How Marketers Should View the State of the Tech Integration Industry

As our “About” page says, M2I sprung up from our experience running such integrator-facing sites as CE Pro, Commercial Integrator, Security Sales & Integration. One of the most valuable features of those websites is the extensive, research-heavy “state of the industry-” style reports they create; each of them chock full of valuable market data. The problem for marketers who target integrators, however, is that those reports all come out at different times and target different sections of the industry. 

So, we’ve decided to synthesize the most important points found in all that research here in one systems integration industry overview. 

Residential tech integration: pandemic-who? 

The custom electronics industry, unlike the commercial and security spaces, actually saw impressive growth over the past year despite the global pandemic’s effects on just about every conceivable aspect of life and business. 

As our sister site CE Pro reports, these businesses saw an 11.5% increase in revenue on average — despite nearly half of all pros working from home throughout 2020. About 70% of CE integration companies did not even furlough a single employee during the crisis. 

Part of this was due to the fact that integration companies were deemed “essential” by the federal government early in the COVID-19 pandemic.  

“Without custom integrators providing the backbone in the home for connectivity and entertainment, homeowners would have suffered much more than they might have,” says CE Pro Chief Content Officer Jason Knott. 

Biggest challenges 

Home networking and IT installations were listed as the most-anticipated technology categories for installations this year, followed by surveillance cameras, video doorbells, and access control products.  

But what about challenges to the CE landscape? 

“For the first time in a decade in the survey, the lack of labor was not listed as the No. 1 challenge dealers face. It was supplanted by ‘unprofessionalism’ in the industry,” CE Pro’s report says.  

Manufacturers and software providers may not be able to help much with that particular problem, but maybe they can attract dealers’ attention by addressing these other concerns: 

• DIY/Tightening Equipment Margins – The ever-growing consumer/DIY electronics market is bad for CE business…from the perspective of both integrators and manufacturers. While neither side of the business chain wants to bring prices down to compete, true value can still be forged in other areas such as reliability, advanced customer support, attractive package deals, and user training. 
• Electricians Encroaching in Custom Electronics – Again, dedication to the CE channel could be a differentiator in a market where more people are competing for the same jobs.  
• Manufacturer Consolidation – It seems integrators tend to view manufacturer mergers & acquisitions with a healthy dose of skepticism. If your company is seeking to grow through M&A, remember how important it is to maintain your image with dealers and ensure that none of your dealer-cherished programs and services are compromised by corporate restructuring. 

The increasingly-tight labor pool has reached a crisis situation post-pandemic for most, if not all, residential custom integration companies, according to Knott. He says the cottage industry is mostly made up of small entrepreneur-run companies that do not have the expansive resources that larger employers have to attract new talent.  

“Manufacturers and distributors serving the industry are in communication with dealers daily. They can help elevate the entire market by connecting available labor with potential employers, whether that an individual technician looking for full-time work or making sure other integration companies know that if they have a lull in a big project while waiting for other contractors to finish their portion of the job, they can share their staff with other local dealers to keep them busy,” he says. 

Commercial tech integration: bouncing back 

The commercial side of the market was far less lucrative this year, with entire vertical markets defunct for considerable stretches of time as schools, corporations, and retailers were figuring out a new way to operate. Live sound and production – an industry in itself – came to a complete halt and still isn’t back from the brink just yet. 

Insert Segment4 pic; Credit: Commercial Integrator research 

According to our sister site Commercial Integrator’s State of the Industry Report for 2021, over 40% of integration firms said their business was down more than 5% in revenue over 2019, with 18% saying they were down less than 5% and about 12% saying their revenue stayed the same. 

Optimistically, 25% said their revenue was up at least 5%. 

More good(ish) news: there’s no doubt that at least five years of tech innovation was – by necessity – crammed into the final nine months of 2020. 

Biggest challenges 

Commercial integrators are going to have a more significant seat at the table than ever before when it comes to digital transformation, says Commercial Integrator Editorial Director Jonathan Blackwood.  

“Prior to COVID, integrators were helping implement systems that could establish more effective collaboration and communications,” he says.  

“But moving forward, these customers will be venturing into a new workplace that is undefined. Organizations need to find ways to make hybrid collaboration and communication happen, where employees are just as effective in the office as they are working remotely. Integrators can play a key part in these decisions because they’re the experts in making the technology work together.” 

Where manufacturers come into play, Jonathan says, is helping to facilitate the structuring of these systems. Not just in the products they provide, but in the service, customer support, and partnerships they can build for integrators. That’s their key differentiator in this market. 

Security systems integration: surveilling opportunities 

It wouldn’t be fair to say that the security integration industry took advantage of 2020 uncertainties, even as these company’s clients grew more concerned about security and, correspondingly, sales started to increase.  

It’s probably more accurate to compare the situation to the success of platforms like Teams and Zoom: they were useful in 2019; but in 2020, they were almost essential. 

Many respondents in this research from Security Sales & Integration said they’re currently working on making their business more efficient – which appears to be a theme across integration firms in each of these major categories.  

It seems that efficiency – whether it’s purchase efficiency, ease of install, or a customer support system that goes the extra mile – is the most valuable trait an integrator can hope for in a manufacturer partner.  

It makes sense: these companies are looking for stability more than anything right now, and one of the ways they can achieve that is through dedication to a “more work, better” mindset.  

Another common theme: looking for new sources of revenue. In security’s case, contactless access entry tech is a promising category. Cloud and Security as a Service are also picking up steam as more businesses work remotely. 

Biggest challenges 

The biggest challenge for most security dealers and integrators is finding qualified or even raw but promising new talent to fill an abundance of positions, says Security Sales & Integration Editor-in-Chief Scott Goldfine.  

“While manufacturers cannot help them with that directly, they can help them in myriad ways to maximize efficiencies across their business, sales & marketing, installation, service and monitoring operations,” he says.  

“Providing products that are easier to install, fail less, have better support, offer remote diagnostics, are easily integrated, are cybersecure and user friendly — all goes a long way to helping dealers be more efficient, work smarter, and do more with less. Taking those types of factors into account will forge a true partnership among channel constituents.”