Security systems integrators had expected to pull ahead in 2011, but instead they experienced a dismal first half of the year and a better-by-comparison but still “just average” second half. Following a 4.4 percent drop in 2010, systems integration revenue among the industry’s largest security companies fell yet again — by 3.6 percent in 2011 — leaving many wondering what it would take to get back up to speed. Integrators face sharp curves in the need to quickly adopt IP as the primary infrastructure for security systems, as well as to create business models that offer security as a service.
There were some stand-outs among the 2012 Top Systems Integrators, a report which ranks companies by their North American systems integration revenue from the previous year. Among the top 10 companies, Convergint Technologies, LLC, ranked No. 7, reported 17 percent growth year-over-year in systems integration revenue reported to SDM. Stanley Convergent Security also did well with its acquisition of Niscayah, removing Niscayah from the No. 8 spot on the report. And Schneider Electric pulled ahead by about 10 percent. Nevertheless, many other companies continued to feel a hard pinch in an industry that has been historically reliant on new construction, government spending, and big capital budgets.
Projects in 2011 originated from a mixed bag of vertical sectors. For some integrators in some geographic areas, government spending carried them through; while for other integrators, the private sector provided the greatest source of new work. As in 2010, the Corporate market was cited by systems integrators as the No. 1 vertical sector contributing to their 2011 revenue. The Industrial market displaced Education as the second most productive vertical sector — meaning that more companies ranked it higher among sources of revenue than in the previous year.
Clearly, existing infrastructures have risen to the top of the road as a primary source of new business to tap. “The market continues to recover and has moved from weak to average on new builds, while strong on maintaining existing infrastructures,” commented No. 13-ranked NAVCO Security.
Many companies found they relied on their key customers’ expansion programs in 2011. Hand-in-in-hand with servicing existing customers is realizing that large capital expenditures are fewer to be found, making the development of security-as-a-service business models more important than ever. However, not all integrators are moving in that direction with the same speed, some saying that customer demand just isn’t there yet.
“Projects for us in 2011 are up at the moment,” claims High-Tech-Tronics Inc., ranked No. 65. “With IP camera technology getting better — especially with bandwidth requirements — I see the market going up. Cloud-based is still new, but we are starting to get customers asking about it.”
Some integrators, such as Interface Security Systems Holdings Inc., ranked No. 109, are farther along this road than others are. In 2011, only 1 percent of service revenue among Top Systems Integrators came from hosted and managed services.
“Our company’s strategic decision in 2007 to expand into the IP managed services market with both physical security and logical security services, along with IP-based remote video and digital voice services, has proven to be extremely successful. We have more than doubled our RMR in the last four years as a result and expect to add over $2 million of new RMR in 2012 all through organic growth,” stated Interface Security.
SDM’s Top Systems Integrators Report ranks, by reported North American systems integration revenue, the largest companies that contract electronic security projects for commercial, industrial, institutional, government, and other non-residential markets. For ranking purposes, these are businesses that derive more than half of their revenue from the sale, design/engineering, installation and service of multi-technology electronic security systems, such as access control and identification, video surveillance, alarms, perimeter security, and other network-based technologies. Listings begin on the following page.