The ROI of unified communications

The problem isn't that John and Mary lack communication devices. Quite the opposite -- they have too many ways of communicating and those methods are not unified.

These disjointed applications make communications more complex, leading to frustration and reduced efficiency. And it's only getting worse. Knowledge workers are increasingly distributed and virtual: working from multiple locations.

Enter unified communications

The answer is unified communications, in which real-time applications are integrated so individuals can manage all their communications together, in both desktop and mobile environments.

Unified communications is certainly moving to the front burner at most companies. According to the 2007 Nemertes benchmark, "Building the Virtual Workplace," 79 of 100 enterprises interviewed were planning to deploy unified communications over the next two years.

And most of the building blocks of a unified-communications architecture are in use at most companies. Ninety-six percent of benchmark participants report the use of at least one tool, such as audio, video, Web conferencing, IM or a presence application.

The challenge for many IT executives is to make the business case for unified communications. This can be tricky, because purported productivity benefits can be hard to quantify.

However, business cases do exist. Companies see unified communications as a way to improve internal communications and increase productivity. There also is the potential for cost savings.

Nemertes also found that organizations tend to underestimate the amount of time they should devote toward planning. Companies often are under pressure from executives to implement the new technology -- whether VoIP or collaboration -- so they don't fall behind the curve.

When we ask IT executives to provide advice to their peers about these types of projects, they consistently say, "Slow down!"

Bottom line: Don't rush and spend time assessing the market and the players, and planning your implementation.

In these organizations, effective customer interaction is critical to overall business success. For example, investment managers may need to apprise their clients quickly of events that might affect their portfolios. Community banks might need to answer specific questions about mortgages or loans. Closing a sale might require involvement of an individual with specific vertical or product knowledge who is located in a separate geographic region.

In these scenarios, unified communications helps improve close rates by giving sales teams better access to support resources via the use of presence. Mobility services enable people to be available regardless of location. Salespeople can locate SMEs in rapid time to help close a sale.

Presence-enabled unified communications serves to virtualize corporate resources, enabling individuals to find the experts they need regardless of location and quickly include them in a call, Web conference, videoconference or audio bridge.

The goal of this approach is to determine if unified-communications technologies can speed the process, leading to such tangible benefits as increased sales or higher customer retention/satisfaction rates.

Take the scenario of a professional-services firm that bids on 75 projects a year and has a typical close rate of 75%, for an annual revenue stream of $8,437,500. If the firm is able to apply unified-communications technologies to close just 1% in additional business in a year, the tangible benefit is $112,500. This benefit increases rapidly as close rates improve, with a 5% increase in close rates providing a benefit of $562,500.

Given the high rate of adoption of elements of unified communications, such as VoIP and IM, models such as JITFTE provide incentive for enterprises to begin to integrate those applications to provide a unified communications experience to their users.

One non-IT-related professional-services firm says unified communications helps its mobile employees become more productive, which translates into more billable hours -- an estimated $20,000 more per individual.

In one scenario, a shortage in a warehouse could trigger an IM to all product inventory managers, along with a proposed conference-call meeting time, and additional information about the trends leading to the shortage, enabling the organization to quickly address the underlying causes and reestablish the proper pipelines. In this example, an organization can reduce the losses associated with an outage by $6,250 to $25,000 through faster communication to quickly react to a supply-chain disruption.

Most companies see the benefits in integrating unified communications with business processes. About 46% of enterprises surveyed are planning to integrate business processes with communications applications, while another 20% are evaluating communications-enabled business processes.

If you figure that employees make an average of $30 an hour (that includes salary and benefits), this translates into potential cost savings of $15 per day, per employee. That comes to 123 hours per employee, per year (based on 245 workdays in a year), for total savings of $36.75 million, based on our 10,000-employee scenario. Of course, this assumes that the time saved is used for other productive purposes.

So if we assume that a 10,000-person organization implements unified communications at a cost of $5.6 million, a savings of 30 minutes per day per person easily justifies the investment. Even if we assume only half of the saved time is reused for productive business activity, we still see a positive return of $15.5 million.

Most companies we interviewed were adopting an IM-centric approach to unified communications. That is, they planned to deploy Microsoft Office Communicator or IBM Lotus Sametime as the real-time communications dashboard and integrate other applications into their chosen IM platform.

Fortunately, almost all unified communications application vendors have delivered or announced capabilities to integrate their products with Microsoft or Lotus IM.

Companies can expect to pay $30 to $70 per user for IM applications capable of serving as a real-time communications dashboard, plus associated server costs. For example, an organization of 10,000 employees would see an approximate cost of $60,000 for Microsoft Live Communications Server 2005 with a three-server configuration (not including hardware costs).

Beyond integration of IM, Web/audio/video conferencing and VoIP, companies can add calendaring applications, enabling presence status to change as someone goes into and out of meetings.

Presence status can be displayed in in-boxes, such as within Microsoft Outlook or Lotus Notes, or across other integrated applications, such as mobile clients, shared workspaces or other office applications. The ability to deliver these capabilities will vary across vendor-product lines.

Finally, enterprises can integrate their unified communications systems with business process applications as described above, either via open Web-services standards or via gateway devices, such as Avaya's Communications Process Manager.

Enterprises should integrate architectural planning functions for all communications applications through converged teams or cross-functional communities charged with creating an organizationalwide road map for adoption of unified communications.

This requires integration of infrastructure planning with application planning, but is essentially to realize the overall value that unified communications brings, not just as a way of combining application interfaces, but also in integrating communications services with business processes.

Finally, enterprises should work with their strategic vendors to determine unified communications road maps, paying special attention to evolving partnerships between companies and the opportunities those partnerships present.

Lazar is principal research analyst and program director, Collaboration and Convergence, Nemertes Research. He can be reached at Irwin.lazar@nemertes.com.

RESEARCH CENTERS:
Applications-Standards | Applications Vendor Solutions | CRM / ERP | Databases | Directories | Grid Computing | .Net | RFID | SOAP | Web Services | Video | VoIP | Acceleration | Gigabit Ethernet | LAN Standards | Management | NAC | Identity management | Patch Management | Microsoft Security | Privacy | Security Standards | Viruses & worms | Web Security | Backup-Recovery | Data Center | Desktop Management | Grid | Server Blades | Servers Desktops | Telework | Handhelds & PDAs | Home Networking | Online Games | InfiniBand | Storage Virtualization | Virtualization | Vendor News | Bankruptcy | Earnings | Lawsuits | Layoffs | Standards | Start Ups | Vendor Markets | Education | Financial | Healthcare | HIPAA | Manufacturing | Retail | Service providers | PDAs & handhelds | Wireless Standards | Wireless Switches | All Company Profiles | Cisco Subnet | Microsoft Subnet | Download Library | Cell Phone Scan