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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“They’ve developed a market or niche that has really worked out great for them,” says Wilson. “The companies that have found their niche are doing something that’s replicable; they can scale their systems up or down, be nimble and be known as the go-to [company] for that system type.”

“Those companies are doing very, very well, and their limitation is only in looking for people who are right for their organization,” Wilson continues. “They’ve got good investment, good vision, good leaders. Those [firms] all seem to be doing better.”

On the flip side is the “traditional AV system integrator,” Wilson says. “The majority can find work, but they just can’t find the profitable work that isn’t beaten down by too many competitors.” As much as the firms doing well can be credited with making their own luck, many firms in this other group made decisions that cost them.

They’re “the ones who didn’t make the transition into the networked environment that we’re in,” Wilson says. “Those are the ones that I think are struggling the most and they’re trying to figure out how they can keep their margins and keep their labor rates up while they realize their relevance is diminishing by their own self-limiting restraints that they have on their company.”

So, yeah. The market numbers look good. But in the trenches integrators know that growing their businesses in 2015 means an uphill battle.

Glass Half Full: The Numbers

There’s no question that CI Research’s and NSCA’s survey of 137 integrators and consultants reveals an industry in which things are trending positively.

“Right now, it’s looking better,” says K.C. Schwartz, CEO of industry member support group USAV. “The early part of 2014 was really tough and had everybody worried. It seems to have righted itself somewhat and the numbers from the third and fourth quarters seem to support the optimism.”

The year ended with 29.3 percent of surveyed integrators estimating that their revenues are up at least 11 percent in 2014. About 40 percent of surveyed integrators say that their in-house project backlog level is higher than it was a year ago, providing some nice momentum entering 2015.

View the results of the 2015 Business Outlook Survey here.

Another good sign is that the positive trend seems to “cross times zones,” according to Chris Miller, executive director of industry member support group PSNI. “If you have a diversified solution set out there, there is business. It appears to be robust across the time zones right now.”

The opportunities appear to span across most vertical markets, too. The corporate market — which is by far the largest customer segment, according to InfoComm, representing 30 percent of the global commercial AV market — is trending upward, according to 52.7 percent of those surveyed by CI Research and NSCA, with only 3.1 percent indicating that the corporate market is down.

The second most positive sector is education with 41.3 percent of respondents indicating that market is up. Only two markets saw roughly the same percentage of respondents indicate that they’re trending “downward” as “upward” — house of worship (HOW) with 18.1 percent down and 19.8 percent up and transportation with 16.5 percent down and 13.6 percent up.

Glass Half Empty: The Challenges

It goes without saying that businesses can’t sit back if they intend to grow and evolve with market demands, but integration industry leaders seem to put an exclamation point on that directive as 2015 begins.

However, it’s at the lean-forward stage when many companies get into trouble by not properly strategizing. Strategic planning for growth should include equal parts technology and business support for that technology.

NSCA’s Wilson spent a lot of time on the road during 2014 talking to integration firms about what he sees as five disruptive business communications technologies — unified communications, BYOD, IP video networks, integration of AV and life-safety systems and the cloud.