CHOOSING THE RIGHT PEDESTRIAN AND VEHICLE ACCESS GATE BASED ON ITS TOTAL COST OF OWNERSHIP AND RETURN ON INVESTMENT
“I’m not rich enough to buy cheap things”
The following paper highlights what aspects need to be considered when deciding which pedestrian and vehicle products to purchase, but to begin with it is important to highlight the fundamentals behind the decision-making process, looking primarily at Total Cost of Ownership and Return on Investment.
Total Cost of Ownership “TCO” or Return on Investment “ROI”
When we speak of “TCO” we are referring to the purchase price of an asset plus the costs of operation. When making any purchasing decisions it is very important to look at both the initial investment and the cost to operate the asset over its lifetime. TCO is about looking at the bigger picture of a products intrinsic value, as well as its value over time.
In other words: TCO= Short Term Purchase Cost + Long Term Cost of Operations
While TCO complicates a buyer’s seemingly straightforward purchasing decision, understanding a products true value requires you to look at its ROI.
In other words: ROI= Total Benefits – Total Costs / Total Costs
Why are TCO and ROI Important?
Total Cost of Ownership (TCO) and Return on Investment (ROI) seem to be similar methods of proving cost effectiveness, but they perform best in totally different situations.
TCO is a measure of cost, including the capital cost to purchase the solution, make use of or integrate it within the business over a given period of time, i.e. the longer the timeframe the higher the TCO.
ROI goes beyond cost and is a measure of benefit from a capital investment and represented as a percentage. ROI looks at the total capital cost of an investment and calculated the value returned by the investment over a given time period.
In some cases a low initial purchase price can mistakenly incentivise buyers to favour one product over another, even though the item with a lower TCO and higher ROI offers better value for money in the long run. Most of the time, the item with a lower TCO or higher ROI is not the item with the lowest short term initial purchase price.
Ultimately buying a “cheaper” product based on price may mean less performance and more maintenance, a shorter life or a lower level of product acceptance, limiting your future options.
What TCO and ROI are in practice for pedestrian and vehicle access gates?
The table below highlights some important aspects to consider when making your purchasing decision on pedestrian or vehicle access gates:
There is a fundamental issue with only thinking of the short term and not looking into the bigger picture of TCO and ROI factors during the ownership calculation process.
DIRECT BENEFIT TO THE PRODUCT OWNER
Reduction in repair rates = reduced repair cost = increased product life
DIRECT BENEFITS TO THE END USER
Reduction in “out of service” time = improved product life = no product changes for long term projects = more efficient and effective performance
Taking only into account the above points, without even considering improvements in performance from the safety and security aspect; these changes more than offset the small purchase price variant.
Equally as important is the risk of selecting technologies that have been poorly designed and have not been fully vetted or validated in the field.
How Automatic Systems can provide superior performance on TCO and a higher ROI?
- Superior, robust, heavy duty and reliable design
- In compliance with the most strictest and up to date standards as well as having the ability to adapt to future regulatory standards
- Superior MCBF (Mean Cycles Between Failure) – up to 10 million cycles
- Low MTTR (Mean Time to Recovery) – less than 30 minutes
- Superior IK9 resistance rating for majority of product line
- Superior IP water rating design
- Warranty up to 5 years
- Highly professional maintenance and service support
- Help desk and product training support
- Worldwide brand recognition and company presence
- Superior product build quality with iconic design in line with architectural trends (Red Dot Award Winning Design 2021)
- Professional design and production teams for “custom designed” finishes and materials ensuring a perfect and timeless fit
- Turn key solutions
- Traditional and digital I/O interface and ready to use XML-RPC and Modbus API over Ethernet
When selecting your product, whether it is vehicle or pedestrian, all the above points need to be addressed collectively. Taking a chance on performance and long-term viability of the product in order to reduce the initial cost outlay may end up costing you more in the long run.
To summarise
- TCO includes the purchase price of the particular asset plus maintenance over its lifespan.
- ROI goes beyond cost by adding in the anticipated business benefit to calculate the actual returns of owning the product.
- Using both TCO and ROI allows you to consider both cost-centric mandates as well as supporting an organisations long term pursuit of value and differentiation.
- It is important to fully consider all aspects of a purchase to ensure you are making the right decision for your organisation.
To conclude
Automatic Systems understands that TCO and ROI calculations are not a straightforward process so have done the hard work for you. Our dedicated teams will guide you through each stage of the process, simplifying this procedure and ultimately ensuring you understand the purchase, running and maintenance costs of your pedestrian or vehicle access gate.
