With IP-based technology gainingcontrol over the home security industry and more and more people shifting to wireless and access control, the role of systems integrators is changing radically. The industry has gotten fiercely competitive, and new entrants are driving breakthrough marketing strategies. There is a decline in profit margins, increase in the significance of networking knowledge, and most of all there is emphasis on higher service fees and much lower installation fees. While these sweeping changes may pose some challenge for the established and complacent ones, the integrators who successfully adapt to the change are set to gain a whole lot. The systems integration market is set to grow at an average rate of nearly 10 percent until 2016, as predicted in a study by IMS research, the leading source of information, analytics, and insight into the modern businesses landscape.
Paul Bremner, market analyst at comments, “As more IT integrators have been entering this market they have been fundamentally changing the way security systems integrators do business. IT integrators have brought their business model of lower equipment costs but higher service costs, and this has translated well when dealing with IP-based technology, which often requires a lot of network planning in the design stage to offer the best available solution. Design and consultancy services are likely to become a larger part of the typical integrator’s revenues. Such services include risk analysis, vulnerability assessment, and client security policy analysis, to name but a few.”
Integrators also are all set to conquer whatever industry changes and market shifts come their way. One of the key strategies remains focusing on a specific vertical market. Thisallows integrators to productively use their knowledge gained on one project directly onto the other. This can effectively boost the margin obtained from each service, which can sometimes go as high as, or even exceed, 30 percent. This has turned out to be a much more profitable margin as compared to that on equipment, which can be even lower than 10% at times. It is hence obvious that the modern consumer wants effective service, and successful integrators are all set to give him just that.
Bremner also stated that, “The opportunity for design and consultancy revenues is highly dependent on the vertical market in question. Projects in transportation, for example, are much more likely to include design and consultancy revenues than projects in either retail or commercial. This is mainly due to the nature of the projects themselves, but is also, in part, due to the different organizational structures found within those verticals.”
Despite all of the changes, the one formula that continues to remain the holy grail of is the highest quality technology solutions. The world market for physical is forecasted to go over the $38 billion mark by the year 2016, and as long as consumers get the quality they want, systems integrators are set to do very well.
Tim Eveler
Author & Public Relations – Tim has been working in sales for the home security system industry over twelve years. He’s held positions at large home security companies and in charge of working with the team to create our security system reviews.