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Top Systems Integrators Report 2021: Hitting the Sweet Spot
Security integrators faced no shortage of curveballs in 2020, but many in the top 100 managed to stay ahead in the count and find success.
As one top systems integrator eloquently put it, 2020 was a “very unique year.” It was far from easy to thrive in business, but despite a dip in systems integration revenue (down 12 percent collectively from the previous year), many reported finishing the year at least even with, if not ahead of their 2019 numbers, particularly in the latter half of the year. A large part of the reason for this success was the ability to shift from vertical markets that were stagnant to others that ramped up during the pandemic.
“2020 was a year where the market shifted dramatically … [and] required us to remain nimble amongst the curveballs thrown our way,” writes A3 Communications Inc., ranked No. 8. “However, we were also able to accomplish some big things.”
Though a small number of top security integrators reported a strong year throughout, often that was due to pre-pandemic budgeted projects that went forward; or a fortunate vertical market forte.
As No. 1 ranked Convergint states, “In 2020 the security systems integration market was strong. Convergint saw significant strength in the financial market as well as the healthcare market. Convergint has developed a leading market presence within the healthcare space.”
Far more companies reported a topsy-turvy year, even if it ended well. “The market was sporadic, with ultra-highs and some very low points as we got closer to the elections,” writes No. 9, Netronix. “I think it was the same as 2019 going into the year, but some companies stopped the spending when COVID-19 hit, while others capitalized on the situation and decided to get a lot of work completed while their staff was out of the office and not impacted.”
This was a theme repeated in many comments.
“2020 was on track to surpass 2019 in projects and revenues by a lot; it ended up basically flat,” comments No. 19, Stone Security.
How to Use the 2021 TSI Charts & Tables
The main table ranks 100 companies by their North American systems integration revenue as of December 31, 2020. The company with the highest integration revenue is ranked as No. 1, and so on. For each of the 100 companies, the following information is provided, from left to right:
- current year rank, which is based on Dec. 31, 2020 North American Systems Integration Revenue;
- prior year rank;
- company name, as used in the marketplace, and headquarters location;
- North American systems integration revenue as of December 31, 2020;
- number of new projects as of Dec. 31, 2020;
- largest project size;
- smallest project size;
- top three markets contributing to revenue;
- number of full-time employees; and
- number of business locations, including headquarters.
TSI 2021 companies are then re-ranked by several other criteria, including largest project by revenue; and top 25 by RMR.
For questions about the Top Systems Integrators Report or the SDM 100 Report, email Karyn Hodgson, SDM Editor.
Note: An e following the figure indicates it is an SDM estimate.
NextGen Security, No. 12, typifies the experience of many of the top integrators: “2020 obviously presented a number of challenges due to COVID-19. We are fortunate to be an essential business and therefore did not shut down at all; but many of our clients did. We had anticipated about 18 percent growth in 2020 but essentially stayed flat. This was a direct result of many projects being put on hold. We service quite a bit of healthcare systems and those clients were quite busy during the pandemic, so it allowed us to put a heavy focus on that vertical in 2020. We carried all of our employees through the pandemic as well with no furloughs or layoffs. This was one of our main goals through 2020.”
About the SDM Top Systems Integrators Report
The SDM 2021 Top Systems Integrators Report ranks North American companies by their security systems integration revenue. This ranking is based on data provided to or, in a few cases, estimated by SDM. Ranked companies were asked to submit either an audited or reviewed financial statement, or a copy of their income tax return showing total gross receipts for the stated period. The vast majority of the firms ranked are privately held.
The main table ranks 100 companies by their North American revenue in 2020 from their security system integration projects. Integration includes solutions such as design, project management, product, installation, programming, start-up, training, and time-and-materials-based service sold directly to an end-user customer or through a tier of contractors. This includes revenue related to security, such as: access control, ID/badging, video surveillance/analytics, intrusion alarms, perimeter security, electronic gate entry, intercom/communications, fire protection, IT/networks, etc. It does not include recurring monthly revenue (RMR), as that is counted towards ranking on the (www.SDMmag.com/SDM100Report). However, due to the increasing focus from security integrators on increasing RMR through managed services, maintenance contracts and more, SDM ranks the 25 Top Systems Integrators in a separate table.
Note: an e following the figure indicates it is an SDM estimate.
