Security Integrator Competitive Survey 2014

Security integrators report that business has become more competitive in the last 3 years, driven by low end new entrants, price pressure and squeezing of independents.

Over 120 integrators responded to questions about the level of competition as well as the specific competitive drivers impacting their business.

First, this chart shows the big picture:

Almost no one found the business getting easier and most found it more competitive.

Low Prices

The biggest foe our integrators reported is also one of the oldest threats: profits are being driven down. Whether because of low-cost equipment, aggressive competition, or rising overhead costs, integrators say their business just is not as profitable as it once was.

• "Low Price. (Homebrew NVRs, Unskilled cheap labor, Budget equipment, and Improper system design)."
• "Reduced margins, more competition from commodity cameras."
• "Competition going in at low margins (ie: box movers)."
• "It is almost impossible to compete with Asian products that flood the market. The quality, support, service related arguments are not enough to justify a 200% - 300% increase in price."
• "It is not always easy to compete with a brand like Axis, looking at Chinese and Korean competitors."
• "We have more competitors selling at much lower margins, making it difficult to compete and still make a profit."
• "Price. We generally take more time than any other company designing to make sure it's right. However, there are some that just want the cheapest."
• "The larger firms are getting desperate for business, and are pricing projects extremely low."

Everyone is an Integrator Now

This problem is more than pricing pressure or a perceived lack of value. The second impact clearly is affecting all regions and many market verticals with droves of new resellers, installers, and 'DIYers' popping up. In the past, security integration was more specialized and called for specific skills. That is changing:

• "It is amazing how many (new competitors) are out there!"
• "Availability of inexpensive consumer products from Amazon, Comcast, TigerDirect etc has cut into and almost eliminated the residential side of our market."
• "Many suppliers available now a day as compare to three years ago. More service center and tech support offering Customer got many option to buy from so they take full leverage and do window shopping."
• "There is more competition across the board. this includes more IT and cabling firms as well as the larger security firms. Everyone is chasing the same pie which is not growing as rapidly. "
• "Any body with a ladder and wire strippers an integrator...or in the eyes of the "price only" end user at least."
• "Trunk slammers are encroaching on opportunities."
• "IT companies selling security cameras and solutions. IT people buying their own stuff also is big."
• "I would say trying to keep the pricing competitive with the many unlicensed and unqualified people out there selling security as a by product along with phones, data, or audio systems."
• "Out of state integrators saturating bid-work."
• "Entrance of new companies in the business."
• "The convergence of the security business into IT allowed several computer companies to start offering security solutions."

Independents Being Squeezed

Another common response was that traditional 'consultative buying', that emphasised end user relationships with independent integrators, is diminishing. Many suggested new business is either competitively bid, or contracted to large, multinational big name firms. These integrators expressed concern in not having neither the huge brand and marketing budget, nor volume purchasing agreements to win big business.

• "We have seen more RFP's being released in this area resulting in quite a few IT companies responding to the RFP's."
• "Clients seem to be gravitating back to big companies again. Johnson Controls and Siemens seem to be regaining popularity."
• "There is cost pressure to bid out projects."
• "I have to deal with Diebold and Stanley so they kind of define the market. We seem to always have to follow behind and reeducate the customer about security processes, equipment and what service is."
• "We are too small to compete with large firms for the big projects, so we try to capture a lot from referrals but it is tough."
• "We need more marketing. We compete against companies that take over some of our customers, then disappear after locking them into contracts."
• "Most of the time it is political and relationship, and not technical."
• "We do not have the name recognition and branding that other companies have."
• "I would say marketing the company against the Tycos is my main concern."
• "Hard specified bids. We have uphill battles trying to get around Cisco video and access control specs."
• "Our long time customers pay the premium for us to supply a result they are guaranteed to be satisfied with. Everyone else takes the low number bid, then calls us a year later to try and fix the system..."