The travel budget needs cutting, says the CFO. The corporate -social responsibility people say we have to take this green agenda seriously. HR reports that the latest polls have executives bleating about how much time they're spending on planes. Smaller local subsidiaries think they're not getting enough face time with company leaders. What are you going to do? For some CIOs, the answer lies in a relatively new concept called telepresence.
If you've even heard of telepresence you probably think of it as the latest incarnation of videoconferencing, and you'd be right -- up to a point. Telepresence combines the latest software, video, audio, screen and networking technologies to create a collaborative experience that its supporters say is as close to a face-to-face physical meeting as it gets.
OK, so you usually need a dedicated room to get the best out of it, but the big factor in favor of telepresence is that it cures a lot of pain points currently being felt by large organizations. Let's examine them one at a time.
The first benefit is cost. Supporters say telepresence can drive savings right to the bottom line by reducing travel expenses. For a one-off capital expenditure of US$27,516-$275,157 plus an ongoing maintenance fee, companies can take massive chunks out of their travel purses.
"The easy way in the front door [for telepresence sales] is to say: we can save your travel budget and give you payback in four to eight months, and that's no BS," says Marc Trachtenberg, CEO of Teliris, a leading provider of telepresence services.
"Other people say: 'Never mind the travel saving. When I speak to one of my pharmaceutical research and development bosses, he says I've taken three months out of the development cycle for a new drug'," Trachtenberg adds.
Paul Bradley, HP collaborative solutions business manager and the man responsible for the firm's Halo telepresence system, confirms that the cost-cutting power of telepresence is making it an attractive strategic investment.
"It lowers operating cost and at CXO level they see the value of doing things faster, whether that's acquiring companies or expanding, or examining how they do inter-company collaboration and the whole question of 'How do I connect to my supply chain?'."
Ray McGroarty, solutions marketing director at Polycom, which also provides voice and videoconferencing systems as well as telepresence, agrees.
"We're finding that with telepresence in our portfolio we're getting access to the C-level to a greater extent than ever before," he says. "In the past it was driven out of the telecoms unit but because of the cost reduction it can achieve it's becoming interesting to senior executives too."
Users of telepresence systems say that it might only take a few deferred business trips to claw back the initial installation cost of the system. The equation is being helped by falling prices of telepresence technologies, according to HP's Bradley. "Displays, cameras, codecs and management software are all falling in cost and we're going to see other suppliers providing capabilities," he says.
Trachtenberg illustrates recent price drops at the low end. "Today it's $35,000-$300,000 but three months ago it was $175,000-$300,000 [for a telepresence system]." However, he warns not to expect too much of a price crash.
"[Analyst firm] Frost & Sullivan says this will be a US$1.5bn market by 2013 with 16,000 units worldwide. That's not the iPod, so there are only so many economies of scale. It will come down in fits and starts, maybe five to 10 per cent per year. It's not a Dell model. Price will go down, yes, but not by 50 per cent a year."
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