strong in the culture and been such a strong part of our success. We're asking still, how can we get some better scale benefits and some better synergies out of this? One thing we are asking us now is that should we have a bit more prescriptive way on how we organize countries? More like a country target model. The similar way, a bit more prescriptive way how we organize key processes. Many of you have asked, how about the European transformation program? We think it's very important to start this transformation from the business needs and from the business opportunities. That's what we're spending a lot of time on at this point. We will do some type of transformation program in Europe.
We're not totally ready to communicate because still we're doing a lot of work in terms of, in particular, how to organize and how to do the key processes in a way that taking us into the future. When we know that need to be enabled with newer and stronger and better technology. We assure you that the decisions we will make really will be thoughtful and well thought through, and it will be based on benefits for our clients, benefits for our workforce, and of course, financial benefits for investors and stakeholders. We look forward to come back to you with a well thought-through plan when we're ready. I think you should be able to expect to get that your next calendar year.
It's not years away, but we need to have a bit more time to really lay that out in detail with the right thoughts behind. Tying all this together, what will success look like? First of all, continue to build this great platform we have. We will not do anything that will not help us to continue to nurture that great platform about the brand position, attractiveness as an employer. It's very important for us to continue to think long-term and do that in the right way. I will say margins, we take it very seriously in Europe and we will increase the margins. That's really the ambition we have. The way we will do that is back to the protective services. There are two ways to make this happen, of course.
One is to grow the higher margin areas in a further way to get the different kind of portfolio mix. That's one way, and we have been on that journey for a period of years, and we will continue to work in that direction. The other one is this about the on-site guarding, to really take a close look on that. Of course, also inspired of the great work the American colleagues are doing. What can we do in Europe to help inject success into that part of the business? If we do both, then the success will really come. I would say also growth continues to be important for us. We like to organically grow, and we also, of course, will complement that with good acquisitions that will strategically be helpful.
Thanks a lot, everyone.
Very good. Thank you very much, Peter. With that overview of Europe, we now have the last division, and then I am going to do just a brief update related to our AMEA region. Now very happy to welcome Jorge Couto to the stage. Jorge has been with the company for a number of years, I think 20 years plus.
20, right? Yes.
Yeah. Was promoted on the 1st of July this year to lead the Ibero-America division. Before that, Jorge was very successful in driving one of the lead markets in Securitas, which is Portugal where we've had tremendous success over time in terms of really building a strong business and also then with a lot of emphasis on solutions and the E&S offering. Great to have you here, Jorge.
Thank you.
Yeah.
Good afternoon to everyone. It's my first time here. I would like to start to say that I'm really happy to be here. I have now been in these new positions for a few months, and I'm really proud to be part of this team. If we talk about this division and as I look to the divisions in a high-level perspective and look to the markets, both regions, Iberia and LATAM, I see some differences. We have two mature and developed markets, Spain and Portugal, which are two of the leaders countries in the global level in terms of really driving the strategy and execute the solutions penetration. In Iberia, we have also market leaders. We are setting the standards in these markets.
Looking to LATAM, to South America, I see that in the last 10 years, we have been investing a lot to enlarge our presence and to create a good footprint there. Nowadays, the target and the challenge is how to strengthening our footprint in that region. If we look to the division as a whole, we are operating as offering services in nine countries in LATAM, which is quite significant, as I said, in Iberia, Spain and Portugal. We have more than 63,000 employees. We have more than 500 cameras. We have more than 80,000 CCTV cameras connected to our Securitas Operations Centers. If you look to year-to-date in 2019, we represent 25% in electronic security and solutions. It's quite impressive the presence we have in this division.
Looking to the sales, we represent 12% of group sales and a little bit less, 11% comparing if you're talking about operating income, what means that we are a little bit below the rest of the division. In LATAM, we are the number two in terms of market share. I think Bart has said that I will talk a little bit about Spain because Spain is a good example. Before talking Spain, it's important to say that Iberia is at the forefront of Securitas development. In terms of sales, we represent 55% of the sales. If you talk about operating result is even higher. Iberia is playing a very important role within the division, and I think we can take advantage from that because it's best practices that we can use it to leverage and the business in LATAM. What happened in Spain?
