System integrators earn their keep

Back when industrial automation was still just an offshoot of the electrical equipment industry, automation vendors viewed product sales as the only path to profits. They often had to give away technical services to close those sales. Their products were all proprietary and only their own engineers knew how to work with them.


Back when industrial automation was still just an offshoot of the electrical equipment industry, automation vendors viewed product sales as the only path to profits. They often had to give away technical services to close those sales. Their products were all proprietary and only their own engineers knew how to work with them.

That scenario has changed. Thanks to open systems technology and dramatic price reductions, many automation products have become commodities. Only a handful of product vendors continue to offer design, installation, and start-up services.

Many more vendors are turning to third-party engineering firms, such as system integrators, to provide the technical services required by prospective product buyers (See 'Integrator Partnership Programs Offer Pros and Cons,' CE 2000 Automation Integrator Guide , mid-Dec., '99, p. 6). Software vendors in particular have become dependent on system integrators as a sales channel-some for as much as 50% of total revenues.

A majority of system integrators
listed in Control Engineering's
Automation Integrator Guide
have earned less than $10
million annually over the last
three years, but an increasing
percentage are earning more
than $10 million.

Show me the money

So, is money being made in the service sector of industrial automation? Contract engineering firms listed in Control Engineering's Automation Integrator Guide- at -report generally steady growth in annual revenues in recent years. A growing percentage of integrators are earning more than $10 million annually.

Independent system integrators that are members of the Control System Integrator Association (CSIA, Exton, Pa.; ) estimate their U.S. market at $1.3-$1.6 billion per year. A recent survey of CSIA members revealed that larger integrators have been especially successful over the past three years. CSIA adds the driving forces behind this growth include continued downsizing of; rapidly changing and increasingly sophisticated technology; and users desiring independent expertise and turnkey responsibility.

Knowledge is profit

An independent survey by Bull's Eye Marketing (Fond du Lac, Wis.) reveals functions that system integrators find most profitable. Not surprisingly, the list is topped by activities that require the most experience and technical skill, such as custom programming, networking/communications, and system design. Moderately profitable activities include system installation, CNC applications, and maintenance. Documentation and panel assembly were ranked as the least profitable activities.

The study, 'Industrial Automation and Control System Integrators,' adds the respondents' anticipate demand for a wide range of automation products from sensors and actuators to controllers and HMI software. Over the next five years, integrators expect to increase their product purchases by an average of 149% across all product categories. No wonder automation integrators seem optimistic about future business prospects.

Although they pay comparable salaries, larger system integrators have consistently generated more sales per employee than smaller ones.

For more information about the Automation Integrator Guide contact Vance VanDoren, consulting editor, at . Contact the CSIA at and Bull's Eye Marketing at

No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
Each year, a panel of Control Engineering editors and industry expert judges select the System Integrator of the Year Award winners.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Learn how to create value with re-use; gain productivity with lean automation and connectivity, and optimize panel design and construction.
Go deep: Automation tackles offshore oil challenges; Ethernet advice; Wireless robotics; Product exclusives; Digital edition exclusives
Lost in the gray scale? How to get effective HMIs; Best practices: Integrate old and new wireless systems; Smart software, networks; Service provider certifications
Fixing PID: Part 2: Tweaking controller strategy; Machine safety networks; Salary survey and career advice; Smart I/O architecture; Product exclusives
The Ask Control Engineering blog covers all aspects of automation, including motors, drives, sensors, motion control, machine control, and embedded systems.
Look at the basics of industrial wireless technologies, wireless concepts, wireless standards, and wireless best practices with Daniel E. Capano of Diversified Technical Services Inc.
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
This is a blog from the trenches – written by engineers who are implementing and upgrading control systems every day across every industry.
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Control Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.