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Anatomy of a redesign.

IN 1988, SECURITY OFFICIALS AT WELLS FARGO BANK, with approximately 450 branch locations throughout California, were confronted by an aging alarm system whose high maintenance costs and false alarm fines created an unnecessary drain on the budget. A plan was needed to provide an organized and controlled equipment change.

The equipment was fully operational and provided a high level of security, but old alarm systems were being replaced by new systems in an uncontrolled fashion at the rate of one per month. Branches were protected by alarm systems monitored by fifty different vendors. The bank also operated two separate central stations supporting 100 branches in one city. Ten types of system controllers were used, 60 percent of those dating from 1945.

New replacement parts were nonexistent. Repairs were made using equipment salvaged from offices that had been closed or remodeled. Because of the age of the components, critical replacement parts were custom-made or control panels were replaced. False alarm fines were escalating at locations throughout the system. Seventy percent of the systems installed reported on a single zone to the receiving station. Single-zone reporting limited the information provided. Police could not be told if a holdup button had been pushed or if alarm equipment had malfunctioned. Single-zone reporting also limited the information given to the service crews. They would spend hours looking for the possible source of the alarm. Consequently, costs for service and equipment maintenance were high.

The central station equipment was at the end of its operational life cycle. Replacement of station equipment would require replacement of the branch equipment as well. Older control panels often support other detection equipment, thus replacement of alarm contacts, motion detectors, and exterior bells are often required with the installation of a new control panel. Costs for new alarm systems were approaching $25,000 per location, and replacement of either central station would entail a million-dollar expenditure.

Communication lines that connected alarm system equipment to monitor stations were made in an era when solid copper wire was used. These direct-connect alarm lines were being phased out by telephone companies on a random basis over time. Wells Fargo received calls from telephone companies informing the company that service to its circuits would not continue and would be terminated in thirty days. Systems were being changed on an emergency basis and premiums were paid for evening and weekend work.

Research on the feasibility of converting all branches to one system connected to one central station operated by Wells Fargo Bank became the primary mission. Two years were allotted for development of a design study, comprised of a system proposal, with management and funding reviews.

Careful consideration was given to management response to converting 450 locations, since acceptance of such a project was not certain. Proposals were refined at each management level to ensure that all aspects of the project were explained and that every question was answered in advance.

Shortly after beginning the study, it was revealed that statewide conversion of the branches to a proprietary alarm system was feasible and that funding for such a project could be made available quickly. Earlier in 1988, approval and funding had been provided for the complete alarm conversion for branches recently acquired from another bank. Two million dollars had been allocated.

By changing equipment requirements, a major portion of the 450 branches could be converted to a proprietary alarm system. The remaining branches could be converted on a phased in basis as funding became available. Under this program, older alarm systems would be identified and replaced early on. For another $2 million all of the alarm systems could be converted.

Management sessions at several levels were held to review the concept and ensure that senior managers understood the limitations of the current system. The proposal clearly outlined the costs the company was paying and would continue to pay under the old program. Costs for new equipment would be contained by converting only the necessary portions of the branch alarm systems. Savings generated through the reductions in service fees, monitor fees, and false alarm fines would help justify construction.

Senior management gave its approval for the security department to submit a formal business proposal describing the costs and benefits derived from renovation of the branch security system. Three proposals were submitted for consideration. These outlined a partial conversion plan to replace alarm systems at 250 branches and the central stations for $2 million; a full conversion plan to replace alarm systems at 450 branches and the central stations for $4 million; and an expansion of the full conversion plan, replacing all alarm equipment at all locations, including off-site ATM enclosures, for just more than $5 million. Submittal of a finished business case was made six months after the study began. Senior management approved the $4-million proposal.

WHILE THE MANAGEMENT presentations were going on, preparations for full project implementation were also underway. Equipment and installation specifications were developed to meet the concept. These specifications were generic in substance, covering basic operational aspects for central station equipment and alarm installation in the branch.

The specifications included central station location, branch locations, central station layout, station electrical, console design, printer placement and type, central processor capacity, software parameters, operator restrictions, operational requirements, alarm processor configuration, control panel features and capacity, alarm equipment configuration, and type of communication network to be used. Time periods were specified for completion of each phase of the construction process. Warranty and service requirements were also included.

Requests were made to alarm vendors and telephone companies for product information and system design proposals. Equipment suppliers were invited to apply their ideas. Vendor meetings were intense and took months so that each feature and operational method was understood. Through this process a full understanding of how the various products functioned was gained, allowing the security department to adapt its design expectations to real world capabilities.

Several reports were issued to staff describing the product information derived from the inquiry. Comments were solicited from the security managers responsible for branch security at the division level concerning the merits of the program, the type of equipment to be used, and system features needed for successful operation. The debates were heated at times, but they were extremely valuable. Through these meetings, the managers shared in the system design.

These discussions highlighted necessary system functions and safeguards. Several features would be required. First, equipment would be UL Grade-AA listed. The company could have developed its own standard for equipment, having a custom design, or it could use a standard accepted throughout the industry.

