2006 TechNO Expo

Tom Tierney
President and CEO
Tierney Brothers

Most companies look at videoconferencing as a means to reduce travel budgets and lessen the airport time for busy managers and executives. Travel budgets can be reduced anywhere from 10 percent to 70 percent, depending on how widely videoconferencing is deployed, the network infrastructure, and whether it is mandated for certain kinds of work. There are many other benefits, both tangible and intangible that contribute to the ROI, in such circumstances as first-round recruiting and remote account management.

To make owning worthwhile, the company should use the equipment once or twice a month. The cost to rent a room and drive several people to a local destination for a videoconferenced meeting is certainly a deterrent today, when high-quality systems can be leased for $200 to $400 a month.

We typically base an ROI evaluation on a one-year equipment payoff profile. Some companies may choose to include a second year in their evaluation. Certainly the primary consideration for videoconferencing is the reduction in travel expenses. However, the other primary consideration is whether the calls will be Internet protocol-based (over the Internet) or via ISDN, or integrated services digital network lines (a digital phone service). With an ISDN call, there are line charges just as though you are making a long-distance call. In both scenarios, bandwidth is critical, but this should especially be considered if the system will be connected via a company’s existing Internet infrastructure. Bandwidth can be consumed by other users on the same network and can subsequently slow down the call. This results in less than smooth motion in the video as well as loss of audio or even dropped calls.

In some cases, a single use per year can justify the cost of owning a system. Eliminating travel costs for one trip from Minneapolis to Beijing will be much more significant than eliminating the occasional Chicago trip. For typical United States travel, we would generally suggest that fewer than 10 trips per year would warrant renting the system rather than buying.

The other consideration is that with rental, you don’t have to deal with ownership issues such as maintenance, depreciation, and technical support. We often provide services to clients who use the technology frequently but choose to rent specifically for these reasons.