Service and Maintenance Paces Systems Integration Revenue Growth
Service revenue in the Americas accounts for 63% of total security systems integration revenues, IHS Markit says.
ENGLEWOOD, Colo. – The global market for security systems integration reached $60.3 billion in 2015, including not only security equipment sales of video surveillance, physical access control and intrusion alarm systems, but also installation and maintenance services, according to research firm IHS Markit
The services market – encompassing design and consultancy, installation, and service and maintenance – is forecast to be the fastest-growing sector of this market during the forecast period, 2015 to 2020.
Service revenue in the Americas accounted for 63% of the total security systems integration market, while in Europe, Middle East and Africa (EMEA) it accounted for 56%. Revenue from services in Asia-Pacific (APAC) region made up 43% of the market.
Service and maintenance is viewed by most security systems integrators as a primary profit center, because contracts tend to generate a predictable revenue stream, according to Oliver Philippou, senior analyst, IHS Markit.
“Service agreements also allow integrators to further develop customer relationships, increasing the chance for future upgrades, retrofits and new installations,” Philippou says. “Revenue from service and maintenance services, which reached $14.5 billion in 2015, is expected to rise to $18.8 billion in 2020.”
Large projects almost always include service and maintenance contracts. However, they are usually single-site projects, which can limit revenue potential. Although retail and commercial installations do not always include maintenance contracts, there is still good revenue potential in these markets, as commercial business and retailers with multiple locations can generate substantially more service revenue than a single airport project, for example.
Maintenance contracts vary by the type of product and the vertical market it is used in. In most cases, contracts are re-negotiated after three to five years, and it is not uncommon for maintenance contracts to reduce in value at this renegotiation stage.
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