Necessary Strategy: Streamlining
Between 2002 and 2003, the Top Systems Integrators collectively charted 21 percent growth in revenue, from $3.4 billion in 2002 to $4.1 billion in 2003. This represents the second lowest growth rate over the last five years (second to 1999-2000, which measured just over 12 percent), and is only about half of last yearâ€™s 41 percent growth rate. This dragging effect could be the result of the leaden economy and its continuing toll on American businesses.
However, 21 percent annual growth is still remarkable progress. Such notable growth under such challenging conditions reflects the marketâ€™s continuing demand for systems integration as well as the integratorsâ€™ resilience and effective strategizing.
Two effective strategies have been to make significant reductions in both personnel and business operations. Acquisitions and non-reporting by some major firms do not fully account for the following facts: in 2003, the total number of full-time employees was down by tens of thousands, and the cumulative number of business locations was down by hundreds. The data strongly suggest that integrators have cut back their operations in order to shore up profits in the face of a demanding economy.
While the number of employees and business locations has been streamlined, the combined number of new projects started nearly doubled between 2002 and 2003. On average, the number of new projects started in 2003 for those companies reporting was 260 per firm. By comparing the almost two-fold growth in new systems with the more modest growth in revenue, we see that cumulative 2003 revenues were principally the result of a larger number of less expensive systems. (In previous years there were evidence that the norm was revenue generated from a lesser number of more expensive systems.)
For those in the field reporting their largest new system in 2003, the average figure was just over $2 million. With two of the top five failing to report these data, the largest single project was reported by No. 2, Stanley Security Solutions, Indianapolis, which claimed $30 million in revenue from one project. The average smallest new project for the entire field of 100 was just over $31,000.
The core of the new systems sold continues to be the same: access control and video surveillance.
Over the last five years, gross revenues have escalated over 156 percent, which shows that core characteristic for the Top Systems integrators also remains the same: sustained growth.