Telepresence and video conferencing: The business case

It could be any meeting room, anywhere, with one major difference: The room, within Sheraton on the Park hotel in Sydney, is a gateway to the world. At the push of a button, we are chatting to colleagues in Toronto, Canada, speaking to each other as if we were seated across the table. We see the nuances of facial expressions, hand gestures and presentations, full-size, clear and uninterrupted.

Until Starwood Hotels unveiled its suite at Sheraton on the Park in February, telepresence in Australia was little more than a showcase technology. Impressive, immersive and bleeding edge, vendors were keen to promote the benefits but, with a hefty pricetag, the concept of virtual meetings featured well and truly on the 'nice to have' side of CIO's priority lists, if indeed it featured at all.

Not that it isn't a compelling technology. Far from it. But organisations have been hard pressed to assemble a suitable business case for implementation. Starwood had no such issue. The group is in the midst of stage one of a global rollout that aims to install 70 telepresence suites in cities around the world by the end of this year. Tokyo has just come online, joining the likes of Chicago, London, Los Angeles and several locations across Asia. At the current rate of implantation, about six rooms are going live each month.

"Before it became a global initiative we tried to get it running between Sydney, Singapore, Macau and another location in Asia," explains the director of information technology for Sheraton on the Park and IT regional director for Starwood Pacific Hotels, Lindsay Leigh. "We decided it wasn't going to be as effective if we only had four locations talking to each other. So we went to the US.

"A few other Starwood hotels were looking into the technology so we sent our heads of IT globally to talk to vendors and see what we could come up with."

The Sydney telepresence suite was the first cab off the rank -- and the first publicly available suite in the southern hemisphere. It uses Cisco technology and the hotel partnered with its communications provider, Telstra, and Tata Communications. Telstra was keen to get behind the project, managing the backhaul. The Tata Global Network includes a submarine cable network and a Tier-1 IP network, with connectivity to about 200 countries across 400 points of presence.

As the first implementation, Leigh wanted the room to be the showpiece of the region and the hotel. Cisco installations must conform to set guidelines but as the saying goes, the devil is in the detail.

"The room is 100 per cent soundproof; all of the walls are double-thickness, double padded, the air conditioning ducts have been hidden and battened down so there's no noise. We went through about 10 different configurations of lighting until we worked out what was best for where all the individual people sit," he says. "The little things we learned have become the standard across the whole of Starwood. So we were in a trial period on the fly to make it fit and it has come together perfectly. This is what they base everything else on."

It is somewhat of an inconvenient truth that the global financial crisis has been a bit of a boon to the telepresence and video conferencing industry. Faced with the indelible need to cut costs and increase productivity, enterprise began to explore alternate methods of collaboration that don't involve getting in a car or on a plane. It was a key part of the business case for Starwood's own telepresence network.

"The first part was: 'Will people want buy this and what is the price point at which people would look at this scenario?' "So we analysed the cost of flying; if you fly a CEO or senior executive from here to Singapore it's $3000 to $4000. But we also took into account the cost of people not wanting to leave their family."

Sheraton on the Park charges about $500 per end point, per hour. Anybody can use the service and the hotel setting, where staff are on call 24 hours a day, makes the round-the-world proposition realistic, particularly in Australia where long-haul travel is otherwise an inevitability.

But the GFC cannot take all the credit; virtual conferencing makes tonnes of sense from a sustainability perspective -- and we're talking tonnes of carbon. Sustainable collaboration

Telepresence is perhaps the pinnacle of virtual meeting technology but it requires significant investment. It has, however, helped bring video conferencing technology into the parlance of enterprise.

"Larger organisations will be going for high quality, such as Cisco telepresence, Polycom or Tanberg," says senior analyst for enterprise Asia-Pacific at Ovum, Claudio Castelli. "Normally, you have to have a carrier behind you so the companies tend to be multinationals with sites in multiple locations."

Castelli says video traffic in the enterprise is growing as video conferencing technology makes it possible for companies to go for high level solutions without the high level investment.

Some companies like international planning, infrastructure and environmental consulting firm, Parsons Brinckerhoff (PB), combine both. PB is considering the deployment of a telepresence solution between its offices in London, New York and Dallas. Closer to home, however, Australia Pacific-based CIO, Christopher Johnson, successfully implemented a Tanberg-based video conferencing solution that has not only garnered considerable buy-in from employees, but material return on investment.

PB Asia Pacific was already using Cisco's WebEx Web-based conferencing at the desktop level, but the solution had reached its limit within the organisation. Johnson was keen to explore the collaborative opportunities of video-based solutions. He and his team worked with managers to identify the sites employees most travelled to by rental car and by plane -- the Gold Coast and the Sunshine Coast, Brisbane, Sydney and Melbourne. Based on the findings, he was able to make a case to trial video conferencing.

One of the key drivers for the implementation, Johnson says, was the organisation's social and corporate responsibility focus. The company recently established a 'fly free' week, when air travel was banned for all employees, as part of its sustainability program.

"From a corporate responsibility perspective, we commenced an advertising campaign within the business in the four locations around the theme of: Why jump on a plane or get in a rental car when you can achieve the same thing and maximise time in your day through video conferencing -- why not give it a shot?"

Johnson cites directorate-level sponsorship, communication and a multifaceted approach that took in all business units as some of the reasons for the project's success. He is also impressed with the reporting functions of the system which allow the company to track the number of conferences, network performance, carbon-based reporting and return on investment.

