Q. Why does the cost of video conferencing systems seem to be escalating faster than travel expenses?
A. That is happening because the pace of business is moving faster and globalization is increasing, and the amount of what people are trying to get through and the amount of collaboration that people are doing…is intensifying.
In video conferencing, specifically there are a couple of things to note. First of all, people are still using traditional video technologies, using ISDN in part. The more they use the more it will cost. If they using integrated converged IP networks, which they probably already developed for voice integration or VoIP services…then they have at least a fixed cost or semi-fixed cost that they can exploit much more readily and get a much better unit cost for video conferencing.
When we talk about the actual units themselves, the actual video technology, particularly with the introduction of the telepresence capability…those are very high-end deployments and that’s what the technology costs right. As scale will build, which I’m very confident it will, then those costs will come down, like any new technology. So the boxes will give more for their dollar over time.
The networks are now very cost effective, particularly if you’re on IP technologies. And, at the end of the day, in the vast majority of circumstances, the equation of the cost of a video conference, even over a great distance on very sophisticated technology, versus shipping the people around on planes and in hotels — it’s still a slam dunk.
What’s changed is the usability of video conferencing. It’s actually working in this generation. Where we’ve been through many false starts, I think, in the use of video, it’s becoming more usable, more user friendly, more of a pleasant experience so people are using it more and more rooms are being installed — and so the bills are going up.
I would say the unit costs are probably coming down. It’s a volume-driven thing. And that’s good to see because that’s investment, that’s petrol in the tank of business: the more interactions they’re having with customers, then more business is being done.
Q. Seems like a chicken-or-an-egg scenario. Hasn’t cost been the main roadblock to the broader adoption of video conferencing?
A. No, I don’t think it’s been the cost. I think it’s been the usability. I think a lot of execs and managers are still mentally in the era when video gave you that extremely jerky look on the screen. The screens were small. The call would drop every now and again. It was a whole performance to get everybody dialed in on the technology and the bill at the end was directly in proportion to the amount of usage.
Now, if you’re an enterprise that’s invested in an IP infrastructure as a foundation for WAN communications and also for VoIP you’ve got a ready-made environment to have a purely fixed and inexpensive cost of IP video. And the technology, the management systems and service providers like ourselves are now here to give people the sort of seamless experience they would expect when they’re doing a webinar or a plain old audio conference without any fuss.
And so it’s not really been the cost. Definitely, there have been people who look at the cost of a Cisco Telepresence [and other systems]…and say wow that’s extremely expensive. But it’s like a Ferrari versus a Mini Cooper.
Q. Has the small business market for IP video conferencing systems, that is affordable systems, been largely ignored by vendors?
A. No, I think the desktop systems that have been coming out, particularly from the traditional vendors, like Tandberg and Polycom … you can have a very cost-effective, high-definition video solution now. I think the whole challenge with the small medium enterprise is delivering them the foundation in the first place to deploy an IP video solution, because whether they would invest in IP networking technology is questionable.
Q. Can you quantify the savings a company stands to realize by using IP-based video conferencing versus one based on a traditional PBX system?
A. It’s pretty safe to say that most companies that put money into IP video conferencing now will end up spending more, not less, because the capability is better and the price points for the better video equipment is higher.
And there’s a first fixed cost of putting the network in place. So you’ve got this agile IP infrastructure, but you’ve got to take chunks of bandwidth then that you’ve got to put aside for your video.
Where the savings come are off the travel budget and there are savings. That doesn’t mean the travel budget is still going to go down either because you’re still going to have that intensity of travel that we talked about earlier. So I think people will end up spending more in that budget line but will be generating value elsewhere, be it through the cost reduction, contribution to carbon footprint, or work-life balance of their staff. Particularly domestic European and domestic US travel, it’s a really difficult environment for a lot of managers to be in and they love the ability to be able to replace that with video conferencing. It makes for a much, much happier and more productive workforce.
Q. You mentioned a couple of the benefits of video conferencing, but what is the single biggest driver?
A. That’s a good question. It depends on the stakeholder you’re talking to. If you’re talking to CFOs and HR leaders in organizations it’s really to do with being able to make staff more productive because they have a higher-quality interaction with lower costs with more intensity than they will do if they have to travel or use an audio conference when video conference is really what’s needed. So we’re about getting the most productivity from their people.
You definitely have a corporate social responsibly agenda. And all the companies we work with are very keen to take our surveys and make sure they are properly audited. We saved about 840,000 face-to-face meetings in one year, and it was 98,000 tons of CO2 that we bought back. And so people are monetizing those benefits or taking those benefits and putting them in their annual report.
Q. Has that mostly been European companies or are carbon footprint concerns also something you’re seeing in the US?
A. Until recently. There’s been a complete sea-change I’ve seen [in the US] in the past six to nine months that I’ve felt.
You definitely also have a CIO agenda: I bought this agile, integrated IP infrastructure and now this is the darn stuff we’re supposed to be running on it. This sense of frustration that there’s a whole load of video boxes sitting around gathering dust in rooms all over their enterprise and many of them are IP-ready. And this is the next phase of an evolution of a network’s IP strategy: I’ve done my VoIP stuff and video was really the cream of integrated applications being run over a converged network. So that strategy’s always been envisioned, that you’d have voice and video on a data network, so they’re getting on and deploying that.
All these agendas are coming together at the same time. And that’s why we’re seeing a surge in sales of video services and video equipment.
McCormack has been CEO of BT Conferencing since early 2006, after having been VP of product management for BT Global Services since 2002. Previously, he held various positions within BT and its joint ventures, including those with AT&T and MCI.
