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Services and demand for greater data integration will top the list of trends for 2011 as organizations look to their security providers to simplify their lives for them. And that could mean improved revenues for those delivering the goods.


December 22, 2010
By Jennifer Brown

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According to a new report on the Americas market for security systems integration, IMS Research has found that integrators are increasing their RMR through service and maintenance contracts. IMS Research forecasts that service and maintenance will account for 33.4 per cent of the total Americas security systems integration market by 2014.
 
Service and maintenance contracts are not only a means for security systems integrators to stabilize cash flow over time, they are also the most profitable portion of most projects, according to the U.K.-based research firm. Margins for service and maintenance can be more than 30 per cent while margins for equipment are often lower than 20 per cent.
 
“The importance of a recurring revenue stream for systems integrators cannot be overlooked,” said report author and IMS Research analyst, Ewan Lamont. “Companies that are offering a value-added service contract, such as Convergint Technologies, are seeing strong growth and greater resistance to the economic downturn than those integrators that do not. Companies with high levels of RMR are also more attractive to investors and acquirers.
 
“Additionally, there are major benefits for end-users who can extend the life-cycle of a well maintained system or save money by outsourcing the services that they would have previously handled in-house,” said Lamont. “One example of this is in the casinos market, where service and maintenance was traditionally handled by on-site technicians, but is increasingly being outsourced, providing new opportunities for security systems integrators.”

But depending who you are and what product or service you’re selling, 2011 may start out slow in this country says one industry consultant in Canada.

“I see the market increasing slowly over the next year. The key word is slowly as compared to last year’s growth,” says Terry Hoffman of Hoffman and Associates in Midhurst, Ont.

He says that is a result of two factors: one being the increase of the value of the Canadian dollar compared to the U.S. dollar as the majority of goods are sold in U.S. currency.

“This currency evaluation provides goods to Canadian customers at a lesser cost,” he says.

Hoffman agrees that security providers are finding ways to be more competitive thus offering bigger discounts and/or blending complimentary value added services into their service and installation offering. Hoffman says the value added service increases a client retention percentage and in return develops potential non-competitive bid opportunities along with long term service level agreements.

And while Canada’s crime rate has decreased over the past he says the fear of crime has increased.

Another IMS Research report issued in late November called the World Market for Physical Security Information Management (PSIM) Software, examines the growing (and much hyped) market for PSIM software platforms.

While there are a wide number of products that fulfill some of the criteria of PSIM, such as VMS and ACS software, these products are unable to fulfill all of the criteria and are not considered to be PSIM software platforms by IMS Research.


By 2014, IMS Research forecasts that the world market for PSIM software will be worth around $200 million. As a point of perspective, IMS Research forecasts that the combined global market for VMS and ACS will exceed $1 billion by 2014.

Wong states, “It is important to note that IMS Research has measured the market in terms of PSIM software license revenue. If services, maintenance, design and consulting revenues were added, it is conceivable that the market for PSIM software would exceed $1 billion by 2014.”

Chris Wooten of NICE Systems agrees PSIM is going to be a big player in 2011 and for future years as organizations realize the benefits.

“We see that customers are starting to recognize the value of integrating disparate subsystems to give a complete picture of what’s happening,” says Wooten, who is president of NICE Systems.

“We have customers where we are linking their video systems to intrusion and access control systems etc. We refer to that as one aspect of situation management, other people call it PSIM,” he says.

Wooten says he has a slightly different take on PSIM but agrees it’s definitely one area he sees customers seeing value.

“They need to know what’s going on and just taking data from their access control system doesn’t give them the whole picture. By integrating these systems together they get a much richer data set and can respond more effectively,” he says.

PSIM has been compared to the Enterprise Resource Planning systems rolled out by IT departments 10 years ago.

 “We see people across a broad spectrum of customers looking to deploy this now for various reasons. They are what we consider to be enterprise customers such as airports, seaports, mass transit organizations – not your convenience store or small four cameras or small access control system.”

In the U.S. regulation and compliance is driving much of the investment in PSIM systems, but there is less pressure on organizations in Canada to do the same.

“The U.S. government is putting out a lot of regulation for securing the energy grid for NERC, in different types of facilities like chemical facilities, and financial institutions,” he says.

For critical infrastructure organizations, they need to know the people, processes and technology all work the way they are supposed and if they don’t where is the gap?

“The way many people are looking at PSIM is they have six different video management systems linked together but the approach we’re looking at is linking technologies together but also people and processes. When an incident occurs it’s more about the processes in place and responding in real time,” says Wooten.


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