Total cost of ownership: are you really getting the best deal when it comes to CCTV?
Article written by Steven Kenny, business development manager for the A&E Programme at Axis Communications. A common misconception when purchasing almost any business solution is that the upfront cost will make up the sole, or at least a large majority, of a project s total outgoings. This is a dangerous way to approach a procurement decision, often leading to issues such as unexpected operating fees, product failure and worst of all, downtime.
For this reason, when calculating the total cost of a project or assessing a tender, it s extremely important that businesses analyse the Total Cost of Ownership (TCO) to help make the most informed purchasing decision. In specific regards to network video, we define TCO as a selection of relevant costs associated with a video surveillance solution through its complete lifecycle . The important message here is this is in reference to the complete lifecycle, including the whole cost of acquisition, the entire operating cost and the total decommissioning cost. To understand the importance of TCO as a consideration within network video procurement, we developed an example large-scale city surveillance project, comprising of 1,500 outdoor cameras and an enterprise-class video management, network and storage solution. Our analysis discovered that 67% of the total cost came in the acquisition phase, 31% during operations and 2% in the decommissioning stage. Zipstream: less is more The surveillance industry is constantly under pressure to capture more and capture it in more detail and better quality than ever before. While the quality of camera resolution has advanced at a remarkable pace, businesses have struggled to cope with the associated large amounts of data storage requirements. As a leader in innovation for the sector, Axis released its very own compression technology, lowering bandwidth and storage requirements by an average of 50% for a typical 24/7 surveillance use case. In Axis original city surveillance project TCO estimations did not include the use of Zipstream, but the effect of utilising this within the project shows significant cost savings during the operational stage, a 3% reduction.
With the projected cost for large installations of this nature standing at $17,000,000, that 3% holds some weight, equating to a saving of $450,000, or $300 per camera. Maintenance beyond system installation Costs that can t afford to be overlooked are those associated with maintenance and repair. Playing a significant role within the operational stage of any TCO analysis, these totalled 5%, or $800,000 in our example project. Of course, this figure is totally dependent on the quality of the solution in place. The importance of product reliability is often underestimated when maintenance costs are taken into consideration, leading to unexpected outlay or an even more expensive burden system downtime. Axis products are designed for performance and reliability, enduring a rigorous testing process to ensure they can withstand extreme conditions. The quality of the solution was shown to have a significant impact on the project s TCO. If failure rates were increased by a factor of four within the city surveillance project, for example, the cost of system failure would jump from 5% to 13%; $800,000 to $2,300,000. Testimonials Here s what some of our customers had to say: We ve installed 4,500 cameras and haven t had a single problem We had a return rate of less than 2% in seven years Our blind testing revealed that Axis cameras have less than 1% failure rate, compared to cameras from other vendors which generally had a failure rate of between 4 and 5% The system has been operating for three years now and has maintained its original reliability and quality Greater insight, informed business decisions At Axis, we believe it is essential businesses invest in the quality of their surveillance projects but also in the time to conduct a thorough TCO analysis.
A solution with a low initial price point can often seem like an attractive offer, with the full costs attached to its operation not understood until months or years down the line. With due diligence applied, a TCO is an extremely useful tool when calculating projects or assessing tenders, providing visibility of an investment over the system s entire lifecycle. This helps to ensures a business has the correct intelligence in place to make an informed purchasing decision that will stand the test of time.
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