If we look to 2011, it's easier to understand that we were at that time a guarding company. 95% of our business came from on-site guarding, only 5% from electronic security and the security solutions. Well, you know that was happening in Spain, the subprime crisis that started in 2008 and has promoted very hard business conditions in Spain. We lost dramatically. We lost a substantial part of the business and the margins have dramatically dropped, as you can see. In 2014, the operating result was 1.5%. It was urgent to do something. As you say, sometimes when we have a crisis, it's a good opportunity to make changes. We have transformed the crisis in important and huge opportunity in Spain. What we have done? Well, in my opinion, not rocket science, because we have one tool.
This is step-by-step in our toolbox that is teaching us what we need to do when we have such environment and such situation. We started to work and to change the leadership. It's crucial to have a committed and engaged leadership. We changed in Spain the top management leadership. The new management to really believe that this is the only way to implement and to be successful. This is the first step that we have done there. What the step-by-step tools teach us? Okay. After the leadership, we need to work with the people. We needed to work with the organization. We started to change the organizations. We have done a big and impacted restructuring process. We started to assess what kind of people we have. We have started to put the right people in the right place and implement a different human resources policies.
This allows us to start to implement the branch model process. What is the branch model process? I think we're all familiar with that. In my opinion, and I started in Securitas 20 years ago being branch manager, and for me it was very important because it was the most gratifying times that I spent in Securitas because I had the opportunity to understand what really means, resources, tools we need to support to give to the branch managers to be successful, to engage clients, to create relationships, to understand the client needs. What we did in Spain? We implemented the branch model. At the same time, the flat organization. The flat organization is simple. We have the country president, area manager, and the branch manager. Only three levels working together very close to the clients and to the people, to our employees.
Was what we have done. Well, doing that we needed to leverage and support all the organization. We started to change the process of work. We started to invest in tools in order to get information, to measure the business, to set up KPIs, to follow the business. It's very important if you don't have information to support our management decisions, it's difficult to continuously improve day by day. After this organizational transformation that we have done in Spain, if you look after 2014, we start to recover our presence, our market share. We start to sell with more added value. The clients start to understand that Securitas is different because we start to differentiate, to create more business lines, to enlarge our offer. The solutions that in 2000, Securitas solutions and Electronic Security in 2011 was 5%. Last year it was 30%.
The impact that we had in the operating income. It was very successful case. I look to LATAM, I see a good opportunity also. I have now been there a handful of times over the last few months, and I spent quite a lot of time with the teams locally, and I see good things and positive signs, but I also see a lot of opportunities to improve our business. We need really to implement and to drive the Securitas operation model all the way through. We need to drive our strategy. We need to do more like we have done in Portugal, in Spain, but also in some of the countries in the region, because we have very good examples in LATAM also, like Uruguay and Colombia that have been performing quite well. What we will do in LATAM?
Well, as I said, strengthen our existing footprint. It will be our focus. We are not concerned about increase our presence. We need to focus where we are and start to make some changes. As I said, we have successful countries, could be best practices to implement in other countries. We are making some fine-tunings, some adjustments in some of them in terms of leadership. We needed to have a very strong leadership in all the countries in order to warrant and to support and to leverage our strategy in that region. After we make these some changes, we will do the same that we did in Spain or that we did in Portugal or in other countries. We started to work with people, try to engage people and we have now a very good opportunity because we have a new purpose.
Using the new purpose because we used to have our values, our strong culture. Now use our purpose to follow and to put the people on the same track. This is one of the things that I am intending to implement. My key objective is to implement the branch management model in LATAM. I see that we have a separations in some countries. One side we have operations and the other side we have sales. We don't have connected. It is not the way how to transform a client, how to sell a solution if the branch managers don't have the right skills. The branch manager and his team need to understand all the processes. We need to conquer the client. We need to engage the client and create good relationships.
If the client don't look to us as a Securitas professional, it will be almost impossible. No? It's because in LATAM we are competing so much on guarding business and the trends of the margins that are decreasing, and we need to interrupt that. As I said, we have very good best practices in the Iberia and also in LATAM, and for sure that we'll use it to leverage all the regions, and some key and important countries that we have. Another thing that we need to do, and I think in my opinion, we have lack of tools. We need to implement modern tools. We have a project with Martin also, not a revolutionary and an IT transformation but we need to look country by country how is possible to make some investments in order to be more efficient and be more profitable using this tool.
