- Email: [email protected]
Videoconferencing
Videoconferencing David Green and Kathleen J. Hansell
57 David Green is Director of Private Satellite Networks at VideoStar Connections, Inc., in Atlanta. Kathleen J. Hansell is Marketing Representative for the International Services division of Satellite Business Systems,.McLean, Virginia.
You can't shake hands at a videoconference, but in every other way this alternative to face-to-face meetings can improve personal productivity and increase competitive advantage. "~/~ike Metcalf looked out the ] ~ i / / | window of the 727 as it .K • . I k touched down after a long flight. This could be anywhere, he thought as he grabbed his carry-on bag from the overhead locker and strode toward the rental car counter. Fifty minutes later Mike exchanged a warm handshake with Jack Hopp, plant manager of Fortunar's field production facility. "It's good to see y o u , " said Jack. "Have we got a busy schedule for you!" "So what else is new?" laughed Mike. He had made this trip and others like it so often that he had long ago given up notions of afternoon golf and gourmet dining. "How's Grace and the family?" Jack asked. "Good. She's busy with yearend reports. And damned annoyed with me for missing Susan's recital this evening. Last time it was Mickey's soccer tournament. I can't win." Two days later Mike was on another 727, winging homeward. He was tired. His trip had not been
successful. Events had occurred in the home office while he had been on the outward-bound flight that had a bearing on his discussions with Jack and on his own position. A quick phone call to the home office had given him little information, and he knew that he hadn't come across to Jack and the others as the informed strategist he had intended to be. The Fortunar production people hadn't the technical understanding of the new product, either. If he had known, Mike could have brought along the chief engineer, and the Alverson reports might have been helpful, too. He sighed. He wasn't eager for the follow-up trip that was now obviously necessary, and thought about how unproductive these last few days had been. He looked at the other business travelers on board and wondered how many of them were thinking the same thing. People Communications
M
ike and his fellow travelers are, in a sense, victims of an information economy.
Business Horizons / November-December 1984
58
Transacting business in this economic environment requires managers and professionals to spend most of their time in communications activities. By their nature, these activities involve many inefficiencies-seeking information, missing phone calls, waiting to see people, and traveling to meetings. According to several studies, approximately half of the business day is devoted to communicating in face-to-face meetingsJ Many meetings require travel and involve a substantial amount of lost time, high out-of-pocket costs, and the subtle inefficiencies associated with lack of information, not having the right people present, and delays in scheduling. Ag a professional rises in business, the time devoted to person-to-person encounters increases. 2 The necessity for this form of interaction is accepted unquestioningly, as is frequent travel across town or across the country. Business professionals' dependence on communication will increase as the information sector of the economy expands. As markets become global, and as business decisions become more technical and have farther-reaching consequences, cons6nsus will be sought from an increasingly wide variety of distant sources. The speed with which informed decisions are made will determine business success. The need for meetings will increase, but the ability of the professional to handle an increased meeting load is limited, and time and distance constraints will resuh in many meetings not taking place that should. However, the future need not be as bleak as it sounds. There are communications alternatives, especially for meetings. Ideally, these alternatives will not only reduce the out-of-pocket and human costs of 1. Harvey Poppel, "Who Needs the Office of the Future," Harvard Business Review, November-December 1982. 2. John P. Kotter, "What Effective General Managers Really Do," Harvard Business Review, November-December 1982.
? I'll.¸
**
O
,
travel to meetings, but will also contribute to organizational and personal effectiveness by enabling more timely decisions, based on better information, to be made. One option with promise is videoconferencing. Another Way g
ideoconferencing, or video teleconferencing, is an "electronic meeting" conducted in specially equipped business conference rooms. These rooms contain video and audio equipment that enable small groups in separate locations to see and hear each other. Videoconferences are different from face-to-face meetings, of course. You can't shake hands or pass a cup of coffee to a fellow meeting-goer in the distant room. At the same time, he can't pollute your air with cigar smoke. Videoconferencing is not intended to replace all types of face-to-face meetings or to eliminate all travel, but it is a meeting alternative eminently suited to the information age. Business organizations from
Aetna to Xerox have invested in videoconferencing systems. Both existing conference areas and specially constructed rooms are used. Black-and-white still image video systems at $25,000 per room are an inexpensive set-up; color motion systems at $250,000 per room provide images of a quality similar to home TV. Networks to link these rooms range from simple telephone lines to sophisticated satellite systems. Options and features abound. An increasing range of technology is available, with innovations appearing weekly. Selecting the right equipment can be difficult, particularly in the area of digitally compressed motion video, where issues of speed, compatibility, and cost complicate design decisions. Nevertheless this rapidly changing videoconferencing systems environment has spurred an annual growth rate of approximately 100 percent over the last several years as a growing number of corporations seek meeting alternatives. Who uses videoconferencing? Engineers at IBM Corporation, Deere and Company, and Hughes Aircraft Company use videocon-
Videoconferencing
ferences to help them manage new product development between design centers and distant manufacturing facilities. At Liberty Mutual Life Insurance Companies, data processing programmers work closely with their users via videoconference. At Aetna Life & Casualty, data processing professionals use a system in the greater Hartford area, while marketing and claims executives use a comparable technology between Hartford and Chicago. Hercules Incorporated's videoconferencing system is part of an organization-wide advanced office system used by information workers at all levels and functions. Senior executives of M/A-COM have used videoconferencing as a management tool to maintain communications among dispersed operating centers. No two of these systems are alike. The best designs consider the users and their needs, balanced against the cost and anticipated return.
