The End of Integrators?

By the end of the decade, security and IT integrators are likely to be displaced and replaced by the forces of Internet services, commerce and information. While integrators solved a clear business need over the last half century, more efficient ways are emerging to meet those needs. We think this will be a painful and critical process impacting the entire industry - from users to the channel and manufacturers.

What Do You Think?

The Value of Integrators

Historically, integrators provided great value to end users and manufacturers.

It has been too expensive for manufacturers, operating from one or a few locations, to reach and service end users around the world.

Integrators bridge this gap, providing expertise of global products to local end users. In doing so, integrators bundle sales, design, installation, optimization, training and service. End users were saved the expense and complexities of mastering selecting, using and servicing products. At the same time, manufacturers could better scale their sales and support resources to sell more products globally.

The Disadvantage of Integrators

At the same time, important inherent disadvantages exist in this structure.

Expertise is needed close to the end user as systems are physically managed and optimized at the end user's site. This increases costs as it forces training of more people in physically dispersed locations or the expense of sending people out to locations. Furthermore, because this can be quite costly, often insufficient expertise is available in certain regions for certain products.

Integrators cannot physically or economically become expert in more than a fraction of the available products. Because of this, integrators need to limit or align themselves with a few manufacturers. This often results in restricted choice for end users.

Prices are often artificially high because of limits of integrators qualified for specific products in a region. Integrators have historically had 'pricing power' in their regions which is good for them but results in higher prices for end users.

Forces Disrupting Integrators

We see 3 key forces that are disrupting integrators and resolving historical integrator disadvantages:

1. Managed/hosted systems are reducing the need for on-site expert integrators to deploy, configure, optimize and service systems (see our analysis and comparison of managed/hosted video providers for an analysis of this).
2. Access to on-line, in-depth information of products allows end users and consultants to make decisions with reduced dependence on integrator's recommendations (see our pro service as an example of this).
3. Buying products on-line increases price competition and reduces pricing power of traditional integrators (see our discussion on buying products online).

We definitely think all of these forces are early and not completely developed. However, consider where we were a decade ago and where we are likely to be a decade from now. In 2000, web based email, amazon and blogs were novel. Now, they are mainstream. In the same way, managed/hosted systems, on-line product info and product sales are all likely to become common. No great technical barrier exists to these forces. It's simply a matter of technological maturation.

What Happens to Integrators?

We think the roles of traditional integrators will be split up. A lot of what traditional integrators do (such as recommending and selling products) will move on-line and others will become unnecessary (on-site software setup, upgrades, some troubleshooting).

Most end users will simply not need nor value the full bundle of services that traditional integrators provide. This will force integrators to make difficult decisions.

As in any period of change, some will not make it. Others will likely move into 3 areas of specialization:

• High End Integrators: We believe the very high end of the market, for complex projects servicing customers with critical security needs (such as government and critical infrastructure), traditional integration will remain the preferred approach longer than the rest of the market.
• Local Experts: As end users can do more by themselves, they will not need the 'full' services of a traditional integrator but are likely to value the help of a local expert who can design, manage and troubleshoot issues. This expert is likely to be a single person or a small team of highly qualified specialists.
• Installation Services: Physical equipment will still be necessary but this equipment will not require complex on-site integration. This will drive the need and value of low-cost, highly efficient install providers (the 'Wal-Mart' of integration, if you will).

At the same time, we believe two groups will be the most negatively affected:

• Traditional Sales: Sales based on relationships and personality will become more difficult. As prices and independent information becomes easier to access on-line, even great sales people will find the number of willing prospects to diminish.
• Semi-Skilled Technicians: Technicians who know just enough to setup and troubleshoot the basics of systems will find themselves replaced by managed/hosted systems. They will either have to move down to the lower pay of installing equipment or forced to become experts.

The End of Integrators

Such changes are certainly processes and will not happen all at once. We do not see one day where integrators are healthy and the next when they are 'dead.' Indeed, many argue that the health of integrators has been declining for years. We believe this trend will accelerate and that the forces of on-line services, information and commerce will drive the transition.

Addendum:

Thanks for the extensive feedback in the comments. It is clear that I made a mistake by titling this provocatively about the "end of integrators." While I do think that integrators as we know them will be replaced in the next decade. However, it's the more specific points that I think deserve emphasize (gain for local experts, installation services and fall for traditional sales and semi-skilled technicians) - not whether or not end users will simply buy and install themselves.

Specifically, by 2015 to 2020:

• Techs who maintain and configure VMS servers or IP cameras will become increasingly obsolete, replaced by centralized services and remote engineers.
• Sales people who over-hype video surveillance products will be shut down. As reviews and technical analysis of products become commonplace on the Internet, users will be able to check and avoid over-selling.