But They Cost A Small Fortune!
Indeed they do. Systems range from a low of $60,000 up to nearly $700,000 per room (Table 1), and may carry a management contract which adds another $18,000 per month to the budget.
These prices definitely put telepresence in the category of a strategic investment that must return value to the company in a significant way. How can these costs be justified?
There are three levels of justification to consider. Level 1 is the traditional rationale that videoconferencing will replace (at least some) travel, so travel costs will fall. While travel savings probably return the least amount of dollars, compared to productivity improvements and business acceleration (discussed below), the numbers for travel are well understood, and the financial team can count them easily.
Unfortunately, even when the numbers look good, many CFOs just don’t believe that travel really will be reduced, and often they are right. The question to ask is: Can we really reduce the travel budget if we install this equipment? Some companies are tackling this the other way around and starting with a travel budget cut, then forcing employees and work groups to find alternative communications methods. This approach often also leads to productivity enhancements, the level 2 cost justification.
Here’s an example of how productivity increases: I am based in Boston. It will cost me 2 days to have an important face-to-face meeting in California with a client, partner or colleague. I have to leave home in the early afternoon to catch a long flight to California, then spend the night, have my important meeting in the morning, catch a return flight and get home well after dinner.
Even using mobile laptops, PDAs and cellphones, much of that time is not productive, and I have missed two evenings with my family. If I and my California colleague had telepresence systems, we could meet for an hour or two on the first day, and the task would be done. If I had three meetings to do in three different cities around the country or the world, I still could get all three done in a day. In short, I get more done in less time—and I don’t have to miss my wife’s cooking or my daughter’s ballet recital.
These level 2 justifications are obvious to the participants, but they can be a bit difficult to quantify. They also will have a correlated effect, which brings us to level 3, the acceleration of business. If the use of telepresence can shorten a product design cycle, close a key contract sooner, establish a partnering arrangement and make it productive or solve a problem for an important customer in hours instead of days, weeks or months, then the pace of business accelerates. Shortening the cycle for each of these business components provides a handsome return and quickly justifies the cost of a telepresence investment.
Substantially the same cost justifications were put forward, with mixed success, in the early ’90s for rollabout room videoconferencing systems, and later in the ’90s when desktop videoconferencing was being hyped, but these new telepresence systems could have better luck. They are so much better and so much easier to use, and the vendors’ pitch is being aimed at executives instead of network/IT people. If the execs want telepresence, they will certainly find it is easier to justify than, say, a corporate jet.
Isn’t Videoconferencing Complicated And Unreliable?
Well, yes, it can be. Those who have been most successful with traditional videoconferencing have put a concerted effort into managing the videoconferencing environment for their users. High-level meetings are scheduled in advance and they are completely managed. The systems are started and verified 10 minutes before the meeting starts, and a technician often remotely monitors the conference to ensure that systems are alive and that quality is being maintained.
Telepresence vendors are targeting high-level executives as their first customers because these users can most quickly justify the expenditures and benefit from the systems. Simplicity, quality and reliability are paramount to gaining acceptance with C-level users, so most telepresence vendors are providing a managed service offering with their equipment (Table 1). These managed services handle all aspects of operation including scheduling, call setup and quality monitoring. Some of these services also include the global high-speed IP network needed to interconnect telepresence sites.
For example, Polycom and Cisco sell a managed telepresence solution without a network, while HP and Teliris include the network in their managed offerings. Cisco automates scheduling for the user via integration with the calendaring functions of Microsoft’s Outlook and integration with their VOIP telephony system.
The new systems differ from traditional videoconferencing in that most do not require a multipoint control unit (MCU or bridge) for conferences in which the other locations can be seen on one of the available screens. Thus a 3-screen system can support up to 4 sites with no MCU. Tandberg, Polycom and Cisco offer bridging to support additional sites when needed. Tandberg and Polycom bridges provide both switching and continuous presence, while Cisco provides only a switching mode of operation. Switching means that remote sites consume a whole screen, and different sites appear or disappear based on who is currently speaking. Continuous presence means that a screen is broken up into smaller screens, and each remote site can be seen all the time, but in a smaller form factor.
Some vendors say that bridging detracts from the telepresence experience. Polycom acknowledges that this is true, but notes that the importance of including those additional locations and people in the conference often offsets the desire to maintain a perfect telepresence environment. All the vendors support a telephone connection, which means that one additional exec who is on his way to the airport can at least participate in the audio portion of the conference. (For more product comparisons, see Table 1.)
