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Many vague vendor claims exist but detailed quantitative evidence is hard to find. While customers are easy on soft ROI / TCO claims in boom times, in the next year they will get much firmer in their demands for significant and quantitative proof. I am preparing a new report to distribute to end users on the "Real ROI of IP Video Surveillance." This note will lay out the issues and open it to community discussion.
What are proponents claiming?
Proponents certainly talk about ROI. For instance, Dan Dunkel, champion of IP security solutions, states, "It is important to understand that scare tactics are replaced by the benefits of operational efficiencies and ROI models." Wow - did DVRs sweep the market far faster than IP cameras simply because of scare tactics? Nonethless, with claims of such vigor, I figured that it would be easy to find lots of hard evidence to back the IT / IP claims.
A search for industry articles returns very little: For instance selections like: "CSO Primer to Video Design, Installation, ROI" and a "Experts point to diversified ROI models, need for remote access as key drivers." Both offer very little detail and the latter strangely and incorrectly assumes that IP video is needed for remote access (DVRs provide the same benefit).
Then I figured the vendors would have some claims.
Why it's Important Now?
Two things are changing for IP video:
What makes an ROI?
Many vendors simply list their products features and conclude that this equals ROI. For example, we support analytics, wireless cameras, remote access, third party integration, higher resolution, etc. Ergo, we have a strong ROI.
The ROI of IP Video can only be generated in comparison with its closest alternative - analog cameras plus DVRs. A true ROI in this case needs to clearly demonstrate how IP video analytics are superior to ones in a DVR, how IP video remote access is superior to using a DVR, how third party integration is superior with IP video over a DVR, how much additional financial value a megapixel camera generated over a 4CIF recorded analog feed etc., etc. Only the differential counts and it needs to be quantified.
Please review my report on how to calculate video surveillance ROIs to examine key factors in developing accurate ROIs.
How Strong Should the ROI / TCO Reduction be?
As a rule of thumb, new technology products that overtake a market need an ROI over 100% (i.e., they payback in less than a year) or a TCO of less than 50%.
Now you may object and say if a stock goes up 15% in a year, that's a great return. However, new technology projects are much riskier and the transaction costs are much more significant.
Most companies are reluctant (especially in a recession), to green light projects unless the financial returns are immediate.
If you accept this, then where are these powerful, immediate quantifiable financial returns in IP video?
| Topic |
|---|
| Case Studies |
| Convergence |
| Financials |
| Hosted/Managed Video |
| IP Cameras |
| Megapixel Cameras |
| Retail |
| Standards |
| Statistics |
| Storage |
| Video Analytics |
| Video Management Systems |
| Wireless |