SDM’s 2014 Top Systems Integrators Report

While challenges persist, great improvement was seen between 2012 and 2013, and it continues into 2014.
By Laura Stepanek – July 15, 2014

SDM’s Top Systems Integrators — a report that ranks companies by their North American Systems integration revenue — collectively grew revenue by 17 percent in 2013 to reach $7.36 billion. This marks the first year for positive growth since 2009. While some of the growth can be attributed to upward estimates for several of the largest integrators (Tyco Integrated Security and Stanley Security), the rest stems from the fact that almost every single integrator in the top 25, as well as many lower-ranked integrators, moved forward. Some improved significantly: Convergint Technologies, for example, grew from $278 million in 2012 to $328 million in 2013.

“The petrochemical market continues to be strong, along with the healthcare market. Data centers also continue to be a strong growing market for us,” describes Convergint, ranked No. 6. The company added, however, that K-12 education and state colleges and universities exhibited slower growth last year.

Systems integrators largely described the 2013 market as strong. The rebounding of new construction, the expansion of businesses, and a continued awareness of the need for protecting people and property were the major growth factors.

“The markets TSI serves created a strong year for 2013 security volumes. We participated in many new projects as well as long-term system upgrades and systems remediation,” comments Tech Systems Inc., No. 18.

MidCo Inc., No. 34, noticed more opportunities. “Companies are spending more for new projects and new buildings,” the company observes.

“We found the market just a little stronger than average. Corporate spending loosened up and money was budgeted for security upgrades at some Corporate 100 sites,” notes Koorsen Security Technology, ranked No. 40.

In addition to a higher level of new construction market and business expansion observed by the integrators, another prime factor continues to be the push from analog to IP, and convergence. According to No. 19, SDI, “We see a few things driving the demand: Certainly, the slow migration from analog to IP for video and access controls is continuing to move along. More meaningfully, however, we see a significant increase in the convergence of the traditional IT and physical security worlds — adding project scope.”

Revenue classified as North American systems integration revenue rose from $6.29 billion in 2012 to $7.36 billion in 2013 — even though seven fewer companies are included in the report. However, for comparison purposes, SDMmeasures the top 100 companies’ 2012 integration revenue ($6.25 billion) against the top 100’s 2013 integration revenue ($7.33 billion). Several larger-sized systems integrators did not report their earnings this year and were omitted from the report; including BCI Technologies, Northland Control Systems, and Securityhunter. However, the report has been re-energized by the addition of several dynamic systems integrators that are new to the report this year, including ISI Security, Universal Protection Security Systems LP, Dakota Security Systems Inc., Electric Guard Dog, TRL Systems, Utah Yamas Controls, and several others.

“We saw just under 10 percent growth in 2013,” reports Dakota Security Systems, ranked No. 23. “We cover a number of geographies and saw broad economic recovery across all of our customer demographics.”

Within certain vertical sectors, the Top Systems Integrators noticed varying degrees of opportunity. Noted growth areas were transportation, energy, warehouses, industrial/manufacturing, education, healthcare, financial institutions, construction/equipment rental, and even government.

The integrators were divided about two of three top market sectors in 2013: education and healthcare. On the one hand, “healthcare exhibited growth through a need to enhance the patient experience and reduce the number of hospital-acquired infectious disease re-admissions,” shares Johnson Controls Inc., No. 5. On the other hand, “the healthcare market is showing caution over the Affordable Care Act,” notes Universal Protection Security Systems, ranked No. 21.

The challenges that systems integrators face continue to be greater competition and tighter profit margins. “We found significantly more work in the security sphere in 2013 versus 2012, though the margins were tighter,” reports No. 113, Protex Central Inc.

“There was an increased competitive profile due to more entries into the market from the IT side of the business,” observes No. 31-ranked Genesis Security Systems.

And while most integrators found video surveillance to be the strongest technology in demand, others are seeing video turning softer due to a bigger supply of integrators. “The camera business has slowed down due to technology companies entering the market,” notes Habitec Security, No. 109.

While challenges persist, there is no doubt that great improvement was seen between 2012 and 2013, and it continues into 2014. “We started to see companies release planned budgets in 2013 that were pent up in 2012 due to weaker financial markets,” relates Protection 1, ranked No. 9.

“The general market for security was marginally improved over 2012. The lack of economic growth kept us from seeing larger improvements, but overall the market seems favorable,” says Electric Guard Dog, ranked No. 28.

Among SDM’s Top Systems Integrators, 80 percent expect revenues to increase in 2014 compared with last year.

How to Read the Top Systems Integrators Report

The 2014 Top Systems Integrators Report ranks North American companies by their security systems integration revenue. This ranking is based on data provided to or, in a few cases, estimated by SDM. Ranked companies were asked to submit either an audited or reviewed financial statement, or a copy of their income tax return showing total gross receipts for the stated period. The vast majority of the firms ranked are privately held.

The main table, which begins on page 62, ranks 117 companies by their North American revenue in 2013 from their security system integration projects. Integration includes solutions such as design, project management, product, installation, programming, start-up, training, and time-and-materials-based service sold directly to an end-user customer or through a tier of contractors. This includes revenue related to security, such as: access control, ID/badging, video surveillance/analytics, intrusion alarms, perimeter security, electronic gate entry, intercom/communications, fire protection, etc. It does not include recurring revenue, as that is counted towards ranking on the SDM 100 Report.

Note: an e following the figure indicates it is an SDM estimate.

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 numbers, website URLs, targeted vertical markets, branch office locations, and much more. SDM’s Top Systems Integrators Report and Database contains the information needed to target products and services to the systems integration market.

The cost of the report is $595. It may be ordered by contacting Heidi Fusaro at 630-518-5470 or by emailing fusaroh@bnpmedia.com.

Read the original article at SDM Magazine.