By Dan Rothrock
President of Zenitel Americas

Trends, Topics and Technologies

Calculating the Cost and Value of Audio in Security

Security executives are increasingly focused on process and budget optimization while positioning their department to play a valuable and strategic role within their organization. Security consultants and integrators must be prepared to understand and articulate how integrated and intelligent communications are central to ensuring the value that resides, underleveraged, within their client’s organization.

The first step is to define the baseline. How do people perform roles, within a measurable process, and use the current tools your client has provided? What are the desired outcomes from this process? What risks does the organization face if these processes are not measured and optimized to reduce costs over time?

In this analysis you will be aggregating data such as:

• Fully loaded labor rates

• Process time to desired outcomes

• Accepted and Insured Risk

• Unaccepted Risk to the Business

• Uptime of the technology

• Maintenance of the technology

• Performance gaps due to lack of a tool, lack of a resource, or lack of a defined process

Once this baseline understanding is achieved, now you have a decision to make that will expose how the physical security program is perceived within the organization.

In corporate technology buying decisions, ROI and TCO have been the two prevailing quantifications needed to compete for funding.

One is used to determine corporate value. The other is used to control costs.

ROI calculations quantify the costs and the expected benefits of a specific project over a specific timeframe, usually three to five years.

ROI % = (Return – Investment Cost)/Investment Cost x 100

TCO, on the other hand, includes just costs. The Total Cost of Ownership or TCO is used to determine how much the technology and systems cost to own, operate, and manage in a business. TCO allows companies to appraise competing services on a uniform level.

Both are useful.

For example, knowing the upfront cost of a purchase is easy; it is the hidden costs that are hard to anticipate. That is where the value of a total cost of ownership (TCO) analysis comes in – it can help to anticipate and understand indirect expenses, such as maintenance, support, licensing fees, and more, that will add up during the lifecycle of a product. Assessing the physical security program and its technology requires a combination of ROI and TCO; which requires taking a “bigger picture” look at the product and its potential value over time.

As mentioned at the beginning of this article, a first step with ROI and TCO is to determine how the security program operates, which is how do people perform roles in a measurable process, using the intercom solution to optimize their desired outcomes.

Why is this important?

Most TCO models focus on a financial estimate model that captures all the costs associated with an activity over its complete lifecycle. TCOs are used in many industries, even beyond enterprise security, as a tool to correctly estimate the direct and indirect costs of deploying a system, and as a tool to compare different systems with different characteristics and cost distribution. This limits the definition of Total Cost of Ownership to:

• Costs of Acquisition (Evaluation and Contracting cost as well as deployment and training)

• Operating Costs (Human touch points creating overhead, system operation, maintenance, warranty, Mean failure costs, etc.)

However, we suggest that a TCO needs to include the inefficiency and failure to achieve preferred outcomes, which is ROI.

For example, with an IP intercom solution within enterprise security, voice becomes embedded in the organization’s culture, its core processes, and its security. Clear directions can be broadcasted to people inside and outside a building. Opportunities for interoperability with other communication systems such as security officer radios and digital signage provide a multi-modal means to communicate the same message. When evacuations must occur in a facility, that interoperability can increase the likelihood of a measured and successful exit.

Audio that is integrated with video, video management, emergency management and access control, can proactively prevent incidents. In many cases, it can do it in real time. This also sets up a situation for a better response to incidents that occur and creates more thorough investigative data.

From our experience and data that we have collected, we estimate the lost opportunity cost to be the major cost of lack of ownership that contributes to the ROI of any system. Across the globe, security executives continually are challenged to justify what they do, as business operations come under increased scrutiny from the C-suite, shareholders and outside auditors. Helping a security executive, who is in the position of needing to make a strong case for their budgets and activities on a day-to-day basis, with a strong ROI, is priceless to, not only them, but to your relationship with them as well.

We also have found that deploying and maintaining integrations has been a hidden cost of intelligent communications programs. Having an open API is not enough. Preferably the versioning of integrations is linked, strategically, between manufacturers as a competitive differentiator and a cost and risk abatement offering.

The true value of audio is when it is embedded in the core processes of the risk, resilience, and security functions. Seeing, hearing, being heard, and, most importantly, being understood in every situation, is critical to the success of business. That is why audio is becoming the user interface to consumer applications. In our cars, on our phones, and in our homes, we use audio to communicate with other devices and applications. Soon security will, as well. Those who do not embrace this opportunity may find themselves behind, both with mitigating risk and with selling, installing, and servicing these solutions.

In summary, the most difficult cost to swallow is an acquisition of technology that is lacking at the time that it is needed. Because physical security continues to struggle with budgeting and has an ever-present requirement to show ROI every day, this becomes a persistent reminder that an IP communication device solution must deliver clear, intelligible audio at the time of need.