Remote Conferencing on the Rise, Supplementing High-Growth Business Travel

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July 2007  -  The Federal Aviation Administration in March said aviation delays would grow in the coming years if the nation does not make "significant" infrastructure reforms. "Forecasters predict air traffic will increase by the equivalent of two major hub airports each year through 2020," the agency said. "The number of passengers carried by U.S. commercial air carriers is on track to hit the one billion mark by 2015." Nor is that all leisure travel. For two straight years, two-thirds of more than 130 members of the National Business Travel Association have said their companies would take more trips than they had the previous year. No wonder companies are seeking alternatives to travel. Though remote conferencing tools have long been available to firms seeking to reduce travel costs and save traveler sanity, a more intense drive for the use of web-, audio- and videoconferencing tools has emerged during the past year. Increasingly, corporations are turning to virtual meetings to save money, promote environmentally friendly policies and increase productivity. Buyers are looking for one platform to manage all their communications needs, and vendors are rushing to provide customers with bundled services. According to market research firm Wainhouse Research's latest biannual WebMetrics report, issued at the end of 2006, a survey of 183 webconference users from small and medium-sized companies and educational and government organizations said saving on travel costs was the top reason for using such services. Nearly 75 percent of respondents said they use webconferencing for education and training, and 60 percent said they use the same platforms for general meetings. "There is almost a direct relationship between increased adoption of Web training in 2006 and a decrease in in-person training," said Alan Greenberg, Wainhouse Research senior analyst and partner, and co-lead analyst for the WebMetrics program. Greenberg noted that in-person training meetings usually involve high travel costs. Researchers did not find the same correlation for videoconferencing or audioconferencing, Greenberg said, indicating that webconferencing technology is truly replacing meetings, rather than simply augmenting them. However, remote conferencing in general is seen as a productivity tool more than as a cost-savings device, he noted. "Conferencing and collaboration technologies don't necessarily replace all travel," he said. "There are always other drivers." Greenberg said he has seen a trend toward unified communications systems, in which companies bundle their entire Web, audio and video communications tools. "At this stage, a lot of it is visionary and marketing," he said, adding that a one-platform system for all communication tools has yet to be truly offered to customers. "We are seeing a huge shift toward unified communications," said Mariana Zamoszczyk, research analyst on high-tech conferencing and collaboration for market consulting and research firm Frost & Sullivan. Zamoszczyk said she also expects greater consolidation among remote conferencing providers as audio, Web, video and instant messenger communications are increasingly bundled for customers. "Everything started to get together under the same umbrella, and that has been going on since the beginning of the IT revolution," Zamoszczyk continued. "Nowadays, for vendors to succeed in this competitive world, they need to offer bundled solutions. So they are forced to sign partnership agreements with other providers and developers."

"Actual use of webconferencing technology at organizations is a fraction of what it could be." —REARDEN COMMERCE PRODUCT MARKETING DIRECTOR DAN FORD

