Touched by an improved economy in most regions and some expenditure of Homeland Security funds, seven in 10 firms reported in the 10th annual SDM Top Systems Integrators Report increased revenue in 2004 – and many anticipate 15 percent or more growth in 2005.

The report ranks by revenue the largest firms that contract electronic security projects for commercial, industrial, institutional, government, and other non-residential markets. These systems integration firms are businesses that derive more than half of their revenue from the sale, design/engineering, installation and service of multi-technology electronic security systems, such as access control and video surveillance.

Growth Trends

This year, reporting considerations hampered some of the larger ranked firms from breaking out their systems integration revenues separately from total company revenues. Therefore, SDM estimated revenue at the same level as 2003 for both Johnson Controls Inc. and ADT Security Services Inc.

Nevertheless, some indications of positive revenue improvement can be gleaned from the remaining Top Systems Integrators: Among companies reporting an increase in 2004 revenue over 2003, the average increase was 28 percent.

Three firms stand out with skyrocketing increases of more than 150 percent. Five reported increases of more than 60 percent, and five more cited increases of between 40 percent and 60 percent. For some, it was a very good year.

A total of 19 firms reported decreased 2004 revenue compared with 2003, averaging about 14 percent among them.

The 15 Percent Solution

Total 2004 revenue among SDM’s Top Systems Integrators increased 12 percent. But many also report that they expect 2005 revenue to increase by 15 percent or more.

Some systems integrators were more optimistic in their revenue increase estimates than 15 percent. “Anticipate significant growth based on pending contracts – 25-30 percent over 2004,” reported North American Video, Brick, N.J.

Many cited reasons for their optimism. Intervid, Frederick, Md., anticipated 20-percent growth in its Mid-Atlantic and Northeast regions because of closing operations in the Southeast. Hamilton Pacific L.P., Pasadena, Calif., forecast a 20-percent increase because of adding territories and “utilizing vertical market penetration.”

In Plymouth, Minn., where Pro-Tec Design Inc. is located, the gradual return of new construction encouraged forecasting of increases of approximately 20 percent. “Investment in security systems is becoming a more high-profile decision, driven by influence from corporate IT and risk management departments.”

Others cited smaller increases, such as industry giant Diebold Inc., North Canton, Ohio, which predicted expected growth of approximately 10-20 percent “to be achieved via acquisitions, organic growth and maturity initiatives within the retail government, commercial and global markets.”

Cam-Dex Security Corp., Kansas City, Kan., was more conservative, anticipating raising 2005 revenue by 11 percent due to increasing demand and an increase in new construction over the last three years.

Others were realistic. “We think revenue will go down due to the economy,” conceded Bonneville Construction S.E., San Juan, Puerto Rico.

However, D.L.S. Ventures LLC, Houston, expects a 5 percent increase in 2005 revenue from Homeland Security grants.

Acquisitions fueled some of the growth in 2004. The revenues of several Top 100 systems integrators from last year’s report have been absorbed in the figures of other companies.

Homeland Security

The effect of Homeland Security funding is beginning to be felt. Among SDM’s Top Systems Integrators, 43 percent reported benefiting at some level from Homeland Security projects.

Last year, total revenues for Top Systems Integrators increased, while the number of employees decreased. This year, the reported increase in revenue is more modest, but the number of employees has increased. This may be the result of the inevitably inverse relationship between projects and employment levels: by the time employment catches up with increasing workloads, those workloads slow, either due to economic conditions or in response to decreased man (and woman) power.

In 2004, integrators also reported that the number of business locations increased, perhaps in response to increased merger activity and to improve customer service.

Overall, systems integrators appear to be optimistic in their economic outlook for their companies but realistic in the labor and overhead resources that will be necessary to achieve their goals.

Editor’s Note:

SDM’s Top Systems Integrators Report defines integrators as businesses that derive more than half of their revenue from the sale, design/engineering, installation and service of multi-technology electronic security systems, such as access control and video surveillance. Some companies ranked in this report are part of larger corporations that encompass more than electronic security systems integration. In these cases, the reported revenue reflects only the systems integration portion of that company’s business. Five firms are ranked both in this report and the SDM 100 (SDM, May 2005). These companies were asked to split their revenue into systems integration and alarm and reported those revenues to the SDM Top Systems Integrators report and the SDM 100, respectively.

