Video Conferencing: You've heard the hype.
Now read the facts.

A report by Wainhouse Research

The Technology

The video conferencing industry has seen steady progress over the past six years. The equipment available today from the major manufacturers provides audio and video quality, reliability, and feature sets that were merely dreams just a few short years ago. Companies large and small have only just begun to realize the cost savings and communications efficiency that video conferencing can provide. In addition, newer products and services have extended video conferencing into the realm of visual collaboration, enabling users to share data and applications while enjoying the intimacy provided by video.

While interest in video conferencing has been growing steadily, recent terrorist actions have caused an unprecedented increase in both curiosity and usage. Although the fear of flying or simple abhorrence of the long security delays now involved with air travel have been enough for many managers to turn to visual collaboration as an alternative to business travel, the fact remains that a careful consideration of the benefits of video conferencing will lead to a fairly long list of hard and soft benefits. Many of these benefits are easy to quantify, while others are more difficult or obscure.

While the price and performance of video conferencing and visual collaboration tools have improved dramatically, network considerations have remained a major obstacle to some. To date, video conferencing has been deployed almost exclusively on circuit-switched ISDN networks. For conferencing users, ISDN has shown itself to be unreliable, unmanageable, and expensive to use. For these reasons, the prospects of video conferencing over IP are exciting ones. IP is the network that goes everywhere, to every desktop and conference room, is supported by a wide range of management tools, and is understood by enterprise IT professionals.

But for IP to marry well with video services will take the skills of a next-generation conferencing or network service provider. Users will be looking for a partner who can deliver both the raw network performance and the enhanced quality of service benefits needed for video, who understands the unique needs of video-based services, and who can deliver the bridging, gateway, scheduling, and reservation services that play a key role in the video conferencing experience. Wainhouse Research believes that new services, such as IVCi's IntelliNet offering, represent the future of the conferencing industry through the promise of delivering superior and reliable performance at ever decreasing costs.

The Benefits

Video conferencing has been viewed traditionally as a substitute for travel. We believe a major reason for this limited focus is that it is relatively easy to quantify the costs of video conferencing equipment and services as well as to document the cold hard costs of travel. Comparing these two hard numbers has often been enough to justify the investment in conferencing. However, we also believe that in today's business climate, organizations should take a more enlightened view of the true costs of travel as well as the wide variety of benefits that can be realized through the adoption of conferencing throughout the enterprise.

Video conferencing reduces travel costs

By converting a travel meeting into a video conference, organizations can realize both hard savings (flights, hotel, etc.) and soft savings (saved employee time). According to a survey conducted by WorldCom, Meetings in America, the average domestic business trip has a hard cost of $1,334 per meeting participant. This is a sum of the cash outlay for airfare, hotel, meals, rental cars, taxis, etc. averaged over a large number of business trips. Related soft costs are not reflected in this number. Soft costs can be calculated by taking the average traveler's hourly salary, adding 25-35% for benefits and overhead, and then multiplying by the number of hours of productivity lost in a round trip. For many individuals, the WorldCom study showed 15-20 hours of lost productivity per trip, leading to an additional hidden or soft cost of approximately $700-1000 per business traveler.

Video conferencing enhances employee quality of life

A multitude of studies have been conducted on the effects of business travel on personal and family stress. In one published report, more than 73% of business travelers found general business travel to be a source of stress. In fact, more than half of that 73% reported that business travel was extremely stressful and that it negatively impacted their lives, their sleep, their well-being, and their general performance both before and after their journeys. 76% of business travelers reported that they suffered from more health problems when they traveled. In addition, a World Bank Survey reported that frequent business travelers are three times more likely to use their corporate health insurance program for mental health treatment. Hence, as a travel substitute, video conferencing helps decrease stress, improve family relations, and avoid physical and mental health problems.

Video conferencing saves time and boosts productivity

Time savings alone often outweigh the direct cost savings offered by video conferencing. In short, video conferencing can reduce employee "downtime" significantly. According to the WorldCom study, an employee invests an average of 21 hours in a meeting that involves travel vs. four hours in a video conferencing-based meeting. Hence, each travel meeting converted to a video conference saves as much as two days of work time. When you multiply this savings per meeting by the number of meetings per year a manager may attend, the additional time available for productive work is considerable. By applying these savings figures across the number of traveling professionals inside an enterprise, the effect on the global organization becomes quite significant.

Video conferencing enhances customer relationships

One reason people turn to video conferencing is to gain immediate, ad-hoc and fully-interactive access to their contacts, regardless of geographical location. The concept here is not to use video conferencing as a substitute for business travel, but rather as a substitute for an ordinary telephone call. Although a voice-only telephone call does allow easy and uni-dimensional communications, the ordinary phone call cannot provide the face-to-face capabilities offered by video. And unlike travel, a video call can be ad-hoc and un-scheduled, much like an ordinary voice call. With video conferencing, a user can be "in front" of a client in minutes after making the decision to do so. Video offers increased impact and focus to any conversation as well as enhanced persuasiveness and generally leads to enhanced trust between partners and suppliers/customers.

