SDM spoke with three companies for its Industry Forecast looking back at 2024 and ahead to 2025 on a variety of topics. The panel included Kathleen Ford, co-owner and CEO of ScDataCom, a Savannah, GA-based security integration company specializing in federal contracts; Chuck Petrusha, president and CEO of Advanced Security Systems, Eureka, CA, a full-service alarm company and past SDM Dealer of the Year; and Greg Parker, global vice president, security and fire, life cycle management at Johnson Controls, a well-known large international integration company.

Below the panel talked RMR trends and strategies for 2025.

SDM: How did your company’s 2024 recurring monthly revenue (RMR) change compared with 2023? And how do you expect 2025 RMR will change compared with 2024?

Chuck Petrusha: We are focusing not only on our RMR but looking inside of our RMR or attrition at exactly why folks are cancelling. So there’s no real new trend that I can report on cancellations, but I can say from our company’s point of view, residentially, the new business has slowed from what it was even three years ago. We don’t feel that it’s pressure from the DIY companies near as much as we just see a slowdown in housing and new housing starts. But multi-family housing is no problem. We’re very, very busy and our RMR trends there are growing at a rapid pace. Commercially the same thing, growing rapidly.

Overall, from 2023 to 2024 we’re going to show single digit growth on our RMR, which we feel satisfied with, even though we’d like to get in that 10 percent plus growth for RMR. In 2023 it was about 7 or 8 percent. We are right in there and we see the same thing panning out for 2024 and are optimistic for 2025 to be about the same. But one thing that has offered the alarm dealer an opportunity is the threat of of AT&T sunsetting their phone lines in California, maybe nationally. So we have a new effort to contact our existing customers and most of those that we’ve contacted are switching from our lowest form of monitoring rate, which is out of a telephone line, to either a cell or Wi-Fi or a redundant Wi-Fi cell combination. So there has been some growth from inside of our existing customer base.

Kathleen Ford: We set a goal in 2024 to grow and it looks like we’re going to end with about 10 percent of our revenue coming from RMR for 2024 and we have a rather ambitious goal of bringing that up to 15 percent in 2025, if possible. Our RMR does perhaps look a little different than Chuck’s, but, what we’re finding is a trend in the public sector, particularly the Department of Veteran’s Affairs, where they are seeking five-year contracts for embedded technicians or full-time service and maintenance contracts to manage their systems. It’s great for me, of course, but it’s great for the customer as well because they get everything they need on their system rather than an install-and-forget-it kind of thing until they’re ready to replace it when the technology is obsolete. So that’s encouraging and I’m hoping to land a few more of those recurring contracts for 2025 and hit that 15 percent.

While this potentially looks a little different than what the industry usually considers managed services, a lot of that is because in the public sector, they’re largely on-prem systems, so they are not cloud-based. That’s what is so exciting for me to see these contracts out there, because for some years we’ve been stuck in this “go to managed services” push in the industry with a customer base that’s very reluctant to do so. So now they’re finding a way to do it. We’re actually on-premise doing work, but they’re prepaying for that, so we are finding that to be a successful arrangement for us, and I think truly the customers are highly satisfied with the results they get.

Greg Parker: We grew services or RMR roughly 8 percent in 2024 and orders are up 10 percent in that effort. We have a high degree of focus on recurring revenue. The first thing I thought of when you asked this question was actually related to what Kathleen just said but in a slightly different way: managed services. Yes, we see opportunities potentially with embedded technicians depending on the vertical market that we serve. However, I think that our bigger opportunities are with a bit of a hybrid managed services where, if you take, for example, our Open Blue connected security offering, it is a service managed by a centralized team of engineers out of one of our facilities in Alabama.

So, what happens there is it becomes a subscription of a managed service. And then the notion of subscriptions beyond that — which could be software-only subscriptions or part of a managed service that goes across life safety and security — become opportunities for growth. Then certainly as you begin to blend some of those technologies across a building that has multiple inputs from life safety, from security, even from HVAC, becomes even more powerful, and that is also a recurring revenue growth opportunity for us — but only if we are hitting the unmet needs of our customers, and we’re helping them solve problems.