Investing in AI-powered video surveillance can deliver significant returns for businesses across multiple sectors. Our analysis shows that a typical multi-location retail implementation can achieve a 399% ROI over five years, through the combined benefits of loss prevention, operational efficiency, and liability reduction.

Before investing in an AI-powered video surveillance system, businesses must evaluate whether the benefits outweigh the costs. A thorough ROI analysis helps companies quantify the financial impact and make well-informed decisions about system selection and implementation scope. AI-powered video security systems have become increasingly sophisticated, offering compelling long-term value when compared with traditional systems. This analysis will compare the costs and benefits of the two.

Understanding the Costs

The foundation of any ROI calculation begins with a clear understanding of immediate and long-term costs. Consider these key questions as you begin your analysis: How large is the facility? How many locations do you have? How many cameras do you anticipate using? What are your footage storage and access requirements? What search capabilities and parameters will you need?

Upfront Costs

The initial investment in an AI video surveillance system starts with hardware, including enterprise-grade IP cameras, AI Network Video Recorders (AI-NVR) or dedicated servers, various sensors for motion and monitoring, network infrastructure upgrades, and backup power systems. Software and licensing represent a second cost category, covering the AI analytics platform licenses, Video Management System (VMS) software, and any development for specific use cases. Installation and integration expenses round out the upfront costs, which include professional installation services, system configuration and testing, integration with existing security infrastructure, initial network configuration and optimization, and comprehensive project management and documentation.

Summary of Upfront Costs 

• Hardware components (cameras, sensors, storage devices)
  
  • Enterprise-grade IP cameras
  • Network video recorders (NVR) or dedicated servers
  • On-premise storage devices
  • Additional sensors for motion, temperature, or access control
• Software licenses for AI analytics and monitoring
• Installation and setup fees
• Integration with existing security infrastructure

Recurring Costs

Recurring expenses fall into multiple categories. Cloud and data management costs include expenses for cloud storage, data transfer and bandwidth, API usage and processing, and backup and disaster recovery services. Maintenance and support cover software updates, hardware warranties, system patches, monitoring services, and troubleshooting. Operational expenses include essential staff training programs, partial administrator salaries, power consumption, bandwidth requirements, and compliance audits. Lastly, change management includes user adoption programs, documentation, ongoing education, and process optimization.

Summary of Recurring Costs

• Cloud storage and data processing fees
• Software maintenance and updates
• IT support and monitoring services
• Power consumption and bandwidth usage
• Employee training and system adoption
• Change management expenses

Measuring the Benefits

AI-enabled video security systems deliver far greater value over its lifetime than might be initially suspected. The systems generate value through three primary channels:

Loss Prevention and Security

• Reduction in theft and fraud
• Faster response times to security incidents
• Improved detection of unauthorized access

Operational Efficiency

• Automated monitoring tasks
• Reduced security staffing needs
• AI-driven alerts for faster incident detection
• Streamlined investigation processes
• Optimized security staff deployment

Liability Cost Reduction

• Lower insurance premiums through enhanced risk management
• Reduced employee accident liability

Real-World Example: Multi-Location Retailer

To illustrate how to calculate ROI, let's look at a use case in which a retailer installs an AI-powered video security system. We will assume that there are 100 cameras in 4 locations and our storage requirement is 30 days. Our table will show two columns: one for an AI-powered video security system and one for a traditional on-premise system. The costs for the AI-powered system are based on Lumana’s pricing and the costs for the traditional on-premise option are based on a typical enterprise-grade system.

In this example, the cost of the AI-powered system is $106,580 and the cost of the traditional system is $170,400.

Benefits Breakdown

In order to calculate the benefits of the new system, our operational costs comparison will compare the costs between an AI-powered system and a traditional on-premise system across six categories: monitoring, investigations, theft and loss reduction, missed security events, employee accident prevention, and insurance.

Operational Costs Comparison (5-Year Period)

Benefits Breakdown (5-Year Period): 

We calculate the benefits of an AI-powered system by adding up the savings in the above categories across a five-year period, totaling $531,500.

Calculating Your ROI

With costs and benefits identified, the ROI calculation follows this formula: ROI (%) = [(Total Benefits - Total Costs) / Total Costs] × 100

Using our retail example:

• Total Benefits: $531,500
• Total Costs: $106,580
• ROI = [($531,500 - $106,580) / $106,580] × 100
• ROI = 399%

Factors Influencing ROI 

Your organization’s specific ROI may vary based on several factors. Some industries, such as retail businesses, may see great benefits from theft reduction, while manufacturing plants might see greater gains in efficiency and workplace safety improvements. Technology capabilities, including advanced AI features such as facial recognition, object proximity, and threat detection, can provide higher savings. Additionally, the ability to integrate AI surveillance with access control or inventory management systems can significantly amplify the benefits.

Conclusion and Next Steps

Calculating ROI for an AI video surveillance system requires careful consideration of both obvious and hidden costs and benefits. While our retail example shows a strong 399% return, your specific implementation may yield different results based on your unique circumstances and requirements.

To begin your ROI analysis:

1. Document your current security costs and pain points
2. List specific operational challenges that AI surveillance could address
3. Gather quotes from multiple vendors (including us!)
4. Calculate your projected ROI using the framework provided
5. Consider starting with a pilot program to validate assumptions

Remember that as AI technology continues to advance, the potential benefits and ROI of these systems will likely increase, making them an increasingly valuable tool for security and operational efficiency.

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