The impact will be on the gross margin but also be more efficient and leverage and the net costs. Well, I needed to talk about the situation that we are facing in the region. I think we are all aware about what is going on in terms of political and social problems in Chile, in Bolivia, in Venezuela, Ecuador, Argentina. It's a complex situations. Also we have differences in the terms of market maturity. These challenges, in my opinion, could be also a good opportunity because the clients now they are more aware about to secure their assets and to guarantee the safety of their employees. This will be a good opportunity for Securitas, for a well-organized and with a clear strategy and available to invest in our clients. In terms of opportunities, what I saw also, we have a very and strong portfolio.
Mainly all of the clients in the private sector. My experience along these years is easier to introduce our ideas in terms of add value, in terms of solutions, in terms of new tools in the private sector, because we know that the public's clients, they have barriers in terms of their procurement legislation. I think this is a very good opportunity in this region, in LATAM. I saw also very excited and engaged people that needs, with some changes in the terms of the leadership, they will be able for sure that work because they are motivated, they are excited, and we will create better conditions, better worker conditions to achieve that. Securitas has a very good competitive advantages.
My opinion, the first one, as I said, strong purpose, clear strategy, a solid business model that we always within Securitas we understand very well, and our availability to continue to invest in our clients and in tools to create value in our services. Well, all in all and in sum up, we have countries that are leading in the first step the guarding business. We have another ones that are leading the productive services. We have some within the division that are prepared to go further and to look to the leader in terms of intelligent services also. We have a mixed within the division and I think it's possible, it's very good to have these differences within the division. Our three main focus areas in the next following years will be growth, gross margin and indirect costs.
For growth, I think it will be not difficult because, as my colleagues said, we are facing pressures in terms of salaries increases, not only in LATAM but also in Iberia. If you need to increase salaries, we needed to increase prices, and some of the growth will come from the price increases. We have two main projects. The Client Engagement Program that Henrik was talking about, that in my opinion, it will be powerful in order to improve the client retention. We need to improve the client retention, and we have also some projects to make some changes in the sales organization. If you sell more and better, if you lose less with the price increase and keep an eye in strategic acquisitions, we have, I think, good conditions to keep growing above the market in this region.
The gross margin will be a business mix. My colleagues always talk about that, is to execute our strategy. We needed to enlarge our offer, our business mix. We need to be more efficient because one of the questions here was, what we'll do with the guarding. We'll only look to investing in technology and the solutions, but 70% or 80% is still guarding. I think in this region, in Latin America, I think we have a lot to do because if you implement the right tools, if you have a thorough costs control, production cost control, we can improve also a little bit and be more competitive in our markets. Efficiency and competitiveness is key behind electronic security and mobile solutions also. The indirect cost leverage, I believe also that we can do something more.
We can get synergies if you consider the country, the both regions and the division. We have in plan also in terms of invest a little bit more in the division to put more resources to support and help the countries locally. This is our plan to the following years and what I would like to share with you. Thank you.
Very good. Thank you very much, Jorge. We will open up for a Q&A shortly, but before we do that, I would like to do just a brief update related to our AMEA region, and that is essentially Asia Pacific and the Middle East and Africa. This is big part of the world, but it's a fairly small part of our business up until now. We have good growth, and we have a very good team in this region. What have we done, and what does our situation look like? Well, when we started to expand and to establish Securitas in the AMEA region, that was done with the ambition of catering to global client needs. We're very global client driven in building a footprint, and today we have a footprint in 16 countries, and then with more than 60,000 employees.
We have more than 50, I think it's 56 global clients that we are serving across this region. This is important, even though it's a fairly small part of the business today, because this is a big part of the future growth. If you're looking at the security services industry and outsource guarding in this case, you then see that India and China will be two of the primary drivers behind the security services growth on a global level but obviously also then in this region in the next five, 10, and 15 years.
What we have focused on is, and what we do focus on also in the next phase, is not to expand into more markets, but rather to invest in core markets where we are investing in our people, but also in our protective services offering so that we can start to establish real strength. Not just to have a footprint, but to build genuine strength in some core markets that we can then leverage as well to be able to tap into the growth when those opportunities present themselves in the future. We have a very strong team. It's like I said, it's a fairly small part of the global business, and we're reporting this under our other segment for that reason.
We have a strong team and very good client relationships, and we will now step up some of the investments organically but also through acquisitions to strengthen the footprint in a few of these key markets. That is a brief overview of our business in AMEA. With that, I would now like to open up for the last Q&A, and then to ask Jorge and Greg and Peter back on the stage, and then more focus in this session than on our divisions and the work that we are doing. Micaela, handing over to you.
