Issue link: https://read.dmtmag.com/i/31490
2 SECURITY STATS www.securitysystemsnews.com JANUARY 2011 SECURITY SYSTEMS NEWS SECURITY STATS Service and maintenance contracts to show 8.1 percent annual growth through 2014 in Americas By Daniel Gelinas A recent study, “The Americas Market for Security Systems Integration—2010 Edition,” forecasts the systems integration market will shift over the next four IMS Research 2010 years to a more service-oriented model. According to IMS research analyst Ewan Lamont, by 2014, RMR from service and mainte- nance contracts will account for 33.4 percent of the market. “Service and maintenance Service and maintenance Integration market, 2014 is forecast to grow at a com- pound annual growth rate of 8.1 percent from 2009 through to 2014,” Lamont said. “As I did my research, the vibe I got is that [the] service and maintenance aspect is not only the most profitable, but also is nice and steady. So one of the benefits there is if you get a three-year contract for service or maintenance, [and] if you get an economic blip that lasts maybe 18 months, it helps you see that through.” Lamont said integrators should start thinking in terms of service contracts as the norm, rather than as a fallback plan for when times are tough. Even in good times, the IMS numbers show that recurring revenue from service and mainte- nance contracts is more favorable than the one-time payout for an install. Margins for service and maintenance can be over 30 per- cent, while margins for equipment are often lower than 20 percent, according to the report. “It’s just a different revenue stream, so when one becomes a little unreliable, such as the main contract revenue, you still have that service and maintenance to go with it,” Lamont said. “Obviously it’s one thing to say, and different to implement. I think integrators just need to be aware of it, for a start. I think it’s one of those things that’s been neglected in the past when times were good and there hasn’t been an issue with getting new customers.” Lamont said the main driver for growth, along with a desire for increased RMR, was differentiating by increasing value for the end user through prolonged system life (greater ROI), more personal contact, and more features. “It’s just all these little touch- es you can provide custom- ers. Some companies are doing Internet logging or GPS tracking of staff, so when a customer calls up with a problem you can say, `At half-nine [9:30], this wasn’t working. About half-10 [10:30], our technician was there and did this work and everything was back to normal at whatev- er time.’” Lamont said. “When you’re able to produce these types of metrics, Ewan Lamont it becomes a differentiator.” Lamont also pointed out that it’s not just about differentiating oneself from the competition for the eye of the end user, but for the eye of the investor as well. More long-term service and maintenance contracts mean a more attractive proposition for potential investors and buyers as well. SSN