Video conferencing speeds time-to-market

Video conferencing can drastically improve the internal communications operations of any enterprise, thereby speeding decision making and making teams more effective. This is especially true in the area of project management. While it is common to categorize these benefits as relating to travel avoidance, the major benefit to be derived is often the decrease in time-to-market (shorter development cycles) resulting from the use of conferencing tools. Companies and teams that understand the strong relationship between time-to-market and profitability will typically achieve superior financial results. By cutting time-to-market, engineering and marketing teams can introduce more products to the market in a given period of time. And by introducing products to the market quickly, companies can avoid or at least delay competitive pressures that may force lower prices and decreased margins.

The Network

An ISDN video conference call is typically routed over different public networks, making it very difficult to identify a point of failure. Similarly, many IP network providers utilize a number of networks to carry a customer's video call. Because IVCi's IntelliNet uses a single network, the service is inherently reliable and problem resolution is much faster. IntelliNet also features physical redundancy with multiple POP's (Point of Presence) in single cities. In addition, strict agreements with the "last mile" carriers ensure a guaranteed four-hour repair time in the unlikely event of a failure. Other IP network providers that utilize DSL or Cable Modem "last mile" carriers are often burdened with response times geared to consumer users. The IntelliNet service allows enterprises to conduct unlimited, secure, and high-quality IP video conferencing between their global offices for a fixed (and easy-to-budget) monthly cost.

Fixed Comprehensive Price

One of the most unique aspects of IVCi's offering is that the cost of the necessary local loop (T1 line from the network backbone to the customer's location) is included in the IntelliNet fixed price. The fixed price includes all network access charges no matter where in the U.S. the facility is located.

Unlimited Usage

IVCi's offering includes unlimited video conferencing usage between all of the customer's IntelliNet video sites. There are no hourly fees. Scheduling, Automatic Call Launching and Management IntelliNet customers have free access to the scheduling system to make reservations, to notify participants, and to launch calls. In addition, the IntelliNet management system provides resiliency testing of the network and end-points and allows customers to generate up-to-date usage reports as required.

Video Bridging

The IVCi bundle also includes six (6) hours of 384 kbps IP video bridging each month for each system on the IntelliNet network. This makes the IntelliNet service more functional while saving customers considerable costs every month.

Gateway Services

The IntelliNet service includes unlimited, no-fee access to IP-to-ISDN gateways that IVCi has deployed on the network. This represents another value-add for customers. Although users will have to pay for their long distance ISDN calls, free gateway access saves customers the cost of having to purchase their own gateways and manage (and cost justify) the necessary ISDN lines.

Privacy & Security

As all IntelliNet video calls are carried across a private, self owned network, customers can be assured of security. This is different from both ISDN and many other IP network providers that route calls or IP packets over a public network.

Conclusions

• Video conferencing technology available today presents a viable alternative to many other meeting types and is an essential business tool. Audio, video, and data sharing performance provided by today's leading systems deliver a business quality experience.
• When used to substitute for business travel, video conferencing can be justified often on the basis of the hard costs savings (airfare, hotels, rental cars, etc.) alone. However, the real benefits of video conferencing as a travel replacement become evident through a full accounting of the soft costs associated with travel.
• Video conferencing can be used to achieve many significant benefits beyond business travel reduction. Notable examples are reducing time to market by improving teamwork across distributed resources and shortening hiring cycles for key employees. Video conferencing should also be viewed as a telephone and travel enhancement—a way to strengthen bonds with remote colleagues and customers between personal visits and telephone calls.
• Most of the video conferencing systems installed today are compatible with both ISDN and IP networks. Interest in conferencing over IP networks is growing because IP offers many performance and cost advantages. IP conferencing can be implemented by an enterprise with two strategies: a converged network that carries voice, video, and data or an overlay approach (a separate IP network that keeps rich media communications apart from the data). With an overlay strategy, both networks are IP based and offer advantages in reliability and manageability.
• Compared to ISDN, IP networks have a larger fixed cost per month but a lower variable cost per hour of usage. With fixed price plans like IntelliNet, the variable cost of conferencing is zero. In general, the tradeoff between the two occurs around 12-18 hours per month, if looking at network costs only. The added value provided by IntelliNet such as full resource scheduling, automatic call launching, usage reports and active end point monitoring are often difficult to quantify. However, they can make the difference between a productive business tool and one that sits idly in the corner. Fixed price plans also encourage higher equipment utilization rates, which promise to save customers even more.
• The market for IP video network providers is an emerging market and the role between integrators, network providers, and bridging providers is still crystallizing. Many business models exist and the proper choice for any end user will depend on his geographic coverage needs, reliability expectations, need for enhanced services such as scheduling, gateway, and bridging services, and his intended usage rates and calling patterns. IVCi brings years of experience as a video conferencing equipment reseller and integrator, and now combines this expertise with the IntelliNet service that offers superior quality, broad geographic reach, the quality of service possible on ATM-based IP networks, and a fixed price plan that saves customers money.

© Wainhouse Research, LLC

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