With almost any IT purchase, when you ask for a return on investment (ROI) rate, you get a simple answer: 15% in...
the first year or 75% in five years. Not so with unified communications ROI. Instead, you get vague answers about soft benefits, such as "increased productivity" or "enhanced communications." But a new study from Frost & Sullivan draws a stronger correlation between collaborative tools and monetary gains.
"If we're able to measure the amount of improvement … that UC can provide versus no UC, then we can say definitely there is some measurable return on investment," said Brian Cotton, a vice president at Frost & Sullivan and lead author of Meetings Around the World II: Charting the Course of Advanced Collaboration, a yearlong global study sponsored by Verizon Business and Cisco Systems.
Despite correlations between enterprises that used collaborative tools and a greater likelihood for success in more traditional ROI standards -- one-and-a-half times more sales and profit growth – Frost & Sullivan researchers hesitated to define it as a causal link.
"If you don't use UC, you can still get your job done," Cotton said. "If you use UC, you can get your job done better, and 'better' can be defined in a lot of ways."
Unified communications ROI defined by more than money
Frost & Sullivan defined "better" as improved performance in six areas: research and development, human resources, sales, marketing, investor relations, and public relations.
Instead of labeling that margin as unified communications ROI, Cotton's team dubbed it a "return on collaboration," or ROC, acknowledging that a return on UC deployments was quantified by "the amount of change in specific functional areas" versus straight time and dollars.
"One of the things that make it really hard to quantify is that UC is an enabler," Cotton said. "It's not like a notebook computer or security appliance, where it's very direct -- 'I installed this enterprise security application and it stopped 15% more spam.'"
Biesse America, the U.S. division of Biesse Wood Division, an Italian manufacturer and developer of computerized wood-working equipment, saw its first instances of unified communications ROI in travel savings but soon found the value of collaboration extended further, according to IT manager Charlie Schulz.
After recently deploying Cisco Systems' unified communications suite – including a voice over IP (VoIP) phone system and unified messaging software -- coupled with the WebEx Web conferencing solution Biesse already had, the company first saw about $5,000 of savings per month in travel expenses, Schulz said.
But the value of collaboration began to emerge in unexpected ways. By using online video demonstrations and WebEx conferences to reel in potential customers, Biesse could include its engineers from around the world on sales calls. Traditionally, Biesse would send its engineers to trade shows to help Sales close deal with customers. Schulz said the company is closing five times more deals with online conferences than with trade shows, and he estimated that the company has since realized a $15,000 to $18,000 per month unified communications ROI.
"We went so far that we cancelled most of our trade shows," Schulz said. "Obviously, we also spend much less time on the road, so we spend more time actually doing the job."
Study finds value of collaboration in profit, sales and innovation gains
Frost & Sullivan's ROC research surveyed 3,662 companies and tied the value of collaboration to gains in several key areas: sales growth, profit growth and new product development.
- New product development occurred in 68% of enterprises that used UC tools versus the 39% that developed new products without collaborative tools.
- 76% of enterprises that used UC tools saw sales growth versus the 50% that increased sales without using them.
- Profit growth was also more likely in enterprises that invested in UC -- 71% versus 45%.
- Collaborative environments such as sales and research and development yielded the highest rate of return, while employee retention and turnover seemed to benefit least.
- Small to medium-sized businesses (SMBs) appeared to see the lowest unified communications ROI, according to the study. Large enterprises with 1,000 or more employees yielded on average six times more value from collaborative tools than SMBs. Despite appearances, Cotton said, the finding doesn't mean SMBs don't benefit from UC. Instead, he said, they probably need to use UC for more than a limited number of employees and include suppliers, investors and key customer groups.
Australian company sees unified communications ROI with improved customer relations
AUSTAR, an Australian subscription television provider, began using Cisco's UC products in its call centers last year, allowing for more sophisticated routing, unified messaging and video conferencing, said Dean Walters, chief information and technology officer and director of operations.
The system is ready to support future projects, such as customer-initiated Web chats, browser-initiated VoIP calls, and agent-to-customer video conferencing, Walters said. Agents can also work from home, allowing the center to call in more troops for unforeseen peaks in demand. For AUSTAR, the unified communications ROI is the ability to use staff more efficiently, he said.
"[Since deployment, we have seen] improvements in average handle time through increased routing accuracy and the [ability to] provision customer-specific data to agents," Walters said. "These improvements in operational efficiencies are measurable and have contributed to real reductions in the cost of customer service for AUSTAR."
Enterprises that use more sophisticated UC tools, such as telepresence, are more likely to see greater returns, Cotton said.
"When we're talking about collaboration, it's not just about sharing data or being in a Web conference. It's being able to read the subtle cues," he said. "If I'm in a telepresence suite, I can see an eyebrow raised, I can see the frown or I can see the eyes glaze over … and adjust my pitch."
Let us know what you think about the story; email: Jessica Scarpati, News Writer
Dig Deeper on Developing a UC Strategy