Integrators need a new capability to respond to 3 industry factors:

1 – The industry isn’t growing. Actually, it’s shrinking

The graph shows an industry decline of 2% from 2007-2015 vs. a modest growth market investment. Owners could have sold their integration businesses in 2007, invested the proceeds and been further (10%) ahead.

The reason?

  • Integrators sell & install hardware & systems (whose costs decline yearly)
  • Installation wages haven’t risen.

So more work is being done each year, but at a lower overall cost = negative growth.

How has the industry responded?

2 – Vendors are selling everything to anyone and everyone!

  • Each year vendors’ equipment is more powerful, but sells at the same or lower price, as they stay competitive vs. other vendors’ equipment.
  • Vendors, however, don’t want to sell less than they did last year – they want to sell more, so what do they do?
  • Many lower standards and authorize more integrators to market their products – hoping to maintain/grow sales.

Now, integrators see bids coming in from smaller, less capable integrators (with lower overheads), proposing exactly the same equipment! Even a solid reputation seems to be less important than price.

To win work, integrators lower margins and cut installation fees because price is increasingly important – especially if the equipment is the same.

3 – Support/service fees are harder to maintain

  • Most sales revenue comes from system installs & less from service/support.
  • Better quality, lower cost equipment means it’s harder for integrators to increase support fees to make up for lost margins.
  • Lower-than-before installation contract totals correspond to lower support fees in the minds of procurement folk.

To sum up …

Integrators face:

  • Shrinking margins/revenue due to intense competition from less-capable but similarly-equipped competitors.
  • Harder-to-win installation contracts at lower-than-before total revenue with lower support/service fees.
  • Lower business revenue/growth potential which makes it harder to pay/keep experienced staff.
  • A less-certain future.

Integrators need a new solutions capability – to allow them to:

  • Differentiate their solutions from other integrators’ bids to raise margins/support fees and avoid price-only-based client decisions.
  • Create new solutions for client’s day-to-day operating problems/opportunities (vs. one-time requirements e.g. security system setup) to cement them as their clients’ key provider and give technical staff more chargeable tickets/calls.

Enter Connectiware