A customized standard would satisfy every aspect of company needs. However, it could be costly and difficult to monitor. The industry standard, UL, is well established and easily monitored. Equipment listed by UL would provide a wide array of functions to select from and would ensure a high level of security with uniform system installations throughout the branches.

Second, station receivers and branch transceivers would be from the same source. Rather than modify existing control panels to function with a desired receiver, all panels would be replaced with new equipment. Using the old panels could limit the functions applied, since features such as multiple-user codes, scheduling, or multiple-zone reporting were not available with the old panels.

A third requirement was that equipment would be generic, available through many alarm vendors. Wells Fargo foresaw delays in completion of its projects because of the lack of parts from competitive companies. Vendors in competition will not readily supply one another with equipment. A firm that installs alarm equipment and is the sole manufacturer of its own alarm products may provide excellent service, but the customer is held captive. Other alarm vendors may not have ready access to those replacement products in a timely or cost-effective manner.

The separation of vendor and manufacturer would ensure equipment availability to a large number of installation vendors. More vendors would be able to bid on the systems without any delay in parts delivery. The resulting competition would encourage uniform prices and lower installation costs.

Fourth, equipment would have multiple-zone reporting. The equipment selected would allow each element of protection to report independently, identifying itself and the type of alarm being sent. A minimum of thirty zones was required. On a single zone the only way to differentiate between a holdup alarm

and a burglar alarm is the time of day. With multiple-zone reporting, holdup alarms and ATM alarms are readily identified. Police response is then based on whether a person or property is being threatened.

Fifth, existing station facilities would be used to house new equipment under those conditions. Using one of the existing stations would lower overall construction costs. Costs for uninterrupted power supply (UPS), fire walls, mantraps, access controls, and communication raceways would be avoided. Only minor modifications would be required to house the new equipment. The existing station also had personnel who had an understanding of alarm response procedures and were familiar with branch personnel.

Sixth, existing staff would be used to monitor the system. The use of existing personnel would reduce training time, speed system evaluation, and ensure a smooth transition from old equipment to new.

Seventh, a standard communication network would be used. Many communication methods were studied, including derived channel, long-range radio, cellular linkage, satellite linkage, multiport channel, side channel, and data insertion. Managers from the data group advised that upcoming changes in corporate communication linkage would supply an alternative method and would be available in the near future. It was decided to place the system on a standard, high-security communication network, managed through the security department.

Finally, additional features were selected. Each range of available features presents the issues of additional costs and operational constraints. Features such as redundant receivers and alternate communication linkage were added. On the other hand, centrally monitored access controls were declined, since branch security applications seldom call for access controls. Remote programming was also declined because limiting access to programming enhances overall security throughout the organization. Adding these functions would also add to the staff requirements and change the configuration of station equipment.

Construction contracts were created using information provided from the legal department and original bid specifications. Schedules were confirmed, and factory and field tests of equipment were performed to determine if the program was operational. Any malfunction along the way could stall the project.

The station and field equipment worked as specified. The field test was scheduled to run for three months before management approval for a full construction start-up would be given. In September 1989, the station was fully operational and field tests showed equipment working perfectly. Field tests were scheduled to continue until January 1990.

By September 1989, the failure rate of old equipment had increased dramatically, and it was uncertain how long the older stations could continue to function. Timetables were shifted, and full construction began. The company was committed to the program once the new station was installed. Prolonged field tests would be inconclusive. Any operational problems would ultimately need to be addressed under contract and warranty provisions. To the vendor's credit, only minor problems were encountered.

The official timetable called for sixteen branches to be installed per month. This time period was based on the vendor's available personnel and Wells Fargo's history of alarm installations. To shorten construction time, the vendor was given an accelerated schedule, gradually moving up from sixteen to twenty locations per month in the last twelve months of construction. The project was scheduled for completion in March 1993; actual completion occurred in February 1992.

WELLS FARGO NOW HAS more than 630 locations on the system, and branch personnel and management are pleased with system operation.

The financial benefits include the following:

* Alarm operating costs were cut by $2 million at project completion.

* Recurring costs (those paid annually) were reduced by $1.5 million.

* Costs for equipment and installation were recovered over the construction period.

Emergency alarm repairs were reduced by 82 percent. Formerly each branch paid $1,000 annually. Through the installation of new equipment and the requirement of extended warranties, that sum is now less than $120.

Standard service fees for preventive maintenance to all branches have been reduced to pre-1987 levels. This reduction has occurred with the number of branches serviced increasing from 450 to 630 locations, a 40 percent increase. Alarm monitor fees, network charges (old circuits), and expenditures for false alarm fines have all been reduced.

The following additional benefits have also been realized:

* Uniform statewide operating standards guide personnel on system use and testing. An employee can now transfer from one branch to another and apply his or her training in alarm system operation. There is more confidence in a system that is familiar, and many branch employees are expert in system operation. Testing is now a routine, easily monitored process.