To find a company by name, use the alphabetical index
As a group, the top 100 systems integrators may have lost some revenue in 2020, but the news was more positive that it seems. Of those companies that could be compared year-over-year (companies that appeared in the top 100 in both 2019 and 2020), their total systems integration revenue actually increased by 17 percent.
Profit margins for all the 2021 ranked companies stayed steady in 2020, with 69 percent reporting they either increased or stayed the same. Perhaps most encouragingly, nearly three-quarters of the top 100 integrators expect 2021 revenues to increase over 2020, by an average of 13 percent.
Markets & Technologies
How well a security integrator performed in 2020 was closely tied to two main factors: the diversity of their vertical market base, and the types of technology and services they offered.
No. 26 CTSI was one of the few who reported a stronger 2020 than 2019 due to “the necessity for more security projects to be completed because more people were working remotely and needed un-assisted building and business access at non-business hours.” The company cited their best growth opportunities as healthcare, public sector and detention facilities, while K-12 and corporate/enterprise were the worst performers. “Due to our diversity in markets and technologies served, CTSI weathered 2020 well. We rapidly pivoted to industry verticals and technologies in higher demand due to the pandemic,” they write.
WizNucleus, appearing on the list for the first time at No. 100, says that its market increased significantly in 2020 due to entering the critical infrastructure vertical. “Because we serve critical infrastructure our company was not significantly impacted by COVID-19.”
On the flip side, 3Sixty Integrated, No. 29, writes, “Demand was weaker in 2020. COVID-19 stopped and delayed many of our projects in motion along with new purchase orders. This happened across all our client verticals — education, retail, healthcare and financial.”
One thing top integrators had going for them in 2020 was strong relationships with their customers, which helped carry them.
“COVID-19 sucked the wind out of business development; reliance on customer relations was key,” writes No. 58 SCI Inc.
Others got by on the strength of their offerings, or by rolling out new ones.
“RFI survived 2020 by our fire and government compliance customers maintaining their test and inspection service contracts and our strong subscription services,” the company, ranked No. 15, comments.
“Given the pandemic and the impact on the economy, we saw companies more reluctant to spend money,” notes No. 39, CGL Electronic Security. “We saw customers doing what they ‘had to’ and not necessarily spending on upgrades and other ‘should do’ projects. We brought on some new technologies and solutions, specifically some hosted/managed access control and video offerings.”
This was a common response among the top 100. “In 2020 we had to pivot,” writes Ollivier Corp., No. 40. “We were heavily in the office market that was impacted by COVID-19. We moved into pharma and other manufacturing that were not impacted. … We grew our managed services business by over 30 percent.”
Managed services was also a focus for No. 53, Custom Alarm. “As we finished up 2020 there was an intentional focus on managed access control and we have seen positive reactions and a sharp increase in the number of interested end users wanting cloud services as businesses shift to more of their workforce working remotely and managing these systems from a cloud solution can more easily be accomplished. In the security industry we all understand the vast number of benefits with cloud services and are excited to educate our customers and see their positive responses.”
Post-COVID Predictions
COVID-19 shaped 2020 in ways no one saw coming; and it will continue to shape the security integration market for years to come, the top integrators predict.
“Post-COVID will be a roller coaster. Some companies will not be able to withstand the strain of the closures. 2022 will reflect the results of the pandemic,” writes No. 12, Advanced Electronic Solutions.
“My company is heavily connected with the commercial high-rise market; the trend to work from home, initiated with the COVID-19 epidemic, will certainly affect the occupancy rates,” says Key Security Designs, No. 90.
Strategic Security Solutions, ranked No. 43 agrees with that assessment. “We expect the overall electronic security landscape to fundamentally change as the economy resets to the new work from home model resulting from COVID-19 restrictions. We expect companies to need less office space since work from home has changed our customer’s real estate needs. We are refocusing our efforts to provide services and new ways to bring value to our clients.”
Technology needs are also shifting.
“As a result of the pandemic, we have embarked on a new digital world. Innovative products ensuring safety and security have become a priority for organizations worldwide and we anticipate additional growth within this sector for 2021 and beyond,” Convergint writes.
“COVID-19 will continue to impact the security integration business in the near term,” says No. 6, Tech Systems. “While challenges exist in getting back to normal, there are opportunities with new technology regarding health, hygiene, social distancing, contact tracing and touchless access. Overall, the biggest impact on our business will be in the areas of cybersecurity, cloud solutions, artificial intelligence, IoT and managed services.”