Please, we have a question from gentleman here in third row, Karl-Johan.
Karl-Johan Bonnevier via DNB Markets. Little higher question, if I may. It's a three-level question in the way that looking at technology growth during 2019, we obviously seen an organic deceleration compared to the growth rate you have shown in earlier years. It would be great to get a little feel for what you have seen happening during this year. Obviously now you're putting up quite ambitious target for the next three, four years for growing this again. A little more feel for the timeline, how you see a re-acceleration of this again, if it's a hockey stick in two years' time, or if it's something that we should expect a more continuous improvement if you are looking at it. Also I heard the word accountability coming up quite a few times during the presentations.
How have you drilled down this SEK 40 billion target in an accountability kind of project? How have you built the SEK 40 billion target, basically? Is it just you're looking from a top-line opportunity, or is it coming from bottom up?
Yeah. Highly relevant questions. I can start if you want to fill in later on. We have established, and we have learned quite a lot in the last five years in terms of electronic security and solutions. Like you said, we've seen a slower growth, but still healthy growth in the footprint that we have. We are learning, and we're taking a lot of these learnings then to also make sure that we are now able to scale this business over the next five years. A big part is going to be what we're doing organically with the existing platform and resources but we are also looking at how do we, in targeted investments, through acquisitions but also in strengthening our solution selling and delivery capability, being able to then scale that up.
The reason that we're doing that is very much based on the numbers that we have shown more transparently today as well, that Bart highlighted, is that we see that we're adding more client value. We're also adding higher value to Securitas as well. That is the reason that we believe that this is also warranting continued investments so that we can really drive that growth. The second question is the target. If you say SEK 40 billion, the important thing for me is not the set number but it's obviously to give you a clear reference, and that's the reason that we spelled that out. The important thing is also internally that we are doubling.
We're setting a fairly ambitious target for ourselves to double this business, but that is obviously based on everything that we have learned and all the proof points that we have today. How have we done that? When we built the strategy, when we did the strategy review, we also then did financialization. We have done that across all the divisions to then also look at how do we now financialize the plan, because we also have limited resources. Like we said, we are proud of having long-term value development, but we also have fairly stable margin that we would like to improve over time.
One of the important things in that has then been to say what is the opportunity, so that we have accountability then not only on a group level for people like Bart and myself, but across all the leadership that we have on the scene here, and that we then have specific targets, essentially, that everyone has committed to drive. That has also been the methodology that we have taken in terms of then also defining that number. It is an ambitious number, but we have a way that we believe we can get there. Any other comments on that?
Edmund.
No. Go ahead.
To increase your margins, you mentioned higher prices for your clients. Do you think this can make your clients willing to go to other competitors with the higher prices?
Yeah, that is always a balance, of course. What I see is that we have a long track record of being successful in managing price wage. That is something that I think you've also heard today. You heard it from Peter, you heard it from Greg and Jorge as well, that this is something that we continuously focus on. To manage that successfully over time, we have to continuously push ourselves to do better as well. It's a lot easier to have a price discussion with a client that is really feeling satisfied with the relationship and the services that we bring. A lot of that success is not only that moment of price negotiation, it's also the continuous delivery that we provide to our customers over a longer period of time.
I think that is, and the ambition, obviously, is that we are able to manage that successfully in the future as well. I cannot guide on the future, but we have a good track record and this is always an important part of our business and the focus.
Any further questions, please? Yes. Edward Stanley here in the middle, please.
Hi. Ed Stanley of Morgan Stanley. I'm interested in North America on just to get a feel for what the retention rate of your employees is or your churn rate, to look at it from another point of view. Given that you talked about benchmarking your staff against in benefits against the Walmarts-
Yes.
Has your retention rate improved dramatically since you've done that?
Dramatically would be probably a bit of an overstatement. We just introduced the benefits this year. The goal obviously was to identify benefits that we felt would connect with our employees. To give you an example, some of the health and weight management benefits were a reflection of looking at our claims over the course of the last several years and understanding that our workforce could benefit from very specific types of benefits. We introduced those in the first quarter of this year. Utilization has come, but I can't tie them back necessarily to a direct number to give you a specific number.
