Weighing Total Cost of Ownership for Digital Signage

Mounts, like displays and other hardware items, are part of the natural evolution of upgrades and improvements over the years and hence a part of total cost of ownership (TCO).

Many who play in the world of digital signage have a tendency to get blinded by the bright displays and creative content, and this is understandable.

These elements are the things we see every day but in the harsh reality of the industry, it is the business decisions that will ultimately determine the success or failure of a network.

One of those business issues important to understand is the concept of total cost of ownership (TCO). A TCO analysis is standard practice in the signage market and remains a necessary tool to evaluate the business case, aka return on investment (ROI), for deploying digital signage networks.

This begs the question, Is TCO an opportunity or quagmire?

So, what does a mount manufacturer contribute to the TCO question, when those products are simply part of the hardware infrastructure? The simple answer is that mounts, like displays and other hardware items, are part of the natural evolution of upgrades and improvements over the years and hence a part of TCO.

To illustrate this point, several years ago rp Visual Solutions was involved in a major retail chain deployment using 120 flat-panel displays and mounts. A number of years have passed, and we now have an opportunity to assist them with the upgrade of their panels from the older model to the newer (0.2mm narrower) model.

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With this many panels, that difference is equal to inches and as you know, in retail every inch is a revenue generator. The increased revenue must be compared to costs, and the displays and mounts are important components of that analysis. Yes! Even boring metal work will aid in the cost versus future benefits.

By offering our client a comprehensive TCO analysis, we were able to align ourselves as a valued partner versus just another mount company.

Most clients go into a project with a preconceived idea of what capital is required, but only a vague idea of what the ongoing costs will be. Too often those ongoing costs are based on “guesstimates,” rather than depending on real numbers and accurate analysis. TCO should be based upon sound business practices and generally accepted accounting principles (GAAP) put forward with the best information you can ascertain at the time of the business investment.

An excellent resource is to review The 7 Key Elements of Digital Signage from the Digital Signage Experts Group to ensure that you have covered and accounted for each of those key elements that go into the revenue and cost model of a typical DOOH deployment.

The benefit of preparing a TCO analysis up front is that it provides a vision of the long-term recurring costs, and when added to the initial startup costs of hardware, software and content combine to give a full and accurate financial picture from which to launch the project. This data may also provide a competitive edge over other vendors being considered.

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Sharing those numbers that are firm and fixed versus those that need speculation allows you to review the TCO with your client and avoid situations that can easily become quagmires.

Many manufacturers in the digital signage display marketplace have excellent online TCO calculators. Each of these resources can be very effective; however, viewed in isolation they may result in a biased result because all system costs must be considered to make a more informed decision when determining the best digital signage solution.

Total cost of ownership means just that — what the totalsystem will really cost over its lifetime. Quagmires may also develop when electronic devices fail or out-of-warranty repairs occur … stuff simply happens. Some dealers take the attitude that ignorance is bliss, or lack the skill set to provide a clear, concise TCO.

The flip side is that by positioning yourself as a valuable solutions provider and partner, you can become a hero that saves your client’s day, and ultimately their ROI.

Author Randy Pagnan, president of rp Visual Solutions, will be facilitating Seminar 15, “Total Cost of Ownership: Opportunity or Quagmire,” at Digital Signage Expo 2015 on March 11 at the Las Vegas Convention Center.