Once a high-ticket novelty for only the healthiest of large enterprise budgets, videoconferencing price points are dropping, opening the door to a variety of industries to use it as a communication tool to cut costs and ramp up employee productivity.
Improvements in the technology – including “souped up” chip processing coupled with better audio and video quality – have boosted ease of use, quality, and manageability, attracting more users and increasing the ROI.
Pharmaceutical giant Bristol-Myers Squibb Co., based in Princeton, N.J., started exploring videoconferencing in the early 1990s and has watched the technology mature to deliver solid value to the organization.
“The market morphed from being a very specialized high-priced end unit to be more of an appliance situation. With most things in technology it is [becoming] more, better, faster, cheaper,” said Mark Lamon, director of informatics at Bristol-Myers Squibb.
GE Power Systems, in Atlanta, is another videoconferencing user that started with video in the 1990s, according to Mike McGary, global video communication leader at the equipment manufacturer for the energy industry.
“Videoconferencing stared out with huge, unwieldy, complicated systems. People didn’t understand them; it was a big mystery. Now the systems are becoming much easier to use and manage, and have lost that mystery about them,” McGary says.
A picture tells a thousand words
With the slumping economy dropping the ax on travel budgets in most enterprises, the use of videoconferencing for meetings has garnered newfound interest, according to analysts and users of the systems.
“When travel is cut, voice, video, and data conferencing go up,” says analyst Elliot Gold, president of Telespan Publishing Corp. in Altadena, Calif., which tracks the videoconferencing industry.
Another analyst, Christine Perey, president of Placerville, Calif.-based Perey Research & Consulting, says video meetings can replace travel.
“The way travel budgets are being cut today, many people are having to say: ‘I can’t make that meeting.’ If you can offer an alternative like videoconferencing, that is an important way to say, ‘I still want to participate as fully as possible in that meeting’.”
One user, Craig Brandofino, assistant director for audio and videoconferencing services at Ernst & Young LLP, in Lyndhurst, N.J., says recent travel cutbacks have boosted the firm’s use of video.
“We use [videoconferencing] for a number of things. Recently with some tightening of the belts we’ve had more use of videoconferencing, especially among and between different departments in the firm,” Brandofino says.
Based on usage reports and other calculations, Brandofino says the company estimates it saves on average approximately US$150,000 to $200,000 per month in travel expenses.
Users say it is not just tangible travel savings but a harder-to-quantify boost in productivity that is the real payoff of videoconferencing.
“The other productivity gain is being able to get the right people to the right meetings so decisions can be made more quickly,” Bristol-Myers Squibb’s Lamon says. Video meetings play an important role in facilitating communication among Bristol-Myers Squibb’s research, sales, and marketing departments, which are distributed around the globe, Lamon adds.
“We have 13 research sites distributed throughout the world. Videoconferencing lets the biologists collaborate with the chemists and clinicians when they are all located at different sites,” Lamon says. “[With video] you can see the whole development spectrum and get the appropriate inputs.”
Bristol-Myers Squibb also uses video communication to interview job candidates and to interact with alliance partners.
GE Power Systems has found uses for video across a whole spectrum of manufacturing processes and management duties including engineering design reviews, employee management, and project management for power plant installations, McGary says. “We increase productivity because we are able to have the right engineers at the right place for the job,” he says.
Spreading the word
Making the initial investment in videoconferencing technology is only half the battle. Many systems are underutilized, says analyst Christine Perey, because users lack training and an understanding of the technology. “One of the challenges that enterprises have to face and overcome is marketing these products internally. If you are going to invest in the technologies, please invest in training people and in raising awareness of this as a tool. That can have a tremendous impact, increasing your efficiency tremendously and increasing ROI.”
Although videoconferencing existed at Bristol-Myers Squibb for many years prior, the company stared an internal marketing campaign in 2000 to try to educate employees to the effectiveness of the technology.
“We went site to site with the equipment, showing the products and instructing,” says videoconferencing manager Fite. “We wanted to show how people could be part of a team through the use of video. That was part of the push, to change the way people think about doing a meeting. People are used to having a meeting where you meet face to face. You have to get people to culturally accept that the video experience gives them the same benefit,” Fite says.
The use of videoconferencing has given rise to the concept of virtual teams at Bristol-Myers Squibb, which has cut down the number of employee relocations, according to Lamon.
Down to the desktop
In addition to multipurpose conferencing rooms equipped with video, high-quality desktop video systems are now available, changing how workers incorporate video into business process.
Worldwide banking institution Deutsche Bank AG has connected 2,500 of its employees around the world using desktop videoconferencing equipment from Avistar Communications Corp.
According to Dan Smaller, head of International Equities Sales at Deutsche in London, “Desktop videoconferencing [offers] a whole new range of uses, especially in terms of day-to-day contact with people within my organization,” Smaller says. “It takes communication to a new level.”
Smaller says the system allows him to converse with people around the world including most of the team he manages as well as clients, partners, and customers, without leaving his desk.
“Of course you make the trip for some things, but 95 percent of what is necessary from a face-to-face to meeting I can accomplish through video,” Smaller says.
Both Bristol-Myers Squibb and Ernst & Young are currently piloting IP-based desktop video systems from Polycom.
“There needs to be a ton of testing,” says Bristol-Myers Squibb’s Fite. She says there is already considerable user interest in desktop video equipment, but the company is trying to keep the lid on demand. “It is going to be like candy; once one person gets it, everyone will want it,” Fite says.
Video over IP takes flight
The convergence of voice, video, and data over IP networks is a major force, set to drive future videoconferencing growth. Analysts say the convergence will lower videoconferencing costs and improve usability during the next few years.
As video delivery moves from ISDN to IP networks, worldwide videoconferencing equipment provider revenues are expected to skyrocket from $780 million in 2001 to 1.1 billion by 2005, according to Boston-based research firm Yankee Group.
Although most enterprises have yet to embark on a video, voice, and data convergence strategy, IP-based videoconferencing systems have been available for several years and are expanding from trial to full-scale deployments.
A significant argument being made for IP-based systems is cost savings, but manageability benefits outweigh savings, according to Christine Perey, president of Perey Research.
“You can manage settings, manage directories remotely, and you can troubleshoot more easily with IP systems,” Perey says.
Initial concerns about the quality of video over IP are diminishing, Perey says. “We are seeing good performance,” she adds.
Some users, such as Deutsche Bank, have jumped headfirst into video over IP on the desktop, but others are more cautious.
“You’ll see the convergence of voice, video, and data over IP, but it will be evolutionary rather than revolutionary,” said Mark Lamon, director of informatics at Bristol-Myers Squibb, based in Princeton, N.J. “We have to be able to satisfy people that this won’t negatively impact data transmissions, which are fundamentally the reason the networks were built.”
The percentage of ISDN installations will erode away in favor of IP installations over time, Lamon says, which “in turn will make video a more ubiquitous medium because instead of being tied to conference rooms you will be able to deliver it anywhere.”
Craig Brandofino, assistant director for audio and videoconferencing services for Ernst & Young, in Lyndhurst, N.J., is looking forward to the manageability features in video over IP.
“We are exploring video over IP because we see that as the future,” Brandofino says. “It is easier to manage, you have more control over the quality and use, and from our research it may be cheaper than hanging it off the PBX.”