Brivo OnAir TOTAL COST OF OWNERSHIP (TCO) How Software-as-a-Service (SaaS) lowers the Total Cost of Ownership (TCO) for physical security systems.

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1 Brivo OnAir TOTAL COST OF OWNERSHIP (TCO) How Software-as-a-Service (SaaS) lowers the Total Cost of Ownership (TCO) for physical security systems. WHITE PAPER

2 Page 2 Table of Contents Executive summary... 3 Introduction... 4 How SaaS is a game changer... 4 The importance of understanding your true total cost of ownership (TCO)... 5 TCO model methodology... 5 TCO model assumptions... 6 Summary results... 6 Benchmark configuration... 7 Annual cost comparison with non-redundant on-premise solutions... 8 Annual cost comparison with redundant on-premise solutions... 8 Comparison of cost distribution with non-redundant on-premise solutions... 9 Comparison of cost distribution with redundant on-premise solutions... 9 Added benefits of the Brivo OnAir SaaS solution Conclusions Appendix A: Detailed cost comparison of best performing options... 12

3 Page 3 Executive Summary Software-as-a-service (SaaS) is a software licensing and delivery model that eliminates the need for individual entities to purchase, deploy and maintain IT infrastructure or application software. SaaS vendors are able to amortize their infrastructure costs over thousands of users yielding lower total costs of ownership (TCO) for customers. This ability to amortize costs enables SaaS vendors to make investments that guarantee the security and resiliency of their solutions that would not be viable for many business customers. Naturally any business must decide for itself what constitutes Protective measures lower risk an acceptable level of risk and investment in protective measures. For most businesses, SaaS solutions will deliver superior system up time at far a lower cost than comparable High Down5me on-premise solutions. This translates directly into a reduction of risk and the associated costs of incidents. Data Loss Risk Liability In this study, we analyzed the economic benefit of the Brivo The: OnAir (SaaS) security solution compared to traditional onpremise solutions. Recognizing that organizations vary in their Business Disrup5on Low appetite for risk, we compared our SaaS solution to onpremise solutions deployed with protective measures ranging Superior Minimal from superior to minimal. Physical security solutions are in a Protec,ve Measures category of business system that must be held to a higher standard of availability and performance than ordinary office equipment. For this analysis, systems with minimal protective measures are situated in simple computer rooms with manual data back-ups and no redundancy of any kind. Systems with superior protective measures have full redundancy and high-availability computing environments. The key findings from our analysis include: Over five years the typical Brivo OnAir system costs 33% less than an average non-redundant solution and 74% less than an average fully redundant solution. Brivo s SaaS solution offers security and resiliency capabilities that are unmatched by our competition. All on-premise solutions require significant investments by the customer in data center infrastructure, IT management and application maintenance which are not included in their up-front costs. The investment required to equip traditional on-premise solutions with even moderate protective measures can double or triple their cost and the complexity of deployment. 5 Year TCO Comparison The cost advantage of the Brivo SaaS solution is significant across multiple solution types from embedded appliance, client/server and enterprise architecture. Brivo OnAir Avg. Non-redundant Avg. Redundant $68,916 Systems deployed with minimal protective measures may demonstrate a lower initial cost but at at the expense of increased operational risks. $17,890 $26,855

4 Page 4 Introduction Organizations have traditionally relied on internal IT departments or the physical security organization itself to build, operate and maintain their physical access control and video surveillance system infrastructure. As these systems have become more complex and threats to networks more sophisticated, most entities have recognized the need to have physical security infrastructure managed under the formal framework and policies established by their IT departments. Those seeking to reduce risks and improve operational performance recognize that secure and resilient IT infrastructure does not come cheap. Often, organizations find it difficult to justify the high cost of implementing on site security platforms able to deliver 99.9%+ uptime. In many cases, organizations find the balance between budget and risk by settling for a good enough solution, depending on a measure of luck to help them minimize downtime and the business impact of system outages. How SaaS is a game changer Software-as-a-service (SaaS) is a software licensing and delivery model that eliminates the need for individual entities to purchase, deploy and maintain IT infrastructure or application software. In this model, the SaaS vendor takes responsibility for deploying and managing the infrastructure (servers, operating systems, databases, application security, data center resources, networking, power, cooling, etc.) and processes (patches/upgrades, backups, database administration, etc.) required to run and manage the full solution. By shifting this workload to the SaaS vendor you not only minimize your costs and risks, but you save time and additional drain on scarce management resources. Leveraging the SaaS model, customers gain access to enterprise-class solutions while eliminating the need for expensive hardware, staffing, maintenance and upgrades. SaaS vendors manage all of their customers on a single instance of the software, so they are able to amortize infrastructure-related costs across thousands of customers. This yields substantial economies of scale, and lowers the total cost of ownership (TCO) for customers. As an added benefit, SaaS providers invest heavily to make their solutions resilient and secure allowing them to offer service level agreements (SLAs) that guarantee the uptime and integrity of their solutions. There are no IT infrastructure and management costs associated with the SaaS model (Figure 1), since the subscriptions include these costs. In the on-premise model (Figure 2), IT infrastructure costs (hardware, software, maintenance and ongoing management of the infrastructure) account for a large percentage of the total cost. Figure 1: SaaS Based Architecture Figure 2: Server Based Architecture