"There are some assumptions in reporting," he admits. "It asks for the number of participants and the typical cost of travel per participant. But it became pretty clear to us during the 60-day trial that there was a material return on this investment -- a very tangible reduction in carbon emissions and in rental cars and flights, and the rather intangible in productivity gains."

PB is not the only company to have realised the productivity benefits of video conferencing. Ricoh CIO, Rob Livingstone, was able to use the impetus of a major business project to implement a Polycom high definition video conferencing solution. When Ricoh's state-of-the-art Oceania printing innovation centre in Sydney was given the green light, the company also realised the need to provide a showcase experience to customers in other parts of the country.

"Part of our strategy was to put in high definition video conferencing," Livingstone says. "So a customer could come into the Melbourne showroom and enjoy the benefits of a high definition video conference directly into the printing innovation centre in Sydney. They can see and experience the software and hardware without having to fly up."

[leftquote: Because all the video conferencing is done across our internal data network, the marginal cost of calls is zero] The drive and justification for the solution may have been all about the customer and the need for best of breed infrastructure, but Ricoh soon began to realise the technology also provided company benefits.

"Because all the video conferencing is done across our internal data network, the marginal cost of calls is zero," Livingstone says. "It's not ISDN-based so it's high bandwidth, point-to-point or multipoint conferencing and we encourage staff to use it for internal meetings. Obviously, customers come first but we have spare time on the network and we found that the internal use has been phenomenal."

Starwood has also begun realising the internal benefits, conducting budget reviews and key recruitment interviews using telepresence. It's certainly not the system's raison d'etre, but there's no doubting the productivity gains.

Ricoh is averaging about 2500 video conferencing sessions per year. Based on a five per cent improvement in productivity tied to a percentage of those who might not travel or to inefficiencies, Livingstone calculates the company is looking at a minimum of 250 hours of productivity gained based on the technology.

"And that's probably conservative," he says. "Our total travel bill has reduced year-on-year by about $220,000. That's a compound saving, which is also due to reduction in airfares, better buying and shorter trips where necessary, but certainly a contributing factor to the reduction is the high use of VC."

He estimates about 40 per cent of the savings is directly attributable to the use of the video conferencing infrastructure. The success of video conferencing has spurred a further desktop video conferencing rollout through the same infrastructure. "We are now extending the capabilities of the meeting or boardroom video conferencing units to the desktop for key stakeholders within our business," Livingstone says, "And extending the scope of VC even more."

How do you know when a video conferencing rollout has gained buy-in from the business? You start receiving grief from employees when it's not available. PB quickly found its video conferencing rooms oversubscribed and that mobility was becoming an increasing requirement. Johnson solved the issue by deploying Tanberg's desktop-based video units.

Likewise, CSC, which has installed seven LifeSize high definition video conferencing units in its offices around Australia, discovered a keen level of interest from staff only 12 months after implementation.

"People beat me up because they can't get in to use it," jokes CSC CIO, Ben Patey. He considers desktop video conferencing the next evolution for enterprise "as long as CIOs can get answers to questions such as 'how does it impact on the network?'"

You also need to have sound architectural design, strong policy settings and a close relationship with your telco.

Another major consideration is an age-old IT issue -- interoperability -- as vendors jockey to establish their technologies as 'industry standard'.

"It's not easy to make Cisco telepresence talk to LifeSize or Tanberg," says Ovum's Castelli. "It is possible but you need an exchange service in the middle and that's normally provided by a service provider, who charges for it."

The telepresence industry is beginning to see partnerships, such as the recent deal between BT and Tata Communications for an intercarrier exchange.

"You have to subscribe and buy it as a managed service," Castelli says. "That's the direction it seems to be going but, so far, it is not fully transparent."

For CIOs, it can be more like picking a team than choosing a technology partner. "It was a big decision on our part," says Starwood's Leigh of the choice to go with Cisco. "We had to make a decision between Polycom or Cisco and the decision was a bit like 'Holden or Ford'."

For those like Starwood, which sells its telepresence suites as a service, the return on investment calculation is solely around use. Leigh estimates an ROI of about nine months. Intangible returns, such as productivity gains, can be more esoteric.

PB's Johnson used a relatively simple but effective evaluation procedure.

"We had a register in the room at each of the locations to rate the experience having just finished a video conference," he says.

Johnson suggested the initial $292,000 investment would have an ROI of eight months in a best case scenario.

"We didn't have to do a thing to our network except tweak quality of service, class of service and prioritisation for the traffic and so on. Within 60 days of implementation, we received the reduced year-on-year, month-on-month invoices for all our travel -- and the $292,000 investment had turned off $750,000 in travel.

"From a purely financial perspective, if we turned all the gear off and never used it again, we had a material return on that investment, but that was never the goal. It was never about the money -- our goal was all around sustainability and, of course, improved collaboration and work efficiency."

Ricoh's Livingstone says there were two parts to the ROI discussion. "One is based on a strategic intent and the ROI rides on the back of that initiative, whether it's the refurbishment of a major building or infrastructure. From our point of view, the ROI was very strategic -- it was about maximising exposure to existing and potential customers and driving our business towards significant growth targets.

"It turns out that we've travelled some way down the line with [video conferencing] use internally, with quite considerable utilisation and savings as a result -- and that has been icing on the cake."