Again, the feedback utilization and some of the anecdotal feedback we're getting on all the benefits have been very positive. Our goal, it's early stage, as you've heard, but our goal obviously is to drive better retention and more importantly, try to bring good quality people into the organization.
Here.
Hi. Johan Eliason, Kepler Cheuvreux. I was just wondering about this doubling of the E&S solutions. Is that still purely business to business, or are there thoughts about business to consumers as well in that?
Yeah. We are a business to business focused company. We have some residential clients but that has never really been a core focus for us. When you look at this, a big part of the solutions, I think, Peter, you shared 20,000 solutions customers in Europe. Those are all business to business relationships, and that is also the focus as we are going forward. We're sticking to what we are good at. Obviously we cater to some of the residential business with our call-out capability, for example. That's an area, but where we are normally not owning the customer. Primarily business to business focus as we go forward.
I think I can add that nothing business to consumer, but we have some examples, the B2B 2 C, because we have a very strong structure in terms of mobile, for instance, and we are providing some call-outs, not directly to the final consumer but have a client in the middle. We are seeing some trends that is possible to increase and to have good opportunities in that way.
Yes, please, Steve Goulden.
Hi there. Just in terms of the expansion in solutions, can you give us an idea of what sort of multiples you would, because obviously a large part of it would be through M&A. What kind of multiples you are currently looking at in terms of the sort of businesses that you'd like to buy? How easy is it to buy businesses that will move the needle on this front, i.e. what does the pipeline look like? Also, in terms of synergy potentials, both from top line and also margins, what would you tend to expect from this kind of business?
I probably should take that question. Yes, we are actively working with M&A, throughout the period. As you have seen, we have added 1.6% on average acquired growth throughout the period, and that has been done by adding larger acquisitions and mid-size acquisitions and smaller acquisitions as well. We continue to work with that. In terms of valuation, the focus will be on electronic security companies. You cannot so much buy companies that provide solutions as such. Just to be clear here, what we buy is really electronic security providers that we will then later on use in providing the service directly of electronic security or in using and building the solutions. In terms of valuation, typical, these companies come at a multiple of nine, 10, 11, 12, depending on if they're really scalable. There have been prices in the markets up to 14, 15.
We are not prepared to pay those. I think also in the meantime, the market has come down on those multiples. I am talking now more about a year ago, where there is really a hype there. We are not talking about those multiples, and I am talking here about EBITDA. That is the range there. It depends on where exactly and the strength of the company and so on. Pipeline, I will not comment on specific matters, but we are working continuously with it. I should also say we are very well known in the market and everybody knows Securitas, so everyone that considers to sell, someone will approach us. It is not that we really have to scan the market. They will rather approach us. From that perspective, we are well-positioned.
In terms of integration, we have a lot of experience now, and we see synergies more on the top line rather than on the cost line. If we acquire these companies, it's mostly to further improve our skill set and our in-depth knowledge in certain areas, and also enhancing our footprint in certain cases. It's more about the commercial synergies that could kick in rather than looking for a lot of cost savings. That is really where we are. Those commercial synergies can be, you have seen from Tony, the examples that we can see in both directions. First of all, guarding customers that buy electronic security and the other way around. Of course, also the synergy in terms of building solutions.
That is really a booster to those businesses, and how much that really is at the end of the day depends a lot on how well we integrate the businesses in a way while keeping the specialization. That is really the recipe. We have experience. We have more and more experience in those and I think we are geared up from the balance sheet to make acquisitions and to continue there our pace of 1% or sales of something, and then if you have a little bit more sizable targets, then we go more to the 1.5% over the period. That is where we look at.
Do you expect to add one or 1.5%?
We have done 1.6% over the period. That includes a few other more sizable ones. I think, yes, something like 1% should be feasible. Then it could go up. If it would be really sizable kicking in, then it would help even more.
Just to add to Bart's comment, to repeat one message from before, the electronic security we have, and I think, Tony, you shared that clearly in your presentation. This is really about building strength
Not across 58 markets. It's in a focus set of markets, because we've also seen that it really helps us when we have a critical mass position. Then we also need to be able to integrate this in a good way, and then also to be able to integrate them in more of a global context as well, so that we can also strengthen the offering across that base. That is really the next phase for us.
Okay. Sylvia, yeah, please.
