2015 CI: State of the Industry Report

Over 80% say the business climate is favorable for integration firms, but positive numbers belie daunting industry challenges.

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Have you ever noticed that regardless of how the economy is performing, who the U.S. President is and whether it’s a time of peace or war, the State of the Union Address is basically the same?

There are certain beats at the beginning of their speech that each president hits every year. There’s the “look how far we’ve come” part; the “we’ve still got a lot of work to do” portion; the “we can do this!” element; and before the soliloquy devolves into policy speak they always wrap up the prologue with a dramatic, “Ladies and gentlemen, the state of the union is strong!”

That structure lends itself well to the CI’s 2015 State of the Industry Report:

    We stand here today a mere six years after a global recession began to put our resolve to the test. Some firms didn’t make it, but those who did stand stronger than ever.
    Over 80 percent of integration firms report that the overall business climate is good, very good or excellent as we enter 2015, and 54 percent report revenue growth of over 5 percent in 2014.
    We know that the road ahead of us remains uphill. We know that traditional sources of revenue are dwindling and markets are continually evolving.
    As integrators, that’s what inspires us. We’re prepared to rise to our clients’ technology demands while refining our back-office operations.
    The landscape for 2015 won’t be without challenges, but in this industry challenges are like currency. Integrators exist to solve problems that aren’t easy to solve. That’s what bands us together as an industry.
    And ladies and gentlemen, the state of the industry is strong!

That’s the epitome of a “glass is full version” perception, and in many ways it’s backed up by CI Research’s and NSCA‘s survey of 137 integrators and consultants. Almost 45 percent characterize the overall business climate as “very good or excellent.” Only 9.7 percent say their company’s revenue was down in 2014.

Meanwhile, the pro AV industry “is growing at a faster rate than the economy,” says InfoComm International executive director David Labuskes. The global gross domestic product (GDP) grew 3 percent annually over 2012 and 2013, but the global pro AV industry grew 10 percent annually over that time, according to InfoComm and Acclaro Growth Partners’ 2014 AV Market Definition and Strategy Study.

When it comes to actually running an integration business, however, Labuskes is quick to point out, none of these rosy figures matter.

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“The reality for our integration members has very little to do with the GDP or macroeconomics. It has to do with how hard is it to do work every day, how challenging is it to keep the doors of your business open or to grow your business. And I think it would be so silly for anybody not to acknowledge and recognize that we have a really hard business. There are an extraordinary number of challenges faced by integrators every day.”

To borrow another presidential speech theme, it seems there are two integration markets; things are going well for the firms in one group and the reality is much different for the other.

Chuck Wilson, executive director of NSCA, estimates that he talks to 10 integrators per day. “For every two companies that are doing great, there’s one doing badly,” he says. There’s an element of good project-versus-bad project luck involved, but in many ways the integration firms that are benefiting from the market recovery have made their own good fortune, Wilson says.