A cost model for telepresence
As we work with companies on their unified-communications strategies and business cases, video conferencing has become a key component. During a down economy, companies look to cut corners everywhere, and travel costs tend to be top on the list.
Recessions end, though, and upon emerging from them, savvy business leaders recognize the detrimental effect that lack of travel can have on the bottom line. Face-to-face communication is important for a variety of reasons: Sales teams use facial cues and body language to navigate a negotiation; product development teams may jointly review models; and any workgroup will find meetings more productive when multitasking is out of the question.
Video conferencing – and more specifically, telepresence – helps companies neutralize the need for face-to-face meetings and the need to reduce spending on travel.
Although there are several ways an organization can build a business case for video conferencing (whether desktop, room-based, or immersive telepresence), the most prominent is examining travel costs.
Recently, Nemertes built a cost model for telepresence that did just that. In the interactive model, we examined the typical costs: capital for single- and multi-screen rooms, bandwidth for each screen, engineering and design, implementation, full-time equivalent salaries, managed services, on-premise management tools, and maintenance.
On the savings (or potential savings) side, we used research data to arrive at default measures for executive travel (i.e., first-class flights, upscale hotels, and higher per-diem) and standard travel (i.e., coach class flights, standard hotels, and lower per-diem).
One example was a $5 billion financial-services company with eight video rooms and 45 executives taking 40 trips a year. By eliminating 9% of its executive travel (or 3.7 trips per executive), the company was able to demonstrate a 12-month return on investment. Looking at standard travel with 1,000 employees taking only four trips a year garnered a 12-month ROI by reducing travel by 10% (only 0.4 trips per employee).
With hard-dollar savings like that, it’s easy to see why so many companies are implementing video conferencing. According to our research, 42% of companies have been able to quantify a hard-dollar benefit with video (that’s not to say the remainder couldn’t quantify it; they may not have built the business case).
Remember, this is just looking at travel costs. You can build models that show the potential increase in sales closed by using video conferencing, or improved customer service by opening video to select customers or business partners.
The bottom line: In the majority of organizations, it’s fairly straightforward to build a compelling business case for video conferencing. However, the company must embrace the technology and build a corporate policy supporting the use of it. Nearly half of all companies using video conferencing have or are developing policies to promote its use. That is one way IT can work with the business units to help ensure the success of a key project.