* Uniform construction standards exist for new and existing facilities. Installations are now routine. Each vendor has written guidelines that address every application and the equipment required. Security managers measure the quality of installation with the same standards.

* Control of station personnel, alarm response, and report quality is enhanced. Wells Fargo now has close supervision of all station personnel, allowing responses to be modified to suit operations. The company also has easy access to periodic reports on system operation. This information is available to staff in a predetermined format.

* The system has greater adaptability. The type and quality of equipment installed allows Wells Fargo to be less affected by change in the alarm and communication industries. The new equipment may remain functional for forty years. Individuals who plan to be around that long look forward to this with great anticipation. In truth, however, the system must be modified every five or ten years to maintain a high level of security. Changes to enhance encryption and communication will be necessary over time.

NO SYSTEM OR PLAN IS PERFECT. Changes based on advances in technology and communication that make the construction process easier and the security level higher could already be made to the new Wells Fargo system if the system makeover had to be made today.

A few key elements should be observed if your company is considering a similar project. Conduct your own research. Many managers allow the vendors to provide the raw information on pricing and performance parameters. This information can be gained through the use of knowledgeable associates or qualified consultants. Through this process you will know what you need to meet company requirements and what is available, and communication with the vendor becomes more defined.

Do not accept the vendor's statements on performance as fact until you have verification of results by similar organizations. After the verification process, test the proposed application with the vendor. If you cannot arrange a scaled simulation for the equipment needed, you may have to change the vendor or the equipment or reconsider your application.

Keep your needs basic and your objective focused. Overwhelming the vendor with information requests and project studies that go on for years is not useful. Every department that is affected by the security system will request features, alterations, modifications, or design changes. While such requests are valid, they often will affect the direction of your inquiries and the scope of the project at hand.

Anticipating each department's needs will increase the chances that equipment selection and design can satisfy the broadest array of concerns. The remaining issues can be negotiated or resolved creatively. Consider the following example: A remote location requires a two-hour service response time due to unusual operations. Staff must leave the premises within a specific time frame. The best service time available from any vendor for that region is next-day response. One solution would be to select equipment that provides a controlled means to temporarily bypass the defective portion of the system. Another solution is to install redundant devices.

The use of equipment and installation procedures listed by UL is recommended for any system application. Listed equipment ensures that the majority of components meet a high standard and have a high probability of performing to your expectations. A certification program is in place for proprietary alarm systems. You can now receive a UL certificate from a qualified vendor for each location on your company system.

You should have a clear understanding of communication networks and costs. When Wells Fargo started its program, communication charges were reasonable, with low rates for installation and monthly maintenance. As controls on the regional telephone companies have been lifted, prices have increased.

Controls were lifted to create market pressures that would push circuit prices down. The reverse has taken place, because local access is still dominated by only a few companies. As a result, cost-effective alternative communication methods are now emerging. The methodologies have been around for years, but improvements are making them more attractive.

Alarm companies are now providing UL Grade-AA services over long-range radio at a fraction of the cost of standard telephone networks. Satellite equipment is becoming smaller, making objections to the installation of antennas less likely. Major companies, especially in the financial sector, are finding that the use of satellite can be bundled to include data services as well as provide linkage for security systems.

In considering your own system replacement, you should also have clearly defined milestones and a realistic completion date. Vendors have a tendency to promise more than they can deliver, and management will always ask for a shorter time line. A project completion date three months from inception is ideal but may not be obtainable within the cost constraints.

Through your research you should be able to measure the amount of time required for the project. If management insists on a short construction span, it must be willing to accept the additional costs and added dislocations to operations. A solution would be to set two schedules: one that reflects the expected outcome and one that exceeds management expectations.

Financial incentives are not recommended. The use of penalties as a deterrent must be weighed carefully. Such penalties can have a major impact on project completion and costs. Bonuses for early completion should be avoided because schedules may be affected. If material costs and project schedules are fair, the vendor will have more than enough incentive to complete the project ahead of the stated completion date. Payment should be made as materials are installed and only after the installations have been inspected and accepted.

The vendor is the most important element in any large scale project. Contractor performance will determine the successful operation of any equipment. Careful consideration of product features is important, but the vendor's understanding of and familiarity with a product is more critical. Vendors should be selected based on prior experience. A contractor should have a minimum of five years' experience installing the specified product.

The future holds great promise for innovations in the security field. In the coming years improvements will occur in diagnostics, encryption, and product performance. Computer languages will readily allow integration of many types of alarm systems into a single processor. Each advance will make it easier for security directors to bring these systems into a single, vendor-operated, central station or to establish their own proprietary alarm system.

Ted P. Barron is vice president and security project manager for Wells Fargo Bank in San Francisco. He is a member of ASIS. This article has been accepted as a candidate for the First Annual Technology-at-Work Solicitation.
COPYRIGHT 1993 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
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Title Annotation:Bank Security; history of bank security systems
Author:Barron, Ted P.
Publication:Security Management
Article Type:Cover Story
Date:Mar 1, 1993
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