Tuning Into Travel Savings

Videoconferencing, which has long promised to save business travelers both misery and money, gained new interest immediately following the Sept. 11 tragedy. Several months later, as most businesspeople begin again to embrace the skies, some companies remain convinced that video meetings can save time and money and offer a viable alternative to travel.

Take Ernst & Young LLP in New York, which by the end of January was hosting more than 200 videoconferences per month. Although that's half of the 800 or so videoconferences the Big Five firm ran in October and November, the numbers remain high—up to 100 more video calls per month than in the same period last year, according to Craig Brandofino, assistant director of audio and videoconferencing services at Ernst & Young.

Videoconferencing saves Ernst & Young $150,000 to $175,000 per month in travel expenses, says Brandofino, who notes that his company uses video connections for everything from internal town hall gatherings to meetings with clients. The payback in travel savings, based on the cost of equipment, installation, Integrated Services Digital Network (ISDN) lines and management, took just four to six months, Brandofino says.

New York-based Bristol-Myers Squibb Co. doesn't quantify the ROI for videoconferencing as closely as Ernst & Young. Nevertheless, the pharmaceutical giant's videoconferencing strategy was initially aimed at travel savings, says Steve Marson, director of the company's e-conferencing department.

"We worked closely with corporate travel to find routes where people were traveling that cost the most money," Marson says. "Then we targeted our investing [in conferencing technology] there." Many of the routes Bristol Myers targeted for videoconferencing are between the U.S. and Europe and between the continental U.S. and Puerto Rico, according to Marson.

Setup Costs

Generally, a small room or executive video system, like the one set up by Bristol-Myers in Puerto Rico, costs $20,000 to install "once all the parts of the system, local network and labor are included," says Marson. "And then [it] costs $10,000 a year to run."

Beyond the travel cost savings that videoconferencing systems generate, Marson also points to the productivity gains that employees reap from not having to travel to and from meetings.

A study released last month by WorldCom Inc. confirms that notion. According to the study, an off-site meeting gobbles up 21 hours in travel, preparation and meeting time compared with four hours when done via a videoconference.

At Bristol-Myers, videoconferencing is but one component in a range of virtual conferencing technologies that also include audio and Web conferencing and streaming video broadcasting.

Marson says one high-ranking sales manager told him that two-way video is normally used "when you need to see the whites of their eyes." He was referring to videoconferences that sales managers regularly hold with staff to get commitments on sales targets.

Andy Nilssen, an analyst at Wainhouse Research LLC in Brookline, Mass., says a lot of top-level managers support videoconferencing because it's a way "to make sure people are paying attention by reading their body language—or . . . to tell if someone walks out of the room while the conference is in session."

Marson says large-scale videoconferencing even costs less than teleconferencing. "I use a ratio of somewhere around 10-to-1 for the relative costs of audio- and videoconferencing," he says.

For example, a 500-person meeting would cost more than $5,000 per hour if all the participants used individual phone calls to audioconference, but it would cost less than $1,000 if the participants were gathered into five videoconference rooms each holding 100 people, he says.

Ernst & Young and Squibb primarily use room-based videoconferencing systems that run over ISDN lines. However, both companies are testing video over IP, which enables companies to conduct videoconferencing over an existing wide-area network instead of leasing ISDN lines from a local phone company.

"We're looking at video to the desktop," says Brandofino, referring to a pilot program Ernst & Young has under way using ViaVideo technology from Milpitas, Calif.-based Polycom Inc. ViaVideo is a small camera with a built-in microphone that sells for just under $600, far less costly than large-room systems that sell for around $15,000.

Cope is an Indiana-based freelance writer. Contact him at jamescope@sbinet.com.

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Fear of Flying?

One quarter of travelers who have averaged six business trips in the past year have reduced air travel since Sept. 11, according to “Meetings in America IV: The New Road Warrior,” a report released March 6 by WorldCom Inc.

Travelers who have canceled trips have turned to the following alternatives (multiple responses allowed):

Travelers who have canceled trips have turned to the following alternatives (multiple responses allowed):

Business travelers who have changed their travel plans since Sept. 11 are more likely to use videoconferencing in the future:

USED SINCE SEPT. 11 TO BE USED IN FUTURE
Total conferencing 55% Total conferencing 62%
Audio 42% Audio 36%
Video 32% Video 39%
Web 23% Web 26%

Source: Dec. 12 to Jan. 5 survey of 323 U.S. business travelers who had taken three or more business trips by air in the previous 12 months. Survey conducted by Taylor Nelson Sofres Intersearch, Horsham, Pa., for WorldCom.

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Copyright © 2002 IDG Communications, Inc.

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