Business critical reasons why TCO is a great way to evaluate purchases for modern media and entertainment enterprises.
Managing costs and expenses are always at the top of every businesses’ priorities. Improving the bottom line, especially in a challenging economic climate is an important component of every enterprise business plan
By leveraging total cost of ownership businesses can look beyond a basic cost analysis and paint a much more wholisitic view of their budget items, and gain an understanding of the value the asset provides to the business over time. With that in mind, here are things to consider when calculating total cost of ownership:
You have to measure the both direct and indirect costs. If you are only considering invoice price, you are only looking at part of the picture. In today’s dynamic and global enterprise business landscape, there are several costs and variables that must be considered. Nucleus Research states that “TCO provides an understanding of future costs that may not be apparent when an item is initially purchased”. For cloud vs on-premise comparisons, TCO includes hardware & software costs, ongoing patching, management, and support, user costs, and training costs. You have to consider both direct and indirect costs in your TCO calculation to get the full picture.
You have to go deeper into how your current and potential solutions will perform. In the context of media processing, your volume of source files, their average duration (typically in minutes), their bitrate, and the number of outputs your will be transcoding to, are all variables to consider when evaluating the potential performance of the solutions. This is often overlooked when TCO is calculated.
You have to consider costs over time. When considering TCO, it should calculate all of the indirect and direct costs over a fixed period of time. By doing so you maintain consistency and a a far more accurate comparison. This will also bring to life the economies of scale the business benefit from whe leveraging cloud solutions.
When evaluating transcoding solutions there are a lot of variables to consider, and a lot of those variables affect cost. Key market drivers in cloud solutions such as enterprise acceptance and always decreasing storage, compute, and delivery costs, are bringing cloud solutions into the mainstream with even the largest media and entertainment companies. This why we developed the Encoding.com On Premise vs. Cloud Total Cost of Ownership Calculator. This tool highlights cost savings over time when switching from an on-premise to a cloud-based media processing solution. When you are ready, check out our comprehensive white paper that highlights all of the hidden costs of managing and on-premise encoding farm.