AUSTIN, Texas — The transition to IP-based technology is changing the role of traditional systems integrator in the electronic security industry, according to a new report from IMS Research.
Factors such as declining product margins and the increased importance of networking knowledge has contributed greatly to the change, according to the report titled “Security Systems Integration — World — 2012.” The entrance of new IT integrators into the marketplace is also forcing security integrators to adapt.
“IT integrators have brought their business model of lower equipment costs but higher service costs,” IMS Research Market Analyst Paul Bremner says. “This has translated well when dealing with IP-based technology, which often requires a lot of network planning in the design state go offer the best available solution.”
Design and consultancy services, such as risk analysis, vulnerability assessment and client security policy analysis, are likely to become larger part of integrator’s revenues, according to Bremner.
The report also mentions that while many installers must broaden their skillset, systems integrators have the advantage of specializing in specific vertical markets, including education, health care and casinos. Amassing knowledge from each project allows integrators to increase margins by as much as 30%, while equipment margins can be commonly lower than 10% in extreme cases.
“The opportunity for design and consultancy revenues is highly dependent on the vertical market in question,” Bremner says. “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.”
However, alarm installers shouldn’t fret over this news, as they’ll still have a place in the market, despite the larger role integrators and consultants will have in the industry. IMS Research predicts that physical security equipment sold through integrators and installers will reach more than $38 billion in 2016.