COVID-19 Update

Reducing the Total Cost of Digital Network Operations

Understanding some of the larger “buckets” of operational costs can help provide the framework for making the right capital investments.

Ken Goldberg

An important precursor to a discussion of reducing the total cost of operations in a digital signage network is a semantic resolution of what we are discussing.

The cost of operations should not be confused with the commonly used metric, total cost of ownership (TCO), even though it is an important part of the TCO calculation. It should also not be confused with the other key element of TCO, cost of acquisition, even though many people, especially those in sales, make that leap instinctively.

Total cost of operations begins after any necessary capital investments are made to acquire the goods and services needed to launch or expand a network. 

Systems integrators can deliver the most value to their customers by going beyond typical launch tasks: procurement, integration and deployment. Actively engaging with the customer to help them understand the dynamics of acquisition cost and cost of operations as drivers of TCO makes the systems integrator a partner, rather than a vendor. The advantages of a partner relationship are well appreciated by those of us who have experienced the alternative.

Related: Digital Signage Is More about ‘Engaging’ Than ‘Solving’

Taking the time to truly understand the customer’s network objectives, strategies and capabilities allows the integrator to guide the customer to optimal decisions on acquisition of equipment, software and services. That does not necessarily mean the lowest cost of acquisition, because integrating the right pieces to enable a lower cost of ongoing operations can have greater TCO impact that a marginally lower cost of acquisition.

Understanding some of the larger “buckets” of operational costs is useful and can also help provide the framework for making the right capital investments. Here are a few of the important post-deployment cost drivers:

Ken Goldberg at DSE ONE
Ken Goldberg has spoken at Digital Signage Expo and will be a panel participant at the full-day DSE ONE New York Event on October 21st during Digital Signage Week. Click here for more information or to register for DSE ONE.

Content Management: All of the tasks associated with development and acquisition of content, programming, management of content assets, scheduling and monitoring the network drive operational costs. In short, content management is people and process oriented, and greatly impacted by tools and services that support both.

An integrator who develops a shared understanding of the customer’s content and network strategy can help develop the processes and identify the tools that optimize employee utilization and workflow. Automated procedures, streamlined interfaces and powerful tools associated with projected tasks can reduce the headcount required for this critical set of responsibilities, with a dramatic impact of total cost of operations.

Related: Tips for Deploying Digital Signage Around Campus

Ongoing software costs: The most common operational cost associated with software relates to subscription fees for software-as-a-Service (SaaS) platforms, the most common delivery method in the industry today. SaaS deployments can certainly reduce acquisition costs, as there are typically no purchase or deployment costs. However, understanding how vendors charge for their service can mitigate ongoing operational costs. For example, many modern media players can support two separate outputs.

Certain vendors charge by screen (output), while others charge by connection (player). If your customer can utilize dual output players smartly and pay SaaS fees by the player, the ongoing software costs can be as much as 50% lower than a deployment of all-in-one (system on chip, or SoC) displays or other architectures that by definition charge by the screen for SaaS. The operational savings can greatly outweigh any reduced capital expenditure in the calculation of TCO.

Customers with larger networks (greater than 1,000 end points) and sophisticated IT capabilities may realize significant operational cost savings by considering an enterprise software licensing arrangement.

CoronaVirus Update