5 Page 5 The importance of understanding your true total cost of ownership (TCO) Until the past decade, it has been common for buyers to think of system costs in terms of one-time up-front server and software expenses. However, it has become a well-established fact that the largest part of information technology ownership actually lies in ongoing operational expenses, support and licensing agreements, as well as hardware replacement. This is particularly true of computer systems providing infrastructure services such as access control and video recording, because they must be held to a higher standard of availability and performance than ordinary office equipment. Understanding the total costs for managing the IT infrastructure for your physical security system is somewhat elusive due to organizational silos and simple unfamiliarity, but these costs are real, impactful and growing steadily. The rapid increase in need for IT services and the corresponding costs of self-hosting is exactly the reason that cloud service providers such as Amazon Web Services and Microsoft Azure have experienced such explosive growth in the past few years. To understand your true cost of ownership you need to evaluate all costs including those that may be perceived as minimal or obscured by the fact that they are paid out of another department s budget. Risk is another key consideration in the overall evaluation of costs. Just like IT services, risk is not free. So if you are willing to risk having no back-up hardware or redundant data center or data security program, you are Accepting IT risk is like exceeding the speed limit. It doesn t cost anything unless you re caught. exposing yourself to the potential costs of downtime, business disruption and liability. TCO Model Methodology In this study we analyzed the economic benefit of the Brivo OnAir (SaaS) security solution compared to three traditional on-premise solutions. We included industry-leading solutions deployed on embedded appliances and standard client/server architecture ranging in capability from medium to enterprise scale. The five-year costs include estimated capital expenses for acquisition and installation as well as on-going maintenance, management and upgrades. This study provides information for solutions deployed with minimal protective measures (no back-up hardware or redundancy) and for solutions that approximate the redundancy and disaster recovery capabilities standard with the Brivo OnAir SaaS service. To arrive at the costs for hosting and management of the solutions we elected to use a commercial hosting provider s quotes as a base line rather than relying on estimated end-user cost allocations for data center space, power, data services. We believe that this method provides a fair and even aggressive approach for representing the on-premise IT costs.

6 Page 6 TCO Model Assumptions This TCO model uses the following assumptions: The base system is for a single site with 16 card readers and a requirement for ID badges, wireless locks, and video surveillance. 1 The initial capital and installation costs for the IT hardware and software licenses have been included. Items common to all systems such as card readers, locks, wiring, cameras and recording devices have not been included. We have assumed that the customer purchases the software maintenance that allows them to remain on a supported version of the application and database for the entire five years. In the on-premise model, we have assumed a one-time refresh in the computing hardware and operating system. We have assumed a data center infrastructure cost of $75 per month for the on-premise solutions. This cost includes rack space for a 1U server along with a 2 Amp power budget and 5 Mbps bandwidth allocation. 2 We have used either the competitors hardware/software bundle or a direct quote from a prominent computer hardware provider based on the datasheet specifications to estimate the cost of computing hardware for the on-premise solutions. For the on-premise solutions, we have estimated IT management and database administration costs basis at $800 per year. This includes 16 hours of IT services for general administration, monitoring, patch management, system back-ups and database administration at $50 per hour. The Gartner IT Key Metrics Data study estimates the total cost of ownership for a physical WINTEL server is $8,260 per year Many additional factors are often included in a complete TCO analysis, but we found that these vary so widely from organization to organization that they could not be included in a meaningful generic model. Thus, we excluded such considerations as: Organizational cost of server downtime, including lost productivity and explicit cost of IT and security staff time to remediate failed systems. Business risk cost of system unavailability, including lost revenues, liabilities due to service level agreements, and loss of good will. The costs for continuous threat monitoring, intrusion prevention, data security audits, and data privacy protections. 1 All systems were configured to be feature equivalent. For example, any required software options to support video integration, wireless locks and ID badging, were included but not the actual hardware. 2 These figures are derived from actual quotes received from a co-location service in December of 2015.

