Video: Use TCO to Make the Cloud Storage Sale

A pitch focused on Total Cost of Ownership can make a compelling case when comparing hosted and onsite storage

For AutoWorld, you could demonstrate that 1-4 camera installations, over a 10-year foreseeable horizon, would recognize a nearly 9-percent cost benefit by moving to a cloud-based storage solution. This forecast acknowledges the cost of installing a local storage-based system, costing approximately $29,100 in 2014, when contrasted to the $15,900 cloud-based storage solution cost of ownership, demonstrating an annual savings of $13,200. By year 10, AutoWorld’s cumulative savings is nearly $45,900, due to the efficiencies of the cloud-based solution (cumulative legacy cost at the 10th year: $514,200; cumulative cloud-based storage solution cost: $468,300).

For HealthLife, even more dramatic cost savings is found in the TCO. In this case, the client’s buildings would require approximately 40 cameras per site, representing year-one costs of $118,000 (local storage solution) vs. $83,400 (cloud-based storage solution), demonstrating an upfront cost benefit of $34,600, or 29.3 percent. By the 10th year, a much more compelling picture can be presented to your client by showing a cumulative savings of nearly half a million dollars ($473,000) over the life of the project, by going with the cloud-based solution.

Obviously, a security director who demonstrates this magnitude of savings will undoubtedly hold influence over organization and management.


Question 2: What quality level camera and recorder?

The quality of the cameras used in the installation may substantially affect the TCO comparison between local storage and cloud-based storage. Cameras come with a dizzying array of features, such as scheduled or motion detection-driven recording options, H.264 video compression, pan/tilt/zoom using a joystick and Power over Ethernet (PoE); however, resolution (Low – 640x480, Medium – 720p or High – 1080p) is still the key differentiator in terms of camera expense.

AutoWorld can save nearly $3,000 by going with cameras with lower specifications; while over the 10-year period, HealthLife would recognize nearly $15,000 savings in TCO by reducing image quality to 640x480. The difference in cost can be used either to highlight the relative price parity between low and high, or to support the thrifty selection if client need is not there.

The selection of DVRs and NVRs is one that is largely dependent on the client’s technology tolerance as well as their budget. When your client selects DVRs and NVRs, the quality component represents a pretty limited difference between low and high resolution, so in evaluating the TCO, you can of10 push the higher resolution option based on the overall feature benefits. Remember to match the capabilities of the cameras and storage.


Question 3: How of10 will DVR/NVRs be replaced?

Depending on wear-and-tear and storage capacity, the lifespan of a DVR/NVR can vary. Many feel 5-6years is a good turnover rate, taking into account storage unit warranty coverage periods.

If AutoWorld replaced DVR/NVRs at a rapid pace (every two years), it would see a dramatic savings of almost 15 percent ($89,900) using the cloud storage solution vs. local storage. If AutoWorld expects a 10-year life from its DVR/NVRs, it will recognize a $32,260 savings in the cloud. Somewhere in the middle — 6 years — reveals a $41,000 savings from the cloud solution, a strong rationale for the company’s security director to select cloud over local-based storage.

For HealthLife, an every-two-years replacement would result in cloud storage providing a savings of around $723,200 vs. the local storage option. The difference is less evident as the pace slows, showing that the hospital that expects a 10-year life from their DVR/NVRs would recognize nearly $397,300 in savings. At 6 years, the company benefits from around $461,000 savings.


Question 4: What is the total cost associated with off-site storage?

Calculating TCO when it comes to off-site storage is relatively simple — the cost is eliminated. Thus, a security director spending $5,000 per year on off-site storage will recognize a $50,000 savings over a 10-year period by moving to cloud-based storage. This obviously scales upward.


Question 5: What quality of video will be stored in the cloud?

AutoWorld can optimize savings by using lower resolution (CIF 320x288) from cloud-based video storage. With higher requirements, its cloud-based storage savings benefit would diminish incrementally — by $5,500 at medium resolution, 4CIF 640x480 — over the life of the project. Storing high-resolution video into the cloud does not make financial sense because it reduces the benefit over a local-based storage solution, stealing nearly $19,200 from the original specifications.