Service and maintenance is viewed by most security system integrators as a primary profit center, because contracts tend to generate a predictable revenue stream. New research from IHS confirms this trend, as service revenue in the Americas accounted for 63 percent of total security systems integration, while in Europe, Middle East and Africa (EMEA) it accounted for 56 percent. Revenue from services in Asia-Pacific (APAC) region made up 43 percent of the market. Revenue from service and maintenance, which reached $14.5 billion in 2015, is expected to rise to $18.8 billion in 2020.
The global market for security systems integration reached $60.3 billion in 2015, including not only security equipment sales of video surveillance, physical access control and intruder alarm systems, but also installation and maintenance services. From 2015 to 2020, the services market — encompassing design and consultancy, installation, and service and maintenance — is forecast to be the fastest-growing sector of this market.
"Service agreements allow integrators to further develop customer relationships, increasing the chance for future upgrades, retrofits and new installations," writes Oliver Philippou, IHS Markit senior analyst. "Large projects almost always include service and maintenance contracts. However, they are usually single-site projects, which can limit revenue potential. Although retail and commercial installations do not always include maintenance contracts, there is still good revenue potential in these markets, as commercial business and retailers with multiple locations can generate substantially more service revenue than a single airport project, for example."
Maintenance contracts vary by the type of product and the vertical market it is used in. In most cases, contracts are re-negotiated after three to five years, and it is not uncommon for maintenance contracts to reduce in value at this renegotiation stage.