7 Page 7 Summary Results We have found that for most classes of applications, the SaaS model for security management platforms is the clear operational and financial winner over on-premise, due primarily to the economies of scale introduced by hosted application services. It also provides significant availability and redundancy advantages over most server-based systems, which translates directly to increased business value. Figure 3 shows the conclusions of our study, which demonstrates that the Brivo OnAir SaaS solution can be deployed for 34% less than a non-redundant and 74% less than a redundant on-premise solution. This is without factoring in the business impact and expense of server downtime, which can be considerable for many types of enterprises. Figure 3a shows the advantage of the Brivo SaaS solution against the best performing non-redundant and redundant competitive configuration. Figure 3: Five year total ownership cost and distribution for Brivo OnAir and average results from competing solutions. Brivo OnAir with redundancy & fault tolerance Average comparison without Redundancy Average comparison with redundancy 46% 5 Year TCO $17,890 54% Subscrip)ons So-ware Maintenance Field Hardware On Premise Infrastructure IT Infrastructure 30% 35% 12% 5 Year TCO $27,188 23% 22% 58% 9% 5 Year TCO $68,916 11% Figure 3a: 5 Year TCO comparison of best performing non-redundant and redundant solutions. Cloud Appliance Cloud Corporate Client/Server Appliance $21,296 Corporate Client/Server $43,842 Cloud $17,890 Cloud $17,890 The following pages will examine the cost comparisons for the various solutions.

8 Page 8 Benchmark configuration A typical 16 door system was used as the benchmark for the purposes of this article. Figure 4 below depicts the SaaS configuration with cloud-hosted software. Figure 5 is a generic depiction of hardware and software required for the on-premise solution. Figure 4: Sixteen Door SaaS based Figure 5: Sixteen Door Server based The two charts below offer a comparison of the fully redundant and fault tolerant Brivo OnAir cloud solution against a variety of non-redundant and redundant systems. For the on-premise solutions redundancy is achieved via back-up hardware and data synchronization software. As depicted below, the least expensive non-redundant option (the appliance) is considerably more expensive than the cloud solution, which incorporates redundancy and disaster recovery as an inherent component of the service. When provisions for redundancy are included, there is an enormous cost advantage for the Brivo cloud solution over the appliance and client/server-based configurations. Annual cost comparison with non-redundant on-premise solutions Year 1 Year 2 Year 3 Year 4 Year 5 Total Brivo Cloud $10,114 $1,944 $1,944 $1,944 $1,944 $17,890 Embedded Appliance $10,977 $1,990 $1,990 $3,349 $1,990 $20,296 Corporate Client/Server $14,600 $2,240 $2,240 $3,534 $2,240 $24,854 Enterprise Client/Server $20,323 $3,023 $3,023 $6,023 $3,023 $35,415 Annual cost comparison with redundant on-premise solutions Year 1 Year 2 Year 3 Year 4 Year 5 Total Brivo Cloud $10,114 $1,944 $1,944 $1,944 $1,944 $17,890 Embedded Appliance $47,077 $8,120 $8,120 $8,120 $8,120 $79,557 Corporate Client/Server $23,334 $4,480 $4,480 $7,068 $4,480 $43,842 Enterprise Client/Server $63,056 $4,323 $4,323 $7,323 $4,323 $83,348 As should be expected, the charts below depict a wide variation in the distribution of costs between the various

