As both security systems and customer requirements continue to evolve, the real cost of security systems is being more comprehensively scrutinized. Organizations are realizing that only considering acquisition costs is short sighted. Equally important, or even more so, is evaluating cost over the lifespan of a system. The Total Cost of Ownership (TCO) is the best way to accurately analyze and compare competing solutions.“Do more with less.” That’s pretty much the message security managers and IT directors hear these days. On the one hand, security now ranks high on the agenda of most organizations; on the other, shrinking budgets pose a real challenge to deploying the security and surveillance systems they need. Fortunately, when you take a deeper and longer-term look at the economics of surveillance systems, a different picture can emerge — one that makes a lot more sense from a financial point of view.
Why TCO matters
The definition of TCO is a calculation of all direct and indirect costs associated with an asset over a defined lifecycle. In other words, TCO is the sum of all costs associated with the system, both capital expenses (CAPEX) and operational expenses (OPEX).
So what makes TCO as or more relevant than a system’s purchase price? The answer is – it takes into account operational costs, which in many cases are higher when compared to capital expenditure.
Here’s a simple example of why TCO is critical. A mid-range video surveillance server costs about $3,000. To calculate its TCO over a five-year period, let’s assume the estimated OPEX-per-server footprint is around $1,000 annually, which includes all associated expenses such as installation, floor space, maintenance, power, and ventilation. So in this case, over a five-year period the TCO is $3,000 + $5,000 (5 X $1,000) = $8,000. The insight here is that the OPEX component is substantially higher than the CAPEX, comprising more than 60% out of the overall TCO. This shows the relevance and importance of using TCO as the criterion for analysis and cost comparison as opposed to CAPEX only.
Yes, optimizing the TCO for surveillance systems is possible
So now that we’ve established the importance of TCO in determining the real cost of a surveillance system, you’ll want to know how to reduce it. A good start is minimizing the CAPEX component. Having skilled negotiators on your team to get better prices certainly helps, but there are also a few other things you can do.
Start with performance
It is very important to define performance figures and verify that proposed servers can support up to 512 Mbps of recording, while supporting an additional 256 Mbps for live and playback operations, enabling you to serve hundreds of video channels on a single server. By doing this, you will decrease the number of servers you need and save substantially on the associated CAPEX.
Consider hybrid solutions with value-added services
Many organizations with existing analog cameras are struggling to find the necessary budget to replace and upgrade to today’s advanced IP camera security systems. In many cases analog cameras still provide good video quality, and the cost to replace them in a large-scale deployment is extremely high.
While DVRs have become outdated in the last five years, and replaced by much more advanced video recording and storage technology, it is now possible to cost-effectively migrate a legacy analog solution with the significant benefits of hybrid Smart Video Recorders. Hybrid recorders offer a wide range of video value-added services that improve video quality and integrity, and increase operational efficiency with state-of-the-art management and IT-friendly capabilities.
Main TCO Factors:
Now to OPEX
While reducing CAPEX is a big step towards lowering overall costs, we know that the OPEX portion is a key component in the total cost equation. If you’ve gone ahead and reduced the number of servers and storage devices by deploying enterprise-class, extreme-performance solutions that support value-added services, you’ve automatically reduced your solution’s footprint.
The math is simple. Reduce the number of servers your solution uses by 70% and you’ll reduce the solution’s footprint by the same amount. Bottom line, you’ll save 70% in OPEX costs annually.
One of a security manager’s main objectives is ensuring 24x7x365 operability of their surveillance systems. So pay special attention to the design of the system’s reliability and resiliency, including all components, applications and services, as well as the IP network infrastructure. As the market rapidly moves toward IP-based video surveillance systems, the resilience of video surveillance systems is strongly dependent on the IP network.
Maintenance costs are a significant portion of an organization’s expenses. Obviously, a surveillance solution with low maintenance overhead is always preferable. Look for things like easily deployed software, the use of automated software distribution tools to reduce the maintenance load when performing version updates and upgrades. Another important feature to have is a simple-to-use dashboard with all of the install base’s information. This will let you easily monitor performance and CPU usage.
The green factor
Besides costing much more money, legacy systems consume more electricity and generate higher CO2 emissions. Moving to a new generation of solutions, which are both space and energy efficient, will save a significant amount of power and result in a greener environment.
Looking at the bigger picture saves costs
Despite the budget crunch and new, stricter security procedures and requirements, there is light at the end of the tunnel. Advanced systems with an overall reduced TCO are now available.
As we now know, purchasing a surveillance system is not strictly a matter of acquisition costs. Make sure you consider an efficient design and implementation process; extreme performance; the benefits of a hybrid solution; along with high-reliability solutions and a comprehensive maintenance offering. The bigger picture is definitely a brighter one.