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What Is the Average Operating Margin for an RFID Systems Integrator?
Wow, that is a tough question—one for which I really don't have a definitive answer.
I would estimate that it varies from project to project, but probably is around 10 percent. Many systems integrators have had trouble finding business on a consistent basis, since RFID is still relatively new for most companies and because they adopt the wrong strategy. Many integrators bounce around from one project to the next, even if they are in different industries, making it difficult to leverage existing clients to obtain new business. Some of the most effective companies have focused on a single industry, developing a deep knowledge of the business issues faced by that sector and the solutions necessary to address them.
Another problem that a lot of systems integrators run into is that they attempt to transition too early to becoming a software company. The attraction of being a software firm is that you can attain a higher earnings multiple when you sell your business. But during the early stages of the market, the most successful business model is to be an integrator. As a new technology enters the mainstream, only then should you start selling software out of the box.
—Mark Roberti, Founder and Editor, RFID Journal
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