The transition from analog- to IP-based technologies and solutions has created a change within the security industry and is changing the role of systems integrators, according to a report from IMS Research.
“Security Systems Integration – World – 2012” cites increased competition from IT integrators entering the market, declining product margins and greater importance of networking knowledge are among the factors contributing to the change. However, the report states, integrators who are able to adapt to these changes will reap the rewards of a global systems integration market IMS forecasts will grow almost 10 percent per year through 2016.
“As more IT integrators have been entering this market, they have been fundamentally changing the way security systems integrators do business. IT integrators have brought their business model of lower equipment costs but higher service costs, and this has translated well when dealing with IP-based technology, which often requires a lot of network planning in the design stage to offer the best available solution,” said Paul Bremner, an IMS Research market analyst. “Design and consultancy services are likely to become a larger part of the typical integrator’s revenues. Such services include risk analysis, vulnerability assessment and client security policy analysis, to name a few.”
The report says one strategy integrators are employing is to focus on specific vertical markets, which allows them to apply the knowledge and experience they gain from a project to each successive project within that same vertical. This can further grow services-based revenues, which can in some situations exceed 30 percent — compared with equipment margins, which can be less than 10 percent in worst cases.
“The opportunity for design and consultancy revenues is highly dependent on the vertical market in question,” Bremner said. “Projects in transportation, for example, are much more likely to include design and consultancy revenues than projects in either retail or commercial. This is mainly due to the nature of the projects themselves, but is also, in part, due to the different organizational structures found within those verticals.”
While it may sound as if integrators should focus solely on IP-based technologies, integrators should continue to provide the highest-quality technology solutions to their customers. Tracking new developments from product vendors will still be fundamental to success, with the world market for physical security equipment sold through integrators forecast to exceed $38 billion in 2016.