include participants who would not have traveled had videoconferencing been unavailable) There is 3. See Kenneth Kraemer, Telecommunications-Transportation Substitution and Energy Productivity, Public Policy Research Organization, Universityof California, h'fine, 1981.
no universal algorithm for predicting the savings on travel, yet many corporations have quantified the substitution to their satisfaction. The returns on investment, however, are intangible as well as tangible and include more than
Some Effects of Videoconferencing
Legend
Percent of Users
Perceiving Changes i n . . .
% Increase
% No Change
[ Meeting Length
~
I
I
he return on investment offered by videoconferencing has long been viewed simplistically as out-of-pocket cost savings on travel. Corporations seeking to justify the installation of a videoconferencing system usually begin by assuming that a certain percentage of their travel budget can be cut. Once a system is installed, organizations record the number of people participating in videoconferences, calculate the percentage who would have traveled, and use average trip costs to estimate "travel savings" and to justify the system. Although these travel substitution approaches appear plausible, experience has shown them to be overly simplistic. A number of other factors must be considered. In some instances, travel budgets do not decrease when videoconferencing is installed. Instead, more meetingg-some videoconferenced, some involving travel--take place. In addition, videoconferences often
T
Meeting Frequency
i
46
Meeting Size
49
49
Meeting Effectiveness
26
Decision Quality
60
Task Orientation
61
Cooperation
54
Decision Cycles
32
Preparation Travel Expense
e
23
. Resource Accessibility Understanding the ROI
% Decrease
43
W
28
Travel Absence (Office) Travel Absence (Home) Personal Visibility
M
3____.. 68
i
Personal Productivity Amount of Communications
26 49
59
money saved on airline tickets. Mike Metcalf's trip to Fortunar might have been much more profita b l e - i n all senses of the w o r d - h a d he met with Jack and the others without leaving the home office. Personal B e n e f i t s
atellite Business Systems ~(SBS) and the National Opin! ion Research Center surveyed videoconferencing users in ten large business enterprises to determine the effects of videoconferencing on a number of m e e t i n g - a n d travel-related-variables. 4 As shown in t h e a c c o m p a n y i n g Figure, fully 70 percent of the respondents rep'orted increased personal productivity as a result of using videoconferencing. Faster
S
60
decisions, more effective meetings, and less travel were the three factors contributing most to individual productivity. "We're coming to good decisions in a shorter a m o u n t of time," stated Deere & Co. Executive Vice President Thomas A. Gildehaus. Although exact minute-to-minute comparisons were not quantified in the study, 50 percent of the users surveyed felt decision time had decreased. Dr. Lawa'ence Gould, former CEO of M/A-COM, observed that decisions were being made in " t w o or three days which would have taken a week or two" by conventional means. Time savings are realized because meetings are shorter and because participants tend to prepare better for a videoconference than for a meeting. It is a common observation that most business meetings could be more effective. Videoconference users in the study attested to their increased effectiveness at videoconferences. Better preparation contributes to this effectiveness; in4. Kathleen J. Hansell, David Green, and Lutz Erbring, "Videoconferencing in American Business: Perceptions of Benefit by Users of Intra-Company Systems," Satellite Business Systems, 1982.
creased cooperation among participants accounts for most of the observation of heightened effectiveness. The pressure of limited time in the videoconference room and the increased orientation to the task at hand may explain wily participants are more inclined to work toward a common goal. When asked, "What do you like most about videoconferencing?" the most frequent response was saving travel time and costs. Savings in travel time seem to be a strong motivator for users of local (crosstown) systems as well as for users of long-distance (cross-country) systems. These three variables-faster decisions, more effective meetings, and less t r a v e l - m o s t influence user perceptions of increased personal productivity in a videoconferencing environment. Productivity is not merely a private concern of individual managers and professionals; it is uhimately the cornerstone of organizational performance and competitive Success.
