Total cost of ownership (TCO) is one of the crucial parts of the IT products, including video conferencing solutions. To get a great income and KPI, an audit of the existing products should be held. In this article, we will check the TCO components list and suggest the ways of improving it, by conducting an audit.
What is TCO?
The total cost of ownership for any product is the total of the product itself, adding costs for its operation. The idea of auditing a TCO is to take into consideration the total cost that a business will incur to operate an asset, not just the upfront acquisition cost.
As we see in the image, TCO consists of several components. They directly influence the costs of any IT product, as each of them require time and financial investments.
Which cost components determine the TCO?
To determine the total cost of ownership (TCO) of IT products, let’s consider the following cost components:
- Acquisition Costs: These costs typically include the initial expenses incurred when purchasing the IT products, such as hardware, software licenses, and implementation services. Acquisition costs refer to the expenses incurred when initially purchasing IT products. For example, new servers, computers, or software applications, the costs associated with procuring these items are considered acquisition costs. For the video conferencing solutions, a great role plays the number of users, so that media stream servers are good enough to handle the load. In Trembit we usually obtain the information on possible load and suggest scalable solutions corresponding to the needs.
- Maintenance and Support Costs: These are ongoing costs associated with maintaining and supporting the IT products throughout their lifecycle. This includes software updates, hardware repairs, technical support, and training. Maintenance and support costs ensure that the IT products remain functional, up-to-date, and properly supported by the vendor or internal IT team. Trembit pays attention to the latest versions of the programming languages and suggests customers to upgrade to the latest version. In video streaming components in particular, these are Angular/React, as well as WebRTC API enhancements, etc.
- Licensing Fees: The fees are associated with software licenses and any additional costs for user or device subscriptions. Evaluate whether the current licensing model aligns with the organization’s needs and if there are potential cost-saving alternatives. Consider the lifetime of the licenses, as most solutions provide licenses for a certain period of time, and with the project completion, they might be not relevant any more.
- Operational Costs: Operational costs pertain to the day-to-day expenses related to using the IT products in an operational environment. These costs can vary depending on the specific IT products and the organization’s infrastructure. Operational costs may include electricity costs to power the hardware, consumables, network bandwidth charges, cloud service fees, and other expenses necessary to keep the IT products running smoothly. Essentially, any ongoing costs directly associated with the usage and operation of IT products would fall under operational costs.
- Replacement and Upgrade Costs: This is the type of costs and expenses involved in replacing or upgrading IT products as they become outdated or reach their end-of-life. Plan for hardware refresh cycles and software version upgrades to avoid unexpected costs. This component is relevant for the online video streaming devices, widely used in the support and governmental spheres.
- Training and Documentation Costs: Include the costs associated with training users on how to use the IT products effectively. This includes training sessions, online courses, user manuals, and documentation development. Do not under evaluate this type of cost, rather remember that “give a man a fish, and he’ll be full one day. Teach a man to fish, and he will be full all his life”.
- Downtime Costs: By analyzing these cost components, organizations can gain a comprehensive understanding of the total cost of ownership of their IT products and identify potential areas for cost optimization and efficiency improvement. It is relevant for the production ready apps, as they directly influence real-time user experience,
How to analyze the TCO?
To analyze the TCO of your IT product, consider these key steps in Audit Process:
Initial Cost Assessment
Auditors carefully review and analyze the initial costs involved in adopting a video conferencing solution. This includes assessing hardware expenses, software licenses or subscriptions, and implementation costs such as setup and integration.
Recurring Cost Evaluation
Our audit considers recurring expenses associated with video conferencing. We assess subscription fees, bandwidth requirements, and ongoing support and maintenance costs to provide an accurate projection of recurring expenditures.
Infrastructure and Integration Analysis
This is a key point, where we conduct an in-depth assessment of your network infrastructure, identifying any required upgrades or modifications. Additionally, we evaluate the integration of the video conferencing solution with existing systems and examine customization needs.
