Recurring Revenue Report Reveals Direction of Security Industry
Recurring revenue models have been widely promoted and increasingly embraced by security dealers and integrators. SSI’s first research project in this area indicates RMR currently accounts for 35% of those companies’ total revenue.
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Those in the know like to call recurring monthly revenue (aka monthly recurring revenue, reoccurring monthly revenue, etc.) the gift that keeps on giving.
And while RMR has been hyped as if it is something relatively new to security business, the fact is the alarm industry with its monitoring model was onto something special decades before other industries wised up.
Perhaps no providers have exploited the RMR advantage to greater effect than the paid TV and cellphone companies. Their success has helped inspire many trades to re-evaluate their own offerings in a recurring revenue context — security included.
As it turns out, RMR is not only the gift that keeps giving in terms of delivering a steady cash flow that basically allows providers to earn money 24/7 (the term passive income has become in vogue but given the responsive nature of security perhaps active passive income fits better), but it also has several other business benefits.
RMR customer accounts also increase company equity and build tangible value that the financial community and investors understand and covet. Further, those customers represent ongoing upsell potential, and the deeper the relationship the stickier or longer term and loyal they become.
These factors allow a security company to draw better credit lines and attract a higher multiple when it comes time to sell the business. The realization of such myriad advantages coupled with elevated customer interest in more advanced technologies and associated gains in personal and work efficiency, convenience, and pleasure — in synchronicity with vendors’ shifting from hardware- to software-based solutions enabling “as-a-service”-style offerings — have conspired in recent times to shift if not outright transform many security dealer and even integration companies.
Developments in interoperability and automation have had an especially significant impact. In many cases, installation and ongoing recurring revenue have flipped such that today the former has become icing on the RMR cake rather than vice versa.
All that is well and good, but to what extent is RMR driving the electronic security industry’s direction in 2018? How much is being made by those focused on RMR? What are the growth percentages? How is RMR affecting all the industry’s technology sectors? What are the residential and commercial devices, systems and services are best lending themselves to the RMR model?
SSI’s first Recurring Revenue Report, a survey of approximately 100 security companies of varied sizes and specializations, holds the answers. Check them out in the slideshow above.
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