More Revenue From Fewer Projects

Despite a modest revenue increase in 2004, the number of employees and business locations has increased over 2003 while the number of new projects has declined. Because the largest systems integrators did not report their total number of new projects this year or last, the decrease may indicate larger projects. Last year’s total number of new projects started was more than 52,000 last year, but was more than 28,000 in 2002.

Total gross revenue (2004) ... $4.6 billion

New systems started in 2004 ... 29,979

Total full-time employed ... 94,276

Business locations operated ... 1,462

The difference also may be attributable to the 30,000 new projects reported in 2003 by NetVersant Solutions Inc., Houston. This year, the company estimated 3,000 new projects, and in 2002, it did not give a figure.

Another consideration is that projects sometimes extend over several years. Revenue being reported in 2004 may still be flowing from projects started in 2003. The full effect of projects started in 2004 may not be felt on the bottom line until next year.

Reported employment has increased substantially from last year. In 2004, 94,276 full-time employees were reported compared with 77,210 last year. More complete responses by most systems integrators may result in part of the increase. For example, this year, SimplexGrinnell has reported 11,500 employees compared with not reporting any last year. However, that still leaves an increase of 5,566 employees from other integrators.

Business locations also have increased despite or because of mergers among integrators. This year’s number of business locations, 1,462, has increased over last year’s 1,176. Merger activity can wield a double-edged sword over the number of business locations. Although a merged company may have more locations at first, locations may be consolidated as the two companies become more fully integrated.

Source: SDM Top Systems Integrators Report, July 2005

Revenue by System Type for Top 100 Integrators

Integrated systems continued its growth in 2004, accounting for an additional 1 percentage point of revenue over 2003. Other changes were a 5 percentage-point drop in access control and a decrease of 1 percentage point in CCTV. However, fire protection gained 3 percentage points and badging increased 1 percentage point over 2003 figures. Combined, integrated systems, CCTV and access control accounted for 73 percent of the top systems’ integrators’ jobs in 2004.

*Percentage of total 2004 revenue among SDM’s Top Systems Integrators

Source: SDM Top Systems Integrators Report, July 2005

Health Care Was Integrators’ Strongest Vertical Market

Asked to choose five or fewer markets from which a significant portion of their 2004 revenue was generated, integrators again, as in 2003, picked health care as their top market. Other vertical markets shifted position over 2003, such as government work, which dropped below industrial and education; retail jobs, which inched ahead of airports; and law enforcement and hotel/hospitality, which moved ahead of transportation/distribution and correctional.

*Percentage of Top Systems Integrators who named this market as a significant source of 2004 revenue.

Source: SDM Top Systems Integrators Report, July 2005

12 Percent Revenue Growth in 2004

SDM’s Top “Systems Integrators’ revenue improved 12 percent in 2004 compared with 2003. Although not as impressive as 2003’s 20-percent growth rate and 2002’s 41-percent growth rate, it still is significant, especially in light of the changes in reporting revenue from some of the largest systems integrators. Some are reporting their integration revenue as level with last year’s due to changes in their reporting of fiscal years and others are not breaking out their system integration revenue separately at all. Of the Top 100 systems integrators listed here, 58 companies reported revenue increases, 19 reported decreases and 7 reported the same income.

Source: SDM Top Systems Integrators Report, July 2005

The Source of the Top Systems Integrators’ Report

SDM’s Top Systems Integrators Report is compiled from questionnaires answered by more than 100 companies which then are ranked by their 2004 total annual revenue, which is rounded to the nearest hundred-thousandth. Included in the table is:
  • 2005 rank and 2004 rank
  • Company name and headquarters location
  • 2004 gross annual revenue. (The letter “v” next to the revenue indicates that the company submitted a separate document, such as an income tax form or a reviewed or audited financial statement.)
  • Number of new systems started in 2004, plus the largest and smallest new projects
  • Number of full-time employees
  • Number of business locations operated, including headquarters
  • Percentage of jobs resulting from Homeland Security funds

    Percentage of Jobs Funded by Homeland Security Dollars

    SDM’s 2005 Top Systems Integrators Report asked a new question: “What percentage of your jobs was funded by Homeland Security dollars?”

    The largest number of systems integrators, 17 percent, reported that 2-5 percent of their jobs in 2004 were funded by Homeland Security dollars. The next highest percentage reported was 1 percent of jobs, which was cited by 9 percent of the integrators.

    A total of 57 percent of integrators reported zero dollars from Homeland Security funds, did not respond to the question or maintained they did not know the source of funds from all their jobs.

