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Telepresence: Looking Beyond the Hype: Page 3 of 3

Calculating ROI

So what’s the payback on these systems? We found that large global enterprises are spending anywhere from $200,000 to $500,000 per room in startup and annual operational costs. By consistently reducing global travel between 2 percent and 5 percent, they can cover the costs of a multi-site rollout in fairly short order, especially as system prices continue to fall. One executive for a global organization told us that even with factoring in the cost of a 45 Mbps connection between locations (T3/E3), he figured the system would pay for itself in a short time by reducing international travel by 2-3 percent.

Again using Cisco as an example (arguably the largest telepresence deployment in the world with over 110 rooms as of September), one executive noted he had reduced travel from over 200,000 miles in 2006, to 110,000 miles in 2007 by adopting policies in which meeting organizers would have to justify why they needed to travel versus make using of a telepresence system.

Calculating productivity from better quality video is more difficult. Anecdotally, I’ve talked to a number of people who have bought into the telepresence hype, stating that the feeling of being in the same room as all meeting participants does provide benefit, at least once folks have a few meetings under their belt and get over the “wow” factor of their first few telepresence meetings. But qualitative benefits are difficult to sell, and difficult to measure. The cost conscious CEO will need more than just “we feel our meetings are more effective” to justify spending hundreds of thousands of dollars.

Questions Remain

Despite all the hype, a number of questions remain about telepresence as a mainstream enterprise technology. Perhaps the biggest question is whether or not telepresence is at odds with the trend toward an increasingly virtualized workforce consisting of a growing number of people working from home, branch offices, or telecommuting centers. If hosting a telepresence conference requires those individuals to travel to a telepresence center, have we made any gains in productivity? Have we made any gains in carbon reduction when individuals must commute to participate in a telepresence session?

Vendors including Tandberg and Polycom address this issue by allowing those using desktop videoconferencing platforms to participate in telepresence sessions, while Cisco argues that the telepresence experience requires physical attendance in the room. Perhaps Cisco has a point: Why invest in telepresence rooms if a large percentage of participants are using standard systems? But the corollary to that argument is “why even invest in telepresence in the first place if the workforce is too distributed to use it?”

The second pressing question is the justification for high-cost telepresence rooms versus more traditional standalone videoconferencing systems. Vendors such as LifeSize (offering high definition at 720p resolution with support for multiple screens) make the case that enterprises need not invest in telepresence rooms to gain the benefits of high-definition videoconferencing. Given that an enterprise can deploy a high-definition system consisting of two screens in a room for less than $20,000 per room, it’s hard to argue that the telepresence experience is worth the additional expense. They also argue that standalone systems provide greater flexibility. It’s much easier to move a codec and a few plasma displays to a new room or facility than it is to pack up a telepresence system and set it up in a new location.

But there is a noticeable difference between sitting around a conference table staring at a screen (or screens) at the end of the room versus sitting in a telepresence environment where the other end of the conference table is the screens. Those who have participated in a telepresence session generally praise the quality of the experience as being far superior to generic videoconferencing, but still, is it that much better to justify a 10x or 20x cost differential?


If the hype over telepresence hasn’t reached your organization yet, it soon will. Evaluate telepresence carefully, asking yourself if your environment can benefit from better conferencing sessions, potentially reduced travel and the prestige of owning a high-definition telepresence solution. But at the same time, ask yourself if it’s worth the cost, and if you can really justify telepresence over basic high-definition videoconferencing systems.

Irwin Lazar is a principal research analyst and program director for collaboration and convergence at Nemertes Research. His blog is called Real Time.