A3 Communications also predicts cybersecurity to be a strong need going forward: “We expect a large cybersecurity push across all verticals to ensure networks and devices are protected as well as managed remotely.”
It remains to be seen what the second half of 2021 will bring, but with widely available vaccine distribution, cases coming down and states and businesses opening up, there is a definite sense of optimism from security integrators.
“I fully expect that our business will be extremely busy and possibly overwhelmed in the second half of 2021,” writes TRL Systems, No. 36. “The greatest impact will be setting up our firm to handle the onslaught of business that has been on hold, along with new business that everyone will want completed as soon as possible.”
Charts
Source: SDM Top Systems Integrators Report, July 2021
Total North American revenue from systems integration for the 100 largest security integrators totaled $4.09 billion in 2020 from solutions such as design, project management, product, installation, programming, start-up and training sold directly to an end-user customer or through a tier of contractors. It does not include recurring revenue from services and monitoring, as integrators were asked to report that amount separately. A comparison between the top 100 companies ranked this year and the top 100 ranked in 2020 shows a 12 percent decrease in systems integration revenue. New systems were also down significantly, at 63 percent.
Source: SDM Top Systems Integrators Report, July 2021
Roughly the same percentage of security integrators saw their net profit increase, decrease or stay the same in relation to 2019, which is not bad, considering the chaos in 2020. Of those who reported an increase, the average increase was 33 percent. However, taking out those that reported 100 percent or over the average increase drops it to 11 percent, which is likely more accurate. Of those who reported a decrease the average was 12 percent, the same as reported last year.
Top Systems Integrators were asked, “How do you expect revenues in 2021 to compare with revenues in 2020?”
Source: SDM Top Systems Integrators Report, July 2021
After a decline in confidence last year as the coronavirus uncertainty took hold, this year’s top integrators are far more optimistic about their revenue outlook for 2021, with 74 percent expecting revenues to exceed 2020 earnings. Only 9 percent expect a decrease. Of those anticipating an increase, they expect an average of a 13 percent increase over 2020 revenues.
Among companies ranked on the Top Systems Integrators Report, these businesses reported the highest total revenue in 2020. The top five remain unchanged from the previous year, with the top two exceeding the $1 billion mark.
Top Systems Integrators were asked to break out their 2020 sales revenue by type of product. The single largest category of revenue from products is from “integrated non-residential systems” that combine two or more different technology solutions. This is followed by video surveillance at 18 percent, and access control at 15 percent of sales revenue. Top Systems Integrators are asked to assign percentages to each product category that makes up part of their sales revenues; these responses are averaged by each category.
Top Systems Integrators were asked to break out their 2020 revenue by type of service. The single largest category of revenue is from “system sales and installation,” comprising 53 percent of total revenue, followed by monitoring at 25 percent, and service contracts at 10 percent. Top Systems Integrators are asked to assign percentages to each service category that makes up part of their sales revenues; these responses are averaged by each category.
*average percentage distribution of staff among systems integrators based on 94 responses
This chart, which you can use to compare job titles in your own company with industry averages, shows the average percentage distribution of job titles among all responding Top Systems Integrator companies. Forty percent of jobs are comprised of installation and technical service positions.
North American systems integration revenue (as reported to or estimated by SDM) declined slightly to $4.09 billion in 2020, based on reporting from 100 Top Systems Integrators. This amount registers a 12 percent decrease. (Note: It is important to read the footnotes above when referencing the results of each year, because the addition or removal of a large security integrator can have a major effect on total revenue.) However, for integrators whose revenue could be compared year-over-year, total systems integration revenue actually increased by 17 percent.
Top Systems Integrators were asked to report the number of vehicles in their fleet and break them down by technical, sales and other. Ninety-three percent of vehicles were reported as technical.
These top market sectors provided the most significant portion of revenues to top systems integrators in 2020 ― and although the top three sectors remained the same as in 2018, transportation appears on the list at No. 8. For the past several years, corporate office space/property management, education, and healthcare have steadfastly been among the top market sectors for security integrators.
More From the Report
To gain additional information beyond that published in this issue and online, the complete SDM Top Systems Integrators Report & Database is available in Excel format. Included are mailing addresses, telephone numbers, website URLs, targeted vertical markets, branch office locations, and much more. SDM’s Top Systems Integrators Report & Database contains the information needed to target products and services to the systems integration market. It may be ordered by contacting Jacquelyn Bean at 215-939-8967 or by beanj@bnpmedia.com.
