Repost from Axis Communications
Total cost of ownership, or TCO, is a way to assess direct and indirect costs and benefits related to the purchase of any IT component. The goal is to create a total estimate of fixed and variable costs that may be used for budget development.
Based on J.D. Roth’s vehicle purchase price ($16,500), interest paid ($1,300), actual mileage (82K over 5 ½ years), fuel ($1,650, $0.0812 per mile), insurance ($765, $0.0376 per mile) and service ($507.07, $0.0250 per mile), the actual TCO/mile is 36 cents, pretty much the same as the AAA estimate.
In The Millionaire Next Door, one of the best-performing groups in terms of personal net worth were “quality used car prone” people. These folks buy a car with an excellent service record that is 3 to 5 years old and drive it for many years, contributing to very high net worth.
With security solutions, purchasing compliance, quality, efficiency and stability is not too far off from our “millionaire.” Purchasing a lower cost video surveillance camera may not be very efficient in digital storage when compared with next-generation compression technologies like Zipstream.
Significantly more efficient implementation of AVC/h.264 video encoding, and purpose-built for surveillance applications, Zipstream compression technology analyzes and optimizes video in real-time to save bandwidth and storage while maintaining image quality. This technology makes it possible to use Pan-Tilt-Zoom cameras for optimum viewing on demand while reducing storage requirements. Important forensic details such as facial features and vehicle plates are preserved, while scene elements that stay constant like walls, land and other surfaces are rendered at a higher compression.
In the figure below, the amount of storage space reclaimed by using cameras having Zipstream offers users the choice of longer recordings or adding additional surveillance cameras for enhanced coverage.
Would you buy a smartphone or tablet with applications only developed by the platform vendor? Such is the value of application developer programs managed by the device, offering a wide range of choices. For example, Axis Communications Camera Applications Platform (ACAP) allows video analytic solution providers (like those shown below) to offer unique processes that run inside the camera and increase the value of the data:
- People counting – allocate staff with customer activity patterns and temporal behavior
- Vehicle License Plate recognition for remote gate control and monitoring from mobile security officer or centralized location – better staff allocation and employee security experience, increased parking revenue
- Long Range Object Detection – early warning of perimeter breaches for high risk and critical infrastructure facilities
- Perimeter Intrusion Detection alarm confirmation (two modes) for reducing the costsassociated with false alarms
- Smokecatcher for early warning of a potential life safety issue
- Acoustic signature detection for rapid response in active shooter scenarios
Each of these are permitting the end user to leverage security solutions, collaborate with other departments and achieve lower TCO.
There are numerous software costs to be considered in our project and the details grow in just the application category. Security applications at the start have a number of complex costs:
- Software licenses: consider group and per-user models
- Server and infrastructure costs: yes, consider eliminating this by leveraging the cloud
- Customization to meet needs: do you really want to do this? You may be in for both a shortened application lifecycle if customizations prevent upgrades to the base product, more expensive upgrade costs or worse yet, full replacement.
- Professional services make the software functional in your environment
- Training costs
- Thin client and other user software user interface needs
- Annual software maintenance costs
- Internal costs to support the application
- Planned upgrade costs for enhanced functionality (usually every 2-3 years)
- Improved productivity and metrics
- Mobile alerts and functionality
- Collaborative interdepartmental tools
- Matching solution provider innovation to the organization’s success trajectory
I've done my TCO analysis, now what?
Today’s powerful micro computing platforms can run entire video management systems on a lower cost device that can be distributed and located closer to the cameras. IT departments currently do not consider these devices to be servers, requiring significant maintenance and lowering TCO. In a distributed platform video could be recorded without streaming continuously over a city-wide or corporate network. The result is improved quality for evidence and significant reduction on bandwidth, scalable cost savings.
What’s next and how do you stay ready with your plan to reduce TCO?
Ask questions. What is happening at your business that may increase costs or improve your processes?
Define targeted use cases by examining your key business problems. These are the things that cost your company the greatest; by taking ownership of a program to leverage your security plan and reduce these “time suckers,” you’re on the way to lower TCO.
Critical Infrastructure facilities require both physical and virtual perimeter protection. Reducing false alarm costs is one opportunity that comes up in conversation over and over. With the previously described Axis Communications Camera Applications Platform (ACAP), video analytic devices can work together and “confirm” alarms before transmission, decreasing the amount of work for security staff.
Cyber protection against intrusion and exploits is critical; DDoS attack prevention vital. With healthcare, it may be customer PII, retail, credit card data, etc. Help your team develop a sense of ownership with the employee, visitor and contractor community; potential predators will perceive your facility as a non-viable and non-vulnerable target and may move on.
Using early warning tools like gunshot detection, vocal aggression, social media and location-based solutions can potentially reduce the ultimate TCO: you might be shortening the time first responders need to save a life at your facility.
 “The True Cost of Car Ownership”, J.D. Roth, Internet, 6/2016 http://www.getrichslowly.org/blog/2006/05/31/the-true-cost-of-car-ownership/