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, according to IHS Markit. In a research note, Oliver Philippou, senior analyst for IHS Markit, said that 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 the market.
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 just 43 percent of the market.
Philippou said that service and maintenance is viewed by most integrators as a primary profit center because contracts tend to generate a predictable revenue stream. Service agreements also allow integrators to further develop customer relationships, increasing the chance for future upgrades, retrofits and new installations. Revenue from service and maintenance services, which reached $14.5 billion in 2015, is expected to rise to $18.8 billion in 2020, according to the research firm.
While large projects almost always include service and maintenance contracts, Philippou said they are usually single-site projects, which can limit revenue potential. And though 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, he added.
Maintenance contracts can also vary by the type of product and the vertical market it is used in. In most cases, Philippou said 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.