We provide an in-depth infrastructure and integration analysis with valuable steps to optimize your video conferencing solution:
- Network Readiness: Evaluation of your existing network infrastructure to ensure it can handle the increased demands of video conferencing. We identify potential bottlenecks, recommend network upgrades if necessary, and suggest best practices for network optimization.
- Security Considerations: We assess the security measures in place to safeguard your video conferencing solution. We provide recommendations on encryption, authentication protocols, firewalls, and other security practices to protect your sensitive communications.
- Integration with existing systems: Trembit analyzes how the video conferencing solution integrates with your current IT ecosystem. It involves identifying potential challenges and providing recommendations on seamless integration with collaboration tools, calendaring systems, and other essential business applications.
- Scalability and Flexibility: We consider your organization’s growth plans and evaluate the scalability and flexibility of the video conferencing solution. Trembit assesses the ease of adding new users, expanding infrastructure, and adapting to evolving business needs.
User Training and Support
We can also assess the training requirements for users to ensure optimal adoption and utilization of the video conferencing solution. Additionally, evaluation of ongoing support needs can be held, including help desk services and troubleshooting.
Cost Savings and Benefits Estimation
Our audit takes into account potential cost savings resulting from reduced travel expenses and increased productivity. We analyze the impact of video conferencing on travel reduction and calculate potential productivity gains from improved collaboration and faster decision-making.
TCO Calculation
By aggregating all identified costs and factoring in potential savings and benefits, we calculate the comprehensive Total Cost of Ownership for your video conferencing solution. Our detailed report provides a breakdown of costs, enabling you to make informed decisions and optimize your investments.
How to improve TCO with audit?
To improve Total Cost of Ownership (TCO) for your video conferencing solution, conducting an audit is essential. The audit focuses on optimizing various aspects of your video conferencing infrastructure, licenses, servers, DevOps, and other practices. By evaluating these key areas, you can identify cost-saving opportunities and enhance the overall efficiency of your video conferencing system.
Licenses
It’s important to include a thorough examination of license dates in the audit to ensure they are up-to-date and not nearing expiration. This helps avoid unexpected costs or interruptions in service due to expired licenses. We suggest adding the table of licenses list per each project, and support the table content to follow up the dates and licenses expiration.
Servers
Assessing the capabilities of your servers is another crucial aspect of the audit. By analyzing server performance and capacity, you can determine if any upgrades or adjustments are necessary to ensure smooth and reliable video conferencing experiences. Since most video conferencing and streaming solutions require scalable server solutions, we suggest including server capacities check in the audit process.
DevOps
DevOps practices are also evaluated during the audit. This includes reviewing the deployment, management, and automation processes for your video conferencing solution. Implementing efficient DevOps practices can lead to cost savings through streamlined operations, improved resource allocation, and enhanced scalability.
Conclusion
In conclusion, improving the Total Cost of Ownership (TCO) of IT video conferencing products involves analyzing the overall expenses, conducting regular audits, and implementing strategies to optimize costs. By evaluating licensing, infrastructure, and operational expenses, organizations can make informed decisions to reduce costs. Keeping licenses up-to-date, optimizing infrastructure, and integrating DevOps practices are key strategies to improve TCO. These measures help minimize expenses, enhance system performance, and maximize the return on investment. By focusing on TCO analysis and conducting regular audits, businesses can make cost-effective decisions and optimize the value of your product. Contact us for detailed information and service.
Further Reading
Understanding the Total Cost of Ownership (TCO) for IT video conferencing products is essential for making informed decisions and optimizing your investments. By considering all aspects of TCO, from initial purchase to ongoing maintenance and upgrades, you can achieve significant cost savings and enhance the efficiency of your video conferencing solutions.
For a deeper dive into the real cost of video conferencing and how to manage it effectively, we recommend reading this insightful article by Lifesize: The Real Cost of Video Conferencing. This resource provides comprehensive information on the factors that influence TCO and offers practical advice on how to maximize the value of your video conferencing investments.