9 Page 9 solutions. The majority of the expenses (54%) for the Brivo cloud solution are associated with the monthly subscriptions. These subscriptions incorporate the software and hardware expenses as well as operational costs for the overall platform. By comparison, 78% of the cost for the on-premise solution is tied up in onpremise and IT infrastructure. The total expenses over five years for the 16 door systems were calculated with the following results: Comparison of cost distribution with non-redundant on-premise solutions Cost Factor Cloud Appliance Corporate Client/Server Enterprise Client/Server Subscriptions $9,720 $0 $0 $0 Software Maintenance $0 $1,960 $2,160 $5,292 Field Hardware $8,170 $1,595 $9,000 $7,524 On Premise Infrastructure $0 $9,241 $5,194 $14,099 IT Infrastructure $0 $7,500 $8,500 $8,500 Total 5 Year Costs $17,890 $20,296 $24,854 $35,415 Comparison of cost distribution with redundant on-premise solutions Cost Factor Cloud Appliance Corporate Client/Server Enterprise Client/Server Subscriptions $9,720 $0 $0 $0 Software Maintenance $0 $12,900 $4,320 $5,292 Field Hardware $8,170 $6,025 $9,000 $7,524 On Premise Infrastructure $0 $48,632 $13,522 $55,532 IT Infrastructure $0 $12,000 $17,000 $15,000 $17,890 $79,557 $43,842 $83,348 This summary clearly shows that the SaaS solution is the most cost efficient option. SaaS solutions, owing mainly to the reduced operational and IT expenses, are generally able to provide a much greater variety of functions than server based solutions, which often charge additional fees for high availability and each piece of added functionality. The cost savings of using a SaaS solution for access control are clear. Extending the cost savings of a SaaS solution even further, the above example does not factor in less visible, yet just as important functionality such as automatic upgrades to applications and system software, active data protection measures and unlimited linear scalability. If this additional functionality were costed out, the SaaS solution takes an even greater leap forward in cost savings over the server-based solutions.

10 Page 10 Added benefits of the Brivo OnAir SaaS solution In addition to the direct cost advantage of the SaaS solution, there are a number of additional benefits, which have not been quantified in this study. The chart below provides a quick summary of the additional values inherent in the SaaS solution. Capabili'es Brivo Lower TCO Less risk All sites always on the latest version Increased up'me Disaster recovery Cyber security Automa'c off-site back up Unlimited scalability Pay as you go Mul'-site support Interna'onal expandability Remote administra'on via mobile devices Mobile device based access creden'al The data represented thus far have primarily addressed the single-site case with 16 doors. Qualitatively, the SaaS solution fares even better in a multi-site application, primarily due to additional cost penalties that the server-based solution must pay during the initial setup, along with higher ongoing IT expenses due to the complexity of managing the security management applications over a far-flung network. The SaaS solution is particularly beneficial in this environment because, as a web application, it is intrinsically multi-site from the inception. Another major advantage to SaaS solutions over server-based solutions is scalability. Our analysis did not include the often-significant costs to enlarge on-premise solutions in terms of door capacity and administrative clients. Many server-based solutions require fixed client installations for each site, increasing the cost of acquisition and the on-going expense to manage remote client software. As mentioned with the case study example above, initial setup costs along with higher IT expenses during installation prove out the superiority of the SaaS model over server-based options.

11 Page 11 Conclusions As we have shown, our study indicates that using a SaaS solution for a security management platform specifically electronic access control, ID badging and video provides major, demonstrable cost savings. In addition to ease of installation and ease of use, the market s increasing awareness of the cost benefits of the cloud are driving the substantial growth in the installation of such systems. These findings have several implications for system integrators and end users. The first is that other things being equal both groups would be well advised to calculate the relative cost of any proposed physical security solutions before making a decision on what to offer a customer (in the case of integrators), or what to ultimately buy (in the case of end users). The second implication is that the savings provided by SaaS can also be extended to other security services, such as hosted video, intrusion detection, remote monitoring, and many others. This is an important implication for the vast majority of business owners, as most businesses are not large enough to be able to absorb the cost of dedicated server solutions into a larger IT infrastructure. What this means is that such business owners can expect to enjoy enterprise-grade service levels at lower TCO points than at any time in the history of electronic security.

12 Page 12 Appendix A: Detailed cost comparison of best performing options 16 Door SaaS solution with redundancy and disaster recovery capabilities Cost Summary Year 1 Year 2 Year 3 Year 4 Year 5 Total 1. Subscription Services 1 Brivo OnAir Reader Subscriptions $1,944 $1,944 $1,944 $1,944 $1,944 $9, Field Hardware PACS Panel & Related Hardware 2 $7,790 $7,790 Field Hardware Installation Labor $380 $ On Premise Infrastructure 3a PACS Application License and Servers 3 3b Redundancy Application Licenses & Servers 3 3c Additional PACS Licenses 3 3d PACS System Installation Costs 3 4. IT Infrastructure Cost Allocation Datacenter Allocation 3 Data Back-up Services 3 Information Security Measures & Audit 3 Continuous Penetration Testing & Remediation 3 Total Cost of Ownership $10,114 $1,944 $1,944 $1,944 $1,944 $17,890 SaaS Footnotes: 1. SaaS subscription services at MSRP 2. Hardware requirements based on the physical design 3. Included in the annual SaaS services.