    * Percentage of jobs funded by Homeland Security dollars

    ** Percentage of integrators

    Source: SDM Top Systems Integrators Report, July 2005

    More From the Report

    To gain additional information beyond that published in this issue and online, the complete SDM Top Systems Integrators Report and Database is available in Excel format. Included are contact names, mailing addresses, telephone and fax numbers, Web site URLs, branch office locations, and more.

    SDM’s Top Systems Integrators Report and Database contains the data needed to target products and services to the systems integration market.

    The cost of the report is $595. It may be ordered directly from SDM’s Web site at (click on Exclusive Industry Research), or by calling Leslie Bouldes at (248) 244-6487.

    Alphabetical Index of System Integrators

    Access Control Technologies Inc. 40

    Actcom Inc. 58

    Adesta LLC 22

    ADT Security Services Inc. 4

    Advance Technology Inc. 86

    Advanced Control Concepts Inc. 85

    Advanced Electronic Solutions Inc. 48

    Advanced Technology

    Systems International 92

    Advantor Systems Corp. 37

    Aerwav Integration Services Inc. 28

    All Systems

    Designed Solutions, Inc. 90

    Allied Safe & Vault Co. Inc. 25

    Arcom Systems Inc. 96

    ARK Systems Inc. 31

    ATC International Holdings Inc. 45

    Atlantic Coast Alarm Inc. 88

    BCI Technologies Inc. 41

    Benson Security Systems Inc. 35

    CHS Inc. 95

    CompuDyne Corporation 7

    Convergint Technologies LLC 14

    D.L.S. Ventures LLC 98

    D/A Central Inc. 59

    Dallmann Systems Inc. 66

    Datawatch Systems Inc. 38

    Deterrent Technologies Inc. 34

    Diebold Inc. 3

    Diversified Security Solutions Inc. 21

    Dowley Inc. 67

    Electronic Security Services Inc. 94

    Electronic Security Systems Inc. 72

    Energy Control Inc. (ECI) 57

    Engineered Security Systems Inc. 78

    Facility Robotics Inc. 80

    Ferndale Electric Co. Inc. 61

    First Service Security Division 6

    Firstline Security Systems, Inc. 71

    Genesis Security Systems LLC 60

    Hamilton Pacific L.P. 17

    Idesco Corp. 62

    Initial Electronics, Inc 30

    Integrated Controls USA Inc. 89

    Intelligent Access Systems Inc. 93

    InterTech Security LLC 63

    Intervid 73

    IR/Ingersoll-Rand Corp. 8

    ISSCO Corp. 99

    Jacksonville Sound

    & Communications Inc. 50

    JBP Security Systems, Inc. 74

    Johnson Controls Inc. 5

    Kastle Systems 13

    Koorsen Protection Services Inc. 39

    LVC Technologies Inc. 47

    MAC Systems Inc. 42

    MidCo Inc. 32

    National Security Systems Inc. 23

    NetVersant Solutions Inc. 16

    North American Video 19

    North American Video Corp. 20

    Operational Security Systems Inc. 64

    Paladin Protective Systems 91

    PEI Systems Inc. 46

    Philadelphia Protection Bureau Inc. 44

    Pro-Tec Design Inc. 84

    Red Hawk Industries LLC 10

    RFI Communications

    & Security Systems 18

    Sec Sol Inc 65

    SecureNet Inc. 27

    Securitas Security Systems USA, Inc. 12

    Security Corp. 29

    Security Design Inc. 56

    Security Equipment Inc. 55

    Securus Inc. 83

    Selectron Inc. 81

    Sentinel Security

    & Communications Inc. 76

    SFI Electronics Inc. 43

    Siemens Building Technologies 1

    Sigcom Inc. 52

    SimplexGrinnell LP 9

    Simpson Security Systems Inc. 97

    SNC Inc. 77

    Sound Inc. 33

    Sport View Technologies 87

    Stanley Security Solutions 2

    T & R Alarm Systems Inc. 53

    Tech Systems Inc. 36

    TEM Systems Inc. 54

    Thompson Electronics Co. 82

    Tour Andover Controls 15

    Trans-American Security Services 75

    Trinity Security Inc. 70

    Tri-Signal Integration Inc. 24

    Universal Security Systems Inc. 79

    Unlimited Technology, Inc. 49

    Utah Controls Inc. 51

    Video Master Inc. 69

    Videotec Corp. 100

    VideoTronix Inc. 26

    Will Electronics, Inc. 68

    Wireless Facilities Inc. 11