Many enterprises that proactively deployed IP telephony (IPT) systems are finding that, several months after the implementation, they have not realized the anticipated expense reduction that fueled the ROI analysis that initially justified the deployment of an IPT system. Other companies are looking to aggressively reduce operating expenses to achieve target profitability levels in an increasingly competitive economy. The answer for both camps may lie in integrated conferencing.
Integrated conferencing falls into the broad group of applications classified alternately as real-time communications (RTC) or rich media communications (RMC). It combines traditional and emerging real-time applications such as data, audio, video, and instant messaging (IM) into a single communications vehicle designed to provide an enhanced communications experience and allow geographically disparate business units to collaborate more efficiently.
The emerging market for these components represents a significant opportunity for manufacturers, value added resellers, and service providers. Revenue in this market space, although difficult to measure accurately, is conservatively estimated at $4.5 billion. The lion’s share of this revenue is in traditional audio-conferencing solutions, followed by videoconferencing ($600 million), Web conferencing ($500 million) and instant messaging ($300 million). According to Mike Gotta (Real Time Collaboration: Making the Enterprise Decision, Content & Collaboration Strategies), this market is expected to grow to over $10 billion by 2008.
RMC solutions fall into three categories, each with its own risks and benefits: externally-hosted solutions, on-premises solutions, and managed service solutions.
Externally-hosted solutions generally make sense for organizations with sporadic needs for event-type conferences with large numbers of participants (e.g., quarterly all-employee conference calls). In this type of environment, it is not economical for an organization to buy and maintain a premises-based system that will only be used at full capacity once a quarter. However, there are security, compliance, and privacy risks associated with hosting IM, audio, and data traffic over the public network. In addition, actual monthly costs for hosted solutions may be higher than expected, due either to one-time setup and overage charges, or to the fact that many departments establish their own contracts with service providers, which erodes the economies of scale across a single, enterprise-wide agreement.
Premises-based solutions are typically more economical for organizations with high-volume conferencing requirements across geographically dispersed locations. A clear advantage of premises-based systems is that the enterprise can place all the facets of a conferencing solution behind its corporate firewall, and apply its own security policies, allowing off-net users access through the firewall. Although premises-based solutions require an upfront capital investment, many companies have been able to finance the upfront purchase and actually lower their monthly operating expenses by reducing or eliminating monthly payments to service providers of externally-hosted solutions.
The ROI is often less than twelve months for companies that shift from an externally-hosted to a premises-based solution, calculated purely based on hard costs (i.e., the costs of deploying the new system minus the costs avoided by canceling contracts for hosted solutions). When soft costs, such as savings from travel avoidance, are considered, the savings become even more compelling. But ironically, many companies find that they are not realizing the expected ROI after the implementation of a premises-based solution. In many cases, this is not a technological issue, but a social one.
That is, employees are slow to embrace the new system, or the company fails to change its business policies to efficiently exploit the advantage of the new system. For instance, the contracts with the former hosted service provider are not cancelled, travel policies are not adjusted to encourage integrated conferencing as an alternative to face to face meetings, or adequate end user training is not made available to employees to allow them to realize all the benefits of the new system.
Once an RMC system is deployed within an enterprise and embraced by its employees, the benefits gained through increased employee productivity can far outweigh the expense reductions that justified the initial system deployment. The benefits of horizontal applications are obvious: many more people from diverse backgrounds can participate in continuing education, open forums, and other meetings, giving companies the benefit of much more diverse input on critical issues. However, vertical-specific applications may hold the greatest potential for improving business efficiencies.
For instance, real-time document sharing during contract negotiation can eliminate multiple rounds of passing revised documents back and forth between the parties. Similarly, advances in virtual whiteboard technology can allow system engineers and clients to jointly design proposed solutions in real time, cutting down on both the time and expense associated with multiple face to face meetings.
RMC is unlikely to replace face-to-face meetings in their entirety. For the establishment of new business relationships, it is difficult to replicate the interpersonal and non-verbal communication that is essential to establishing a level of comfort and trust with prospective business partners. However, for organizations savvy enough to judiciously blend face-to-face meetings and integrated conferencing as appropriate, RMC holds intriguing possibilities for dramatically increasing productivity and lowering cost. IT
Richard Zimmermann is Forsythe’s director of network solutions marketing. Zimmermann also serves as the Chairman of the Board of the Enterprise Communications Association (ECA), an industry forum promoting the deployment of voice, video, and data communications solutions in the enterprise. For more information, please visit www.encomm.org.