Hi. Sylvia Barker from JP Morgan. Two areas of question, please. One on adding branch managers in North America. Could you just explain, is the structure changing in any way, or is it just adding more branch managers into existing branches? How did you benchmark that off other regions? Is that something that you might want to do elsewhere as well? Secondly, just on Europe, obviously, you're working on the potential for transformation there. Just a couple of questions on that. One, how many SOCs do you have in Europe at the moment, and is there any potential to reduce that number and maybe scale better? Secondly, or actually, I'll leave it at that. Thank you.
I don't have a pad here.
That's when we have to start writing and taking notes, if we know there are only four or five questions.
We're fully prepared.
Greg, why don't you comment on the branch manager?
Yeah. It's a great question. This is not a new model for us. When you look at North America's primarily five guarding regions, one of our five guarding regions has adopted to this model over the last several years and had seen great success. It's one of our most profitable regions. The idea is look at any layers or distance that we have between our clients and our managers right now, and redeploy or reduce those layers and use the funds that we save off that to invest in branch managers. It's a proven model. I want to get the profitability I have in that region across all of the regions in North America.
Yeah. On the European question, we have SOCs more or less in every European countries. In many countries, more than one, because of redundancy and so on. As you can imagine, quite a few. I'm sure it's a potential. I'm sure it's something we could look on over time. It's not the immediate focus. We think that there are other areas that probably will yield faster benefits in terms to start working with, including the key processes of HR, finance, as well as the IT investments and platforms. It's on the radar, definitely.
Karl-Johan Bonnevier, third row.
Yeah, I'll take the chance. Just continue on that. If Greg said he had 28 of those kind of financial HR system in his operation, how many have you concluded that you have in Europe?
It would be wrong for me to say a number here. It's more. No, it's really the opportunity to simplify that over time. I think it's important the way we approach it now, is that we like to almost define what is the target model for how to run a country in Europe, and also what is a target architecture we like to have in terms of support system. We are in that process. What we then now need to think through after that is how to drive that change. It cannot be one big project where we change all this at the same time. You probably more expect that over time, we will move towards that. Exactly how that looks like is what we can come back with when we talk about the transformation plan.
Excellent. The question I was planning to ask. Looking at 2020, how do you see in the different regions the wage cost price balance?
Since I'm talking, I can start with you. We don't know yet. It's actually a work that really happens with intensive now. We are monitoring, how should we say, the wages will form in the different markets. In parallel with that, thinking through how to drive our price campaigns with the customers. We are in the real preparation phase for this. We don't have the knowledge exactly how it will land yet. It probably will more be in the beginning of next calendar year.
The dynamics are different as well. If you look at North America, significantly more dynamic.
They will typically have a discussion with your client, if you need to make adaptations, et cetera, to have the right people, good people. You do that in a much quicker process. If you look at Europe, much more collective labor bargaining agreements. That could then also have a significantly bigger impact. That is obviously a big part of the effort, like Peter says, is that we're starting that work now for or we have started that already a few months ago as well for some of the markets. Continuously obviously working to achieve that balance over time.
On that, looking at France and Holland, that obviously were challenges during this year, do you feel that you are able to fully compensate going into 2020?
As I said, the work is not done yet, but that's clearly the ambition. If I put it like that, there's nothing of what have happened this year that will have an overhang on next year. We have an opportunity to get it right.
Thanks.
Paul, there please, in the middle. Paul Checketts, please.
Thanks. I've got two, please. The first, Peter, you mentioned in your negatives column about the contract losses. What are your reflections on why you lost those? Were there any similarities between the factors?
Whenever we lose a big contract, we do some type of loss review. I don't think there is a common reason across them. I think the unfortunate thing is that all is happening in a very short timeframe. Sometimes you lose contracts, but you win more than you lose. It's how our business works here for us. What happened was that we lost a lot in a short period, and quite sizable contracts.
We're of course trying to learn in each of them but it's difficult to generalize one lesson across them. We're doing whatever we can to not let it happen again.
The second question was a more general one. When you look at the range of countries, there's a big dispersion between those, the percentage of electronic solutions. What would you say the key factors are in the countries that have done better and those that have done less well in terms of growing that proportion?
I can start, and Bart also, I think, made one good chart to outline that. It starts with leadership, first of all. If you want to do something which is different tomorrow compared to what you're doing right now, that also requires strong leaders that are showing the initiative and also helping the team and the organization to make that happen. Obviously, you also then need to start to build an understanding of how do you do that. There are a number of different steps in terms of understanding the client needs, doing a proper risk analysis that we have some of our team members showing here today as well in the demo. Based on the risks and the needs of the client, how do you then build a solution which is really catering and addressing those needs in a good way?
