Calculating the Return on Investment (ROI) for video conferencing

While video conferencing is quickly becoming ubiquitous, calculating the Return on Investment (ROI) for video conferencing is still something that is not really that much in vogue. However, increasingly, management is asking questions about the ROI for video conferencing, and they expect these questions to be answered with real numbers.

In this white paper, Lifesize explores the concept of ROI for video conferencing. So, what is ROI, really? Well, to put it simply, the ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company’s profitability or to compare the efficiency of different investments. The return on investment formula is: ROI = (Net Profit / Cost of Investment) x 100.

ROI can also be defined as, “the rate of money gained (or lost) on an investment relative to the amount of money invested”, or simply put an investment’s payback period. Of course, the shorter the payback period, the better. ROI also helps define value. Value can be derived from hard currency savings, and also improving time to market for your own product or service.

Video conferencing offers both tangible and intangible benefits, also called hard dollar and soft dollar saving components respectively. Video conferencing’s single largest cost savings benefit is to reduce both travel costs and time. While there is no substitute for a face-to-face meeting, the time it takes to travel and meet takes at least one business day away from an individual’s schedule. This translates into an inefficient use of someone’s time.

Also, the travel costs can be substantial and can typically range from $1,200 to $1,800 for a 2 to 3 day trip from the office per person. Due to the introduction of video conferencing, travel time has dropped in many companies by as much as 60%. Using 40% as a baseline, typical ROI for a small-to-medium video conferencing system is 12 to 18 months and in a worst case scenario, 24 months.

There are also other intangible benefits attached to video conferencing that may not be attached to a particular ROI, but will provide your organisation added value.

These benefits include:

Improving quality of life for employees who travel extensively
Increasing the speed of operations and decision-making
Unifying the organisation, by facilitating a “one building” approach
Facilitating training throughout the organisation
Attending a live video conference
Storing and Replaying the video conference
Accessing experts quickly in remote facilities for face-to-face meetings
Supporting green initiatives throughout the company and nationally

So, you should start calculating the ROI of video conferencing by starting with the hard dollar tangible savings. You should also brainstorm with executives about the intangible benefits associated with video conferencing that can help differentiate you and your organisation from your competition.

Video conferencing is an excellent value-add for delivering a key product or project within an accelerated time frame. This directly impacts your organisation’s speed to market as well as helps build a more comprehensive product.

So, now you know that the ROI for video conferencing is clear. The investment in video conferencing can pay for itself in as little as 12 to 18 months, or sometimes even sooner. It can bring about very real tangible and intangible benefits, so do not ever underestimate the value that video conferencing can bring to your organisation. Here’s to successful and seamless video conferencing.

For more information on how you can set up a video conferencing solution for your business, contact Actis at 022-30808080 or at contact@actis.co.in.

(Content courtesy: www.lifesize.com and Images courtesy: www.teleswitch.com)

Leave a Reply