Photo via Flickr (noah wesley)
AUSTIN, Texas. — Recurring revenue from service and maintenance contracts will account for 33.4 percent of the total security systems integration market in the Americas by 2014, according to a new report by IMS Research.
Titled "The Americas Market for Security Systems Integration — 2010 Edition," the report notes that service and maintenance contracts are the most profitable portion of most installation projects. Margins for service and maintenance can be more than 30 percent while margins for equipment are often lower than 20 percent, according to the study.
"The importance of a recurring revenue stream for systems integrators cannot be overlooked," says Ewan Lamont, a market analyst who authored the report. "Companies that are offering a value-added service contract, such as Kastle Systems and Convergint Technologies, are seeing strong growth and greater resistance to the economic downturn than those integrators that do not. Companies with high levels of RMR are also more attractive to investors and acquirers."
Additionally, end users looking to extend the lifecycle of a security system or save money by outsourcing services for maintaining a system instead of employing onsite technicians will provide new opportunities for integrators, Lamont says.
For more details about service and maintenance contracts, check out "Why Selling Service Pacts Makes Sense" in SSI's October issue.
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