R e t u r n s to the Enterprise
n addition to increased employee productivity, users in tile study perceived substantial benefit from decreased travel costs. Travel savings reports can be found in almost all organizations with a successful videoconferencing system. In one division of IBM, 1981 travel savings exceeding $1 million were attributed to the corporation's investment in videoconferencing. Allen J. Kxowe, IBM Senior Vice President, Corporate Finance and Planning Staffs, stated, "We could pay for our videoconferencing out of the next year's travel budget and come out way ahead. ''s Hercules Incorporated CEO Alexander F. Giacco, in his 1983 statement to shareholders, pointed out that, "As a result of teleconferencing and
I
5. Think
1982,
Magazine
(IBM),
July/August
better travel management, travel was down 22 percent last year, resulting in savings of $1.5 million." Aetna Life & Casualty documented 1983 savings of more than a quarter of a million dollars from professional time savings between their two locations in the Hartford area.
In addition to travel savings, there are other returns on a videoconferencing investment. Anecdotal evidence is accumulating that the timeliness and greater inclusiveness of videoconferencing can increase an organization's responsiveness in a dynamic market. "It's possible to quickly gather the people involved to resolve the problem . . . Because we can include more people, the need for further inquiries and follow-up is significantly reduced," stated one executive. Arthur Watts, Regional Vice President of Aetna's Employee Benefits Division based in Chicago, commented on the large amounts of information required and huge stakes in marketing a new policy: "To remain in a competitive position, our analyses and decision[s] . . . have to be made in all accurate and timely f a s h i o n . . . [Videoconferencing is] reducing the time it takes to review data with the home office, make decisions, determine strategies, and develop competitive pricing structures." Ill a very different marketing environment, Hercules Divisional Marketing Vice President Robert J. Leahy stressed the special value of videoconferencing "in a matrix organization-helping solve the communications problems with diverse business centers and functional g r o u p s . . . [thus enabling] prompt and timely decision making." The ability to gather the right people together quickly to make a decision is, according to users, one of the most valuable attributes of videoconferencing. Senior executives stressed this aspect three to one over rank and file. he b o t t o m line for organizations that have invested in videoconferencing is, sim-
T
Videoconferencing
"The bottom line for organizations that have invested in videoconferencing is, simply, competitive advantage the results of more productive professionals, reduced travel expense, and improved responsiveness to market opportunities." 61 ply, competitive advantage-the result of more productive professionals, reduced travel expense, and improved responsiveness to market opportunities. Of the three factors,
reduced travel expense appears easiest to quantify. Professional productivity and market responsiveness, although more difficult to measure, nonetheless underlie the
organization's ability to develop and maintain a competitive edge. r---1
57 David Green is Director of Private Satellite Networks at VideoStar Connections, Inc., in Atlanta. Kathleen J. Hansell is Marketing Representative for the International Services division of Satellite Business Systems,.McLean, Virginia.
You can't shake hands at a videoconference, but in every other way this alternative to face-to-face meetings can improve personal productivity and increase competitive advantage. "~/~ike Metcalf looked out the ] ~ i / / | window of the 727 as it .K • . I k touched down after a long flight. This could be anywhere, he thought as he grabbed his carry-on bag from the overhead locker and strode toward the rental car counter. Fifty minutes later Mike exchanged a warm handshake with Jack Hopp, plant manager of Fortunar's field production facility. "It's good to see y o u , " said Jack. "Have we got a busy schedule for you!" "So what else is new?" laughed Mike. He had made this trip and others like it so often that he had long ago given up notions of afternoon golf and gourmet dining. "How's Grace and the family?" Jack asked. "Good. She's busy with yearend reports. And damned annoyed with me for missing Susan's recital this evening. Last time it was Mickey's soccer tournament. I can't win." Two days later Mike was on another 727, winging homeward. He was tired. His trip had not been
successful. Events had occurred in the home office while he had been on the outward-bound flight that had a bearing on his discussions with Jack and on his own position. A quick phone call to the home office had given him little information, and he knew that he hadn't come across to Jack and the others as the informed strategist he had intended to be. The Fortunar production people hadn't the technical understanding of the new product, either. If he had known, Mike could have brought along the chief engineer, and the Alverson reports might have been helpful, too. He sighed. He wasn't eager for the follow-up trip that was now obviously necessary, and thought about how unproductive these last few days had been. He looked at the other business travelers on board and wondered how many of them were thinking the same thing. People Communications
M
ike and his fellow travelers are, in a sense, victims of an information economy.