Obviously, how do you become efficient as well in terms of implementing the solution, managing that solution over time? This is really a learning curve, but it's long-term work, but we are very convinced about the benefits, and we are tracking as well. That's something we haven't mentioned before, how satisfied are the clients, where we are delivering solutions versus standalone services. That is also an important metric to continuously look at, because then typically more satisfied clients are going to stay longer and they will also have a higher willingness to pay overall. It is really a journey, but it always starts with leadership.
If I could add there, the six key drivers that we have talked about, they kind of correlate together. If you are already strong in five of them, you have a strong leadership, you have a strong market position. The market by itself is pretty mature and with mature, we mean in terms of how they view security services, what they expect from security services. They have high expectations. On top of that, you have a good managed cost structure, then you're really in a good shape then to take the next step, and that is to go to electronic security and create solutions. On the other hand, you do not have the right leadership, you are in a terrible market situation. All of that will then make it more difficult to go to electronic security.
If you have a market that does not really appreciate the quality of guarding, it's a much bigger step to take. That is why we need to make them reinforce each other, the six performance drivers also, and they correlate quite well together.
Any further questions? Henrik Mawby, please.
Thank you. Just to follow up on that last question. On the markets in Europe where you have a lower share of solutions and electronic security, I totally lost the question there, sorry.
I'm so happy it once happens to you now.
Hey, we're out of time.
Normally we lose the answers also or we lose your question. Now it happens to you. That's not happening.
Let me give you an answer. I'm not sure it's what you're asking for.
No, here it came.
You alluded to that it was external factors in some markets that the market maturity. Is it then even possible for you to get the ratio up if it's external factors and the market maturity being low? You're a victim under the market circumstances.
It takes more time. It takes more dedication, more effort, for sure. You have seen Spain. Spain is really the best case from that perspective. At that point in time, there was no more discipline in the market on pricing for guarding. Boom. Margins were just falling down very fast. We have seen the result also where those companies have gone bankrupt. We know that. In that case, we said, "Oh, something is happening here. We will invest." We actually acquired, at that point in time, a company, which was tough because everyone said, "You're crazy. Spain is going down the drain." Well, Spain has not gone down the drain, and Spain will never go down the drain. Spain is a very good country, but it was difficult at that point in time.
When it's a crisis, as Jorge said, you have to be really persistent and make decisions. This is what we have done. We invested, we changed the company, you have seen the slide by yourself how the margin has developed. It's a tough one. It's a tough one, you need to have at that point in time, we will also say Spain got the attention from the whole leadership, we really wanted to support also Spain from that perspective. They made a turnaround. I should really say congratulations to the Spanish colleagues.
Yes. It's true that sometimes if we have external factors can help us to accelerate the solutions penetration. For instance, if I talk about Latin, the labor costs are too low yet. The client is not so receptive to hear us regarding cost efficiency and value proposition solutions. As Bart said, we have some examples that it seemed that was impossible but close to the clients, because if you look to the client perspective, the solution is cost efficient for him, and this value proposition. If you are able to explain that and be close to the clients, it's possible to do it. It was what we did in Spain, and of course, it's possible to do it in other countries. For sure that normally we have external factors that can help us to accelerate it, the implementation of the solutions.
I can also say from Europe that our view is that the market is there. We see that, of course, we have the benefit from seeing a wide range of different markets. I think Bart laid it out, the many factors that impacting our success. I would say generally, we're very convinced that the growth opportunity is there if we do the right thing.
The value proposition, like Jorge said, that's the most critical. If we've had countries, because there's been countries as well where our team has said, "No, but in our country, the customers don't want solutions." Then we organize the customer roundtable, and we sit down around the table together with a number of clients and we share our strategy, we share some of the things we are doing. Then we always ask the question, "Do you think this is the future?" Then everyone says yes. Because it's about the value proposition. It's not only cost containment but it's also get a better security equation overall that really makes a difference.
Yeah.
I think that will conclude today, actually, the message.
Good. Let me then just say a few things to conclude. We are very excited, and we have high degree of confidence in our direction. We have a clear strategy, we have clear metrics, and we have a team and leaders that are ready to make this happen. Thanks a lot to all of you for joining us and for being part of the Securitas journey. Thank you.