In retrospect, the SDM 100 – first published in May 1991 – was a clumsy-looking report that split the security industry’s largest companies into two groups: dealers with a commercial focus and dealers with a residential focus.

The top five “commercial dealers” ranked in 1991 were:

1. ADT Security Systems
2. Honeywell Protection Services
3. Wells Fargo Alarm Services
4. National Guardian
5. Holmes Protection Inc.

The top five “residential dealers” ranked in 1991 were:

1. The Alert Centre
2. Westec Security Inc.
3. Dictograph Franchise Corp.
4. Rollins Protective Services Inc.
5. Dynamark Security Centers

…none of those dealers categorized in the residential group exist today!

Five years later, in July 1996, SDM introduced its first Top Systems Integrators Report in response to changes in the industry that were producing a greater emphasis on large, engineered security systems. There were only 22 companies ranked, and many readers wondered, “Who are these systems integrators and what business are they actually in?” For the most part, they existed under Wall Street’s radar, as well as that of other industry watchers.

But over the years SDM’s Top Systems Integrators report grew in both number of rankings and stature, as the demand for integrated video and access control solutions surged.

Preparing both the SDM 100 and Top Systems Integrators reports today is a remarkable endeavor – these are the largest reseller firms of our industry; the businesses that are purchasing the greatest volume of products and services, influencing the mindset of the final buyers, and establishing the reputation of an industry that provides home and business owners with peace-of-mind and an effective tool for protecting assets and employees.

Although both groups are effective security providers, there are obvious differences between the SDM 100 and Top Systems Integrators, which exist mainly in their business models. SDM’s subscribers understand those differences, but for many people outside of the industry, who count on the rankings for information to help them make investment decisions, the differences are not as clear.

Helping to provide that clarification and to form a greater distinction between security alarm companies and security systems integrators, we’ve introduced a new method this year for ranking SDM 100 companies. For the first time, the SDM 100 ranks companies by their recurring monthly revenue (RMR). This is the amount of contractually recurring revenue due from customers for services such as monitoring, contracted service/maintenance, and leasing of security systems. RMR is typically the basis for valuation of an alarm company, and is meaningful language among alarm dealers. Most systems integrators tend not to have recurring revenue, whereas recurring revenue for alarm companies often comprises 50 percent or more of their total annual revenue.

As always, the primary objective of the SDM 100 is to measure consumer dollars gained by alarm companies, in order to present an account of the size of the market captured by these providers.

This year’s SDM 100 collectively marked a 6 percent growth rate in recurring monthly revenue, although many of the firms experienced double-digit growth and very few recorded decreases in RMR.

We’d like to know what you think about the new basis for ranking security dealers. Please e-mail your comments to me at stepanekl@bnpmedia.com, or call me at (630) 694-4027.