The Videoconferencing Payoff

By Elizabeth Bennett  |  Posted 2002-01-01 Print this article Print

Is videoconferencing really the answer? Find out when and how it actually pays off.

Cost-cutting campaigns, a gloomy economic forecast and the post-Sept. 11 travel freeze have renewed corporate interest in videoconferencing. Sales and inquiries have jumped in the past quarter, reports market-research firm Frost & Sullivan, as companies assess the technology for improved service and possible savings.

The three most popular methods of videoconferencing—in-house, hosted public rooms and managed services—range widely in ease of use and total cost of ownership. Each, of course, is significantly better than a face-to-face meeting: A quarterly get-together of 20 executives costs nearly three times as much as the highest videoconferencing alternative.

After the initial investment, the most cost-efficient choice is the in-house setup, in which a company installs and maintains the network and equipment and manages call-monitoring and scheduling. Even used as infrequently as four times per year, an in-house solution pays off versus other options in two years. But buying does not imply usage, warns Gartner Inc. analyst Donald Stuart. And many companies fail to invest in dedicated staff, whose presence facilitates use, he says.

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Companies that lack the resources to manage systems, or are unsure of the potential return, can hire hosting or managed services. Hosting firms lease out space and organize calls in public conference rooms. The host provides all equipment and manages call connections, monitoring and troubleshooting. As with in-house conferencing, only the initiating caller pays the transmission fee. This option requires the least commitment, but the high connectivity charges make it less appealing as the number of meetings increases.

A managed-services firm will set up and run a company's systems on site—an expensive but convenient option. Such contractors sell or lease systems, install and maintain the network and equipment, and monitor calls. Fees—including connection charges—are typically based on a flat monthly rate, so the return improves with use. Background Reading Learn the basics of videoconferencing security at

Senior Writer
Elizabeth has been writing and reporting at Baselinesince its inaugural issue. Most recently, Liz helped Fortune 500 companies with their online strategies as a customer experience analyst at Creative Good. Prior to that, she worked in the organization practice at McKinsey & Co. She holds a B.A. from Vassar College.

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