ROI study sheds light on conference benefits (3)

In part 1 of this article on the business benefits of Web conferencing we have established that there is a business case for productivity with regard to the use of web conferencing at least in the sales department and also in the training department.  in part 2, with the help of Frost & Sullivan and WebEx, we found out that we were even able to underpin those conclusions with facts and figures.  As we concluded in this latter part of the article, the expected results in terms of productivity and return on investment, can be impressive.  In part 3 of this article - i.e. this one - we would like to stress a few points so as to delve deeper into the analysis of those numbers.

There are indeed - despite the undeniable quality of this document - a few grey areas which need to be underlined if we wish to refine our analysis of the Web conferencing ROI.

First and foremost, the examples set forth in this ROI calculation White Paper are high-tech examples, essentially with companies based in the United States. Secondly, the assumptions made in this document with regard to the investment of time savings into work (the so-called correction factor) are rather subjective and may even be deemed to lack transparency to a certain extent (see page 10 of the whitepaper  for details).  Results can indeed vary greatly according to enterprise size, staff Internet literacy, and also the location of a business. Thirdly, whereas a systematic increase in productivity through the replacement of physical meetings with remote conferencing is mentioned, there are still many cases in which face-to-face meetings are bound to be more efficient and we cannot entirely rule them out altogether. At least, it wouldn't yet seem feasible to me just now, and certainly not with regard to sales related meetings.  Fourthly, the lack of representativeness of the sample (as in example 1 and 2, only a single company is investigated in this study) and the lack of historical data can actually cast a few doubts on this ROI exercise.  Lastly, the fact that many a number are originating from the editor itself, could also lead a few people to doubt the numbers are right.

All the above items not mentioned in a negative way but rather as so many hints as to the potential improvement of an ROI calculation for web conferencing.

Eventually, one could also wonder whether the sheer importance of these numbers in terms of productivity, and percentages for the return on investment of web conferencing are indeed instrumental in making the story more plausible or on the contrary is instrumental in raising doubts in the minds of those who oppose the further development of web conferencing (what does a 465% increase in productivity mean? Can anyone believe in such an impressive number? Does it mean each of us can work 4.65 times more than we ordinarily do?)

What prompts these musings about how related the ROI for web conferencing is is in fact the hindsight which I have derived from the time spent on such subjects  since the first implementation of web conferencing at Orange at the beginning of the year 2001.  More than seven years later, I'm still impressed by the margin for improvement with regard to the pervasiveness of web conferencing, throughout Europe at least.  Most business people know what it is, but there are still quite a few managers who are discovering the tool for the first time.  As I am an intensive user and promoter of this kind of technology I do believe that the ROI numbers showed, at least in principle, are true and apply more or less to all sales & services related activities as well as internal and external communications.  However, I doubt that most people would believe that these numbers are right.  Only intensive and highly productive users who have become so Internet savvy and au fait with web conferencing services would actually relate to these numbers.

Having said that, when Frost mentions that "there is no question that collaborative technologies drive efficiency" (re page 6 of the whitepaper) I think that on the contrary all ROI computations are subjective and deserve to be debated.  Whereas overall benefits seem obvious, mainly to those who are quite familiar with the tool and its usage, there is really a need to demonstrate to others that these numbers are right because we are far from having convinced the entirety of business players in that area.  Despite all the (sound) talking about Green IT, I think we are still a far cry from using this tool properly and pervasively.  However I do believe that the return on investment is quite quick and that normal then a few months are necessary to counterbalance the cost of the "investment" (as a matter of fact, there is no investment because this is an SaaS model).

This is actually the paradox which serves as a title for this White Paper but is not really explained in the body of the document.  On the one hand, all ROI calculations for Information Systems whatever they are are indispensable and at the same time they do trigger criticism or even doubts or incredulity.  There is also another even greater paradox about the return on investment for Information Systems in general.  Let's take as an example one of the most popular of them, and one of the most pervasive, I mean electronic mail messaging. There is no doubt that we need e-mail to do business.  We need it to communicate with our clients, partners and amongst ourselves.  However, if we were to calculate the return on investment for e-mail, there'd be a good chance that the results be a lot less impressive than one may think.  (For hints about that, I recommend my earlier work on e-mail usage/misuse in the enterprise). Similarly to web conferencing, questions like these were raised when e-mail was first established at the end of the 1980s.  Managers would ask why we would need this tool at all, and why they would have to respond to their e-mail themselves.  Yet, the decision to implement e-mail was not related to the answer to that question, but to the sheer need of having it installed and moving to the next phase.  I think that similarly, that the development of telepresence is not only related to its ROI, but to the sheer need of changing gears, of moving to the next iteration of conferencing.   

Web conferencing usage will continue to grow over the next few years, in order to establish itself on every desk in every enterprise.  The requirement for remote collaboration to take place is imperative, and although one would need to improve the calculations on ROI and productivity, I believe that the widespread adoption of this tool goes way beyond the numbers and the need to measure how financially productive that is.

One of the major take-aways from this White Paper is that travel cost reduction is not the most interesting argument for the justification of web conference adoption.  We knew that already, but now we can actually prove this point and back it up with numbers. It's mostly productivity which makes it worthwhile and produces results (25% versus 75% according to Frost's estimation).  This is all the more interesting because managers are reluctant when travel reductions are used as a means of selling remote conferencing services.  Besides, as I have pointed out already, there are cases and there will always be cases in which face-to-face meetings will be more productive and more efficient than remote meetings.  At the end of the day, we still need to meet people just because we behave differently online and face-to-face; the level of interactivity derived from face-to-face meetings, like it or not, is not the same, because in face-to-face meetings one can actually feel (not just see) how other people react.  In sales, this is an absolute must have. There is no doubt that face-to-face meetings in sales will remain important in the future.  Even though we may learn to use web conferencing more and more often.  We shouldn't oppose both forms but use each of them properly.

As a matter of fact, an often sought but very little used feature of web conferencing (the webcam feature**), can come in very handy to overcome this face-to-face issue of not being able to react to somebody's expression when you are carrying out a meeting online.  It also has another impact insofar as it enables you to ensure that your counterpart is actually listening to you and not doing something else like responding to his e-mail while you are talking for instance. The impact of people doing various things while being on online meetings is also a serious threat to the increase productivity on web conferencing, and has not been taken into account in this study. This inhibitor is now often quoted for belittling the impact of web conferencing.

As a conclusion, this ROI calculation exercise is quite useful in showing how valuable web conferencing can be in business, and how it brings significant productivity improvements.  However it can be considered as a basis for discussion and not a final calculation to be taken at face value. We still haven't reached the heyday of web conferencing, but I'm very optimistic as to its further widespread development.  Year after year, I observe that my mba students are more and more au fait with web conferencing, that the awareness and the usage is growing.  We're just a stone's throw from success.

(**) as an aside, I personally make sure not to miss an opportunity of switching on my high end webcam when carrying customer related meetings online. Even though it can appear as a gadget, it can be very instrumental in conveying the human factor in an onine conversation).