13 Page 13 Best comparison for solution without redundancy (based on appliance) Year 1 Year 2 Year 3 Year 4 Year 5 Total 1. Software Maintenance Fees PACS Software Maintenance & Related Fees 1 $0 $250 $250 $250 $250 $1,000 PACS System Software Maintenance Labor 2 $0 $240 $240 $240 $240 $ Field Hardware PACS Panel & Related Hardware 3 $1,405 $1,405 Field Hardware Installation Labor $190 $ On Premise Infrastructure 3a PACS Application License and Servers 4 $5,287 $1,359 $6,646 3b Redundancy Application Licenses and Servers 5 $0 $0 3c Additional PACS Licenses 6 $1,395 $1,395 3d PACS Application Installation Labor 7 $1,200 $1, IT Infrastructure Cost Allocation Datacenter Allocation 8 $900 $900 $900 $900 $900 $4,500 IT Administration Allocation 9 $800 $800 $800 $800 $800 $4,000 Information Security Measures & Audit 10 $0 $0 $0 $0 $0 $0 Continuous Penetration Testing & Remediation 10 $0 $0 $0 $0 $0 $0 Total Cost of Ownership $11,177 $2,190 $2,190 $3,549 $2,190 $21,296 On Premise Footnotes 1. Fees charged by PACS software vendor for updates, patches, bug fixes and technical support on application software 2. Labor charges from the Security Service Provider to install and test software patches and upgrades 3. Panel hardware requirements based on the physical design assuming IP system 4. Enterprise class PACS Software and hardware 5. Software and hardware needed to create hot redundancy for PACS infrastructure 6. Additional software licenses sold as options to the base package needed to complete the solution 7. Cost to install, commission and test the PACS system 8. Costs for hosting the PACS solution in a typical data center environment 9. Cost for IT personnel to maintain the PACS computing infrastructure 10. Added costs to protect against typical cyber-threats

14 Page 14 Best comparison for solution with redundancy (based on corporate client/server) Year 1 Year 2 Year 3 Year 4 Year 5 Total 1. Software Maintenance Fees PACS Software Maintenance & Related Fees 1 $0 $600 $600 $600 $600 $2,400 PACS System Software Maintenance Labor 2 $0 $480 $480 $480 $480 $1, Field Hardware PACS Panel & Related Hardware 3 $8,240 $8,240 Field Hardware Installation Labor $760 $ On Premise Infrastructure 3a PACS Application License and Servers 4 $3,940 $2,588 $6,528 3b Redundancy Application Licenses and Servers 5 $5,794 $5,794 3c Additional PACS Licenses 6 $0 $0 3d PACS Application Installation Labor 7 $1,200 $1, IT Infrastructure Cost Allocation Datacenter Allocation 8 $1,800 $1,800 $1,800 $1,800 $1,800 $9,000 IT Administration Allocation 9 $1,600 $1,600 $1,600 $1,600 $1,600 $8,000 Information Security Measures & Audit 10 $0 $0 $0 $0 $0 $0 Continuous Penetration Testing & Remediation 10 $0 $0 $0 $0 $0 $0 Total Cost of Ownership $23,334 $4,480 $4,480 $7,068 $4,480 $43,842 On Premise Footnotes 1. Fees charged by PACS software vendor for updates, patches, bug fixes and technical support on application software 2. Labor charges from the Security Service Provider to install and test software patches and upgrades 3. Panel hardware requirements based on the physical design assuming IP system 4. Enterprise class PACS Software and hardware 5. Software and hardware needed to create hot redundancy for PACS infrastructure 6. Additional software licenses sold as options to the base package needed to complete the solution 7. Cost to install, commission and test the PACS system 8. Costs for hosting the PACS solution in a typical data center environment 9. Cost for IT personnel to maintain the PACS computing infrastructure 10. Added costs to protect against typical cyber-threats

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