Total Cost of Ownership is a hot topic in security circles and frames a dialogue that manufacturers are increasingly having with specifiers, installers and end users alike, writes John Davies. The days of shifting cheap boxes are long gone as the market, very sensibly, has focused on the fact that there’s far more to procuring a suitable security system than just the initial buying cost.
We all know that the increased integration of systems – along with Internet of Things technology – has radically changed the security market. Few security systems sit in isolation any longer and end user expectations are that they will become an integral part of the organisation’s IT systems.
This has understandably shifted the spotlight towards Total Cost of Ownership (TCO) as security systems have moved from a (sometimes) grudge purchase to become a vital part of the host company’s infrastructure. Certainly, from the suppliers’ point of view, we’re seeing a keen interest in TCO from both end users and installers with the benefits often overlapping.
From the end user’s perspective, naturally they want their security purchases to solve their actual needs and to do so both practically and economically. Invariably, in the past security operators were hung up on initial cost and tenders were often awarded for the lowest price products. In my view, this was always a rather short-sighted way of looking at security procurement. It paid little attention to the overall suitability of the products being used for the tasks at hand.
With the benefit of hindsight, many end user security operators are now realising that, when they made decisions based purely on initial cost, it tended to go one of two ways – either the purchase budget was limiting the capability to deliver the full solution or, ultimately, the task of delivering the full solution was becoming far costlier as extra resources were required to make it work.
Imagine an organisation that wants to join up two security systems and manage them from one control point. If the integration is chosen on cost alone, there could well be two (or more) different software operating systems having to work together, rather than the whole integrated solution being run from one or the other. This makes the whole solution inefficient and likely to fall short of the operator’s expectations and requirements.
More pragmatic approach
Over the last three or four years, we’ve noticed that this blinkered approach has changed markedly. The mindset of choosing products or a supplier simply based on the aspect of initial cost has given way to a far more pragmatic attitude focused on the desire to understand the overall impact in terms of cost, performance and Return on Investment. End users are becoming a lot more focused on true interoperability and the genuine integration of products and not being fixated on the initial costs of ownership.
We’re working on many tenders with our installers and M&E contractors where the project specifications focus on one-year, three-year, five-year and even seven-year costs. These factors are considered to be crucial in the tender response evaluations. At the same time, there’s a good deal more weighting being given to the ongoing maintenance side of these solutions as well.
From the installers’ and M&E contractors’ point of view, there’s naturally still a keenness to promote good TCO for customers. On a more direct level, the feedback we’re receiving is that there’s also a palpable demand for systems that are easy and quick to install and integrate. If installers have to use three or four pieces of software to power a solution, it takes far more time to install and commission, and therefore it ultimately costs the end user more as well.
This is where the benefits to the installer and end user become closely aligned. If installers can use one system to bring the entire security solution together, it saves them significant time on site. Saving time means saving more money. The installation becomes more cost-effective and more competitive for tender evaluation. If system installers can provide a good service at a competitive rate then everyone’s a winner.
At the end of the day, the best security installations obviously involve providing the best products or services at a better rate, but not necessarily using cheap products to achieve this. It’s about the whole ecosystem and how easy it is to commission, as well as the ability for it to continue operating at an efficient and effective level moving forwards.
Naturally, providing best value installation is only the beginning when it comes to offering true TCO benefits. Well-integrated systems will offer additional value that may not be immediately obvious to end users. For example, an access control system can collect movement data that may be integrated with HR systems, saving on data collection costs. If security systems are linked to environmental controls, they can also be used to regulate and check lighting, heating and ventilation systems so as to reduce wastage of resources.
Equally, integrated security systems can help with fire and evacuation procedures. There are obvious benefits in terms of protecting people and property, but equally so these systems can improve TCO by reducing the need to fit separate surveillance systems purely for these functions.
As they oversee an entire facility, security systems can offer end users unrivalled insights into the movement of people and daily operations of the organisation. Security providers need to promote this advantage and use it to demonstrate compelling TCO through value-added services. This is a far more sustainable business model for us all, rather than simply providing cheap security solutions.
Ongoing software costs
Arguably, software is one of the most valuable and vital security commodities. We all know that few security systems could run at all without the right software, so end users need to appreciate that it’s an ongoing investment every bit as much as cameras, sensors or access control hardware. Customers also need to realise that software demands regular maintenance and upgrades, just like hardware.
When talking to end users about software, security professionals need to underline any annual licensing fees that will need to be factored into TCO. It may make more sense to choose a product that requires a higher initial payment, but then offers ongoing support and updates as part of this initial fee.
End users must also be shown the importance of considering how well the software integrates with other data management tools to streamline updates and enable systems to work together more easily. Sharing data not only improves performance, but also reduces costs through better efficiency across the board.
As well as the purchase and installation costs of security systems, there are also less obvious elements that end users can miss. These include requirements for equipment space, training costs, future upgrade costs and ease of use. Obviously, any additional time/effort required for use has a cost attached. For example, cloud-based systems often incur an annual licence fee, but they save in on-premise infrastructure costs, internal IT staff, maintenance and cyber security – all reducing TCO. These are not obvious costs or savings, but they soon add up.
Another important aspect of TCO is whether solutions will continue to offer acceptable levels of service for their expected lifespan. For instance, systems making use of Artificial Intelligence and Augmented Reality are rapidly becoming more affordable and offer realistic performance gains that save on human operator time. These systems will inevitably cost more in initial capital costs, but the savings in terms of running costs could easily recuperate this in a short space of time.
These systems are also more likely to last for a longer service life and will help to reduce further investment needs, certainly in the near future anyway. Security providers need to remind end users that it often makes far more sense to invest in emerging technology rather than cheaper systems that will become obsolete more quickly.
Fully understanding the TCO of a security system can be a complicated task for any end user business. However, when these systems are such an integrated part of any business’ IT network, it’s important for end users to weigh up the options and ensure that, whatever solution is chosen, it really does offer the best value possible.
In the past, when security systems were specified and installed in isolation, it was much easier to look at the costs involved. Often, this was the total cost of the hardware required, which may have pleased the accountants, but usually only offered a two-dimensional view of TCO. Inevitably, this sometimes realised inferior solutions being purchased in the misguided belief that this would save on overall costs.
The security industry is very well placed to help end users assess their needs and balance these with an impressive level of TCO which provides a more honest saving on the bottom line. At the same time, there’s a perfect opportunity for security providers to build greater trust with their customers.
John Davies is Managing Director of TDSi