The Shift Continues: Service Revenues Rise in Security Systems Integration

By Deborah L. O’Mara | Nov 15, 2016




Moving to upstart revenue streams and mobile, remote systems management is the way smart, low-voltage electrical contractors are doing something about the changing security and integrated systems market. They continue to adapt to new business models and profit centers, deriving a healthy chunk of revenue from service and maintenance and customer-care agreements.

Contractors are taking proactive measures to protect their profitability, as margins on smaller jobs continue to dive; competition from DIY, self-install and self-monitoring deepens; and project costs soar. Companies are reshaping to a service model to get predictable income flowing and build and retain strong value. Many systems integrators view service and maintenance as a primary profit center, and research confirms this uptick.

An August 2016 report, “The World Market for Security Systems Integration,” by IHS Markit, London, stated that installation and maintenance services now make up a strong overall part of the global market for security systems integration. According to the report, the global security systems integration market reached $60.3 billion in 2015. That number includes security equipment, installation and maintenance services.

IHS predicts the services market—design and consulting, installation and service and maintenance—will be the fastest growing sector. Oliver Philippou, IHS Markit senior analyst—technology, said there is especially strong growth and revenue potential in national accounts and multilocation projects.

“In the past, systems integration revenues were primarily project-based,” he said. “The research confirms systems integrators are moving more toward a recurring revenue model through offering these contracts.”

Service and maintenance accounted for 24 percent of the world market for security systems integration. Security equipment tallied 46 percent of the market. Installation was at 27 percent and design and consultancy at 3 percent. 

Philippou said the ongoing move to the Internet of Things, additional data points and connectivity, and increased system complexity will “assist and aid” this trend.

Changing landscape

Integrated systems continue to grow with many components working in 
tandem—e.g., a hospital with a combination of systems talking to each other, such as nurse call, real-time location solutions, panic alarms, access control, CCTV, sirens and annunciators. Also contributing to this upward trend is larger enterprise installations that necessitate these agreements, more sophisticated technologies and overall increased need for 24/7 uptime and connectivity.

Established in 1944, Houle Electric Ltd., in Burnaby, British Columbia, takes a holistic approach to integrated building systems solutions, offering a service and maintenance agreement for every installation. It’s a philosophy that allows the award-winning firm to service its clients 24/7 and achieve a high level of customer satisfaction.

The technology side of the business is the most dynamic and fastest growing, said Gabriel Ana, Houle Electric’s director of technology for the strategic projects group.

“We offer these service agreements after each new project to ensure that customers get the best support,” he said. “Integrated systems solutions are not fully plug-and-play. They require ongoing care. From the moment these solutions are installed, they need to be supported so that the customer can get their full functionality. It’s also a critical part of the ongoing life cycle of integrated systems.” 

Houle Electric uses analytics to generate usage and reliability reports for customers and as an aid in future technology procurement and design.

“Organizations are dynamic and changing quickly,” he said. “You have to see what works and what doesn’t and need historical data to present to customers so they can make informed decisions on the next cycle of systems integration deployment.”

Houle Electric collects and provides history reports and forward-looking analytics to customers based on performance indicators culled from service work. For example, an ongoing trend of service calls for a particular technology or piece of equipment may indicate the need for replacement.

“Based on this information, we can anticipate issues and proactively address potential failures before they occur,” Ana said.

Providing proactive managed services, which grant the ability to remotely troubleshoot systems, is another plus of service and maintenance agreements.

In addition to making the company more stable, Philippou said these agreements also make a customer “stickier.”

“Customers are more likely to stay with the types of companies that offer these services,” he said. “This often leads to providing other services in additional parts of the business.”

About The Author

O’MARA writes about security, life safety and systems integration and is managing director of DLO Communications. She can be reached at [email protected] or 773.414.3573.





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