Mergers and acquisitions in the market are happening "every week" as the competitive landscape shifts and vendors fight for market share, Zamoszczyk added. Competition is based not only on price, but also functionality, as customers demand tools that not only replace travel, but also enhance business objectives. "The main reason is to reduce travel-related costs, and the second is to increase productivity and competitiveness. We are also seeing a trend toward the implementation of this technology to reduce the carbon footprint." In North America, cost and productivity continue to be the greatest influences on use of remote conferencing, while concerns about carbon emissions play a greater role in Europe, Zamoszczyk said. However, some U.S.-based vendors, expecting concerns over emissions to continue to increase, have started to promote their "green" technology solutions. Dan Ford, director of product marketing for Rearden Commerce, said his company sees a tremendous opportunity in webconferencing as travel costs rise and corporate social responsibility initiatives gain ground. "Actual use of webconferencing technology at organizations is a fraction of what it could be," Ford said. Many employees do not know which webconferencing vendor their company prefers-resulting in some paying rack rates for webconferencing services--and do not realize the potential cost savings and positive environmental impact, Ford said. To overcome these challenges, Rearden advises clients to build adoption through convenience, suggesting its products can be "addictive." Rearden also offers standard discounts with vendors available through its products. "We have negotiated preferred rates with a couple of our merchant providers, and these preferred discounts allow us to provide pricing far below what many small and medium-sized enterprises would be able to negotiate for themselves," Ford said. The percentage discount varies by customer, and Rearden attempts to offer clients better rates than they can get on their own, he said. Rearden Commerce has introduced a single site source for hundreds of services, including travel and meetings, package shipping and dinner reservations. On the meeting services page, corporate travel managers may post messages or policy information for users. A cost calculator provides a measure of visual guilt to encourage users to choose the most economical options for the conference. For example, if multiple attendees use one "bridge" to access the event, the cost of the webconference decreases and is noted in the calculator tool. "It's a unique opportunity for companies to save money on conferencing, as well," Ford said. Telecommunications giant British Telecom in 2005 saved a minimum of £431 (US$856) per meeting and £146 million (US$290 million) overall by, when possible, replacing events with remote conferencing, Ford said. He noted that the company saved 54,000 tons of carbon dioxide by replacing travel with remote conferencing, equivalent to 392 return trips to the moon. BT has its own line of remote conferencing services. Pfizer Inc. also has tried to rein in its growing meeting costs by installing videoconferencing equipment in all sales offices and relying on webconferencing, said Doug Amann, senior director and group leader for meetings, conventions and production management. "We talk about webconferencing and videoconferencing, and we're seeing growth in that. But at the end of the day, we spend a lot of money--big money--on small meetings," Amann said. Focus on Quality While many developments in the remote conferencing industry have focused on productivity and cost efficiency, a market for premium-class videoconferencing also has developed. Ira Weinstein, senior analyst and partner at Wainhouse Research, said "telepresence" technology has been available for about 10 years but came into the limelight last year when it was offered by Cisco Systems Inc. and Hewlett-Packard. "The difference between telepresence and videoconferencing is that videoconferencing tends to focus around the connection. I have to have my system talk to that system," Weinstein said. "How you integrate it, what you do with the room, and the real experience is not taken care of and left to chance."

"This is not the kind of purchase that somebody slaps on their corporate credit card." —WAINHOUSE RESEARCH'S IRA WEINSTEIN ON TELEPRESENCING

Telepresence, with systems costing in the hundreds of thousands of dollars, features large, life-size images of meeting participants, high-quality audio and services to make connections automatic and seamless. "The technology is hidden, and they're trying to create a very pleasing meeting space instead of just a TV with a video system in front of it," Weinstein added. Use of telepresence systems is not expected to skyrocket, but many major companies are installing rooms for high-end board meetings, briefings, and research and development. "We are seeing adoption, but these solutions are expensive," Weinstein said. "This is not the kind of purchase that somebody slaps on their corporate credit card. Videoconferencing is viewed as an IT solution, and it's the IT department that creates the videoconferencing strategy for the company. Telepresence is viewed as a communications tool; it's an executive tool because of the cost. So it tends to be paid for out of different budgets, it tends to be deployed in smaller numbers and it has to go through a different approval process." Since cost is not really a consideration in purchasing these systems, return on investment metrics are difficult to implement. The focus for the customer is on the quality of the experience as a true virtual meeting that can substitute for an in-person event. Time savings, not cost savings, is the biggest user benefit. "You can have five face-to-face meetings a day instead of one," Weinstein said. Weinstein said he expects more deployments of telepresence technology every year. Yet, as technology for videoconferencing continues to improve with high-definition monitors, and the price of telepresence remains high, use of the premium systems will continue to be limited. "Telepresence is generating a huge amount of interest and hype, but more often than not that demand is being fulfilled with an HD videoconferencing system," he said. Plans are in place at Wainhouse's WebMetrics project to begin tracking demand for archival and management tools and to continue research into how customers want to use remote conferencing technology, whether for ad hoc events or scheduled meetings, Greenberg said. Greenberg said he expects webconferencing to be accessible by users in different ways as unified communications packages gain favor in the future. Users may be able to launch online meetings within other applications--such as a Microsoft Word document, for example. "Definitely, use will continue to increase. There is no doubt about it," said Frost & Sullivan's Zamoszczyk. "We see a massive deployment of such technologies separately or in bundles."