Business Horizons / November-December 1984
58
Transacting business in this economic environment requires managers and professionals to spend most of their time in communications activities. By their nature, these activities involve many inefficiencies-seeking information, missing phone calls, waiting to see people, and traveling to meetings. According to several studies, approximately half of the business day is devoted to communicating in face-to-face meetingsJ Many meetings require travel and involve a substantial amount of lost time, high out-of-pocket costs, and the subtle inefficiencies associated with lack of information, not having the right people present, and delays in scheduling. Ag a professional rises in business, the time devoted to person-to-person encounters increases. 2 The necessity for this form of interaction is accepted unquestioningly, as is frequent travel across town or across the country. Business professionals' dependence on communication will increase as the information sector of the economy expands. As markets become global, and as business decisions become more technical and have farther-reaching consequences, cons6nsus will be sought from an increasingly wide variety of distant sources. The speed with which informed decisions are made will determine business success. The need for meetings will increase, but the ability of the professional to handle an increased meeting load is limited, and time and distance constraints will resuh in many meetings not taking place that should. However, the future need not be as bleak as it sounds. There are communications alternatives, especially for meetings. Ideally, these alternatives will not only reduce the out-of-pocket and human costs of 1. Harvey Poppel, "Who Needs the Office of the Future," Harvard Business Review, November-December 1982. 2. John P. Kotter, "What Effective General Managers Really Do," Harvard Business Review, November-December 1982.
? I'll.¸
**
O
,
travel to meetings, but will also contribute to organizational and personal effectiveness by enabling more timely decisions, based on better information, to be made. One option with promise is videoconferencing. Another Way g
ideoconferencing, or video teleconferencing, is an "electronic meeting" conducted in specially equipped business conference rooms. These rooms contain video and audio equipment that enable small groups in separate locations to see and hear each other. Videoconferences are different from face-to-face meetings, of course. You can't shake hands or pass a cup of coffee to a fellow meeting-goer in the distant room. At the same time, he can't pollute your air with cigar smoke. Videoconferencing is not intended to replace all types of face-to-face meetings or to eliminate all travel, but it is a meeting alternative eminently suited to the information age. Business organizations from
Aetna to Xerox have invested in videoconferencing systems. Both existing conference areas and specially constructed rooms are used. Black-and-white still image video systems at $25,000 per room are an inexpensive set-up; color motion systems at $250,000 per room provide images of a quality similar to home TV. Networks to link these rooms range from simple telephone lines to sophisticated satellite systems. Options and features abound. An increasing range of technology is available, with innovations appearing weekly. Selecting the right equipment can be difficult, particularly in the area of digitally compressed motion video, where issues of speed, compatibility, and cost complicate design decisions. Nevertheless this rapidly changing videoconferencing systems environment has spurred an annual growth rate of approximately 100 percent over the last several years as a growing number of corporations seek meeting alternatives. Who uses videoconferencing? Engineers at IBM Corporation, Deere and Company, and Hughes Aircraft Company use videocon-
Videoconferencing
ferences to help them manage new product development between design centers and distant manufacturing facilities. At Liberty Mutual Life Insurance Companies, data processing programmers work closely with their users via videoconference. At Aetna Life & Casualty, data processing professionals use a system in the greater Hartford area, while marketing and claims executives use a comparable technology between Hartford and Chicago. Hercules Incorporated's videoconferencing system is part of an organization-wide advanced office system used by information workers at all levels and functions. Senior executives of M/A-COM have used videoconferencing as a management tool to maintain communications among dispersed operating centers. No two of these systems are alike. The best designs consider the users and their needs, balanced against the cost and anticipated return.
include participants who would not have traveled had videoconferencing been unavailable) There is 3. See Kenneth Kraemer, Telecommunications-Transportation Substitution and Energy Productivity, Public Policy Research Organization, Universityof California, h'fine, 1981.
no universal algorithm for predicting the savings on travel, yet many corporations have quantified the substitution to their satisfaction. The returns on investment, however, are intangible as well as tangible and include more than
Some Effects of Videoconferencing
Legend
Percent of Users
Perceiving Changes i n . . .
% Increase
% No Change
[ Meeting Length
~
I
I
he return on investment offered by videoconferencing has long been viewed simplistically as out-of-pocket cost savings on travel. Corporations seeking to justify the installation of a videoconferencing system usually begin by assuming that a certain percentage of their travel budget can be cut. Once a system is installed, organizations record the number of people participating in videoconferences, calculate the percentage who would have traveled, and use average trip costs to estimate "travel savings" and to justify the system. Although these travel substitution approaches appear plausible, experience has shown them to be overly simplistic. A number of other factors must be considered. In some instances, travel budgets do not decrease when videoconferencing is installed. Instead, more meetingg-some videoconferenced, some involving travel--take place. In addition, videoconferences often
T
Meeting Frequency
i
46
Meeting Size
49
49
Meeting Effectiveness
26
Decision Quality
60
Task Orientation
61
Cooperation
54
Decision Cycles
32
Preparation Travel Expense
e
23
. Resource Accessibility Understanding the ROI
% Decrease
43
W
28
Travel Absence (Office) Travel Absence (Home) Personal Visibility
M
3____.. 68
i
Personal Productivity Amount of Communications
26 49
59
money saved on airline tickets. Mike Metcalf's trip to Fortunar might have been much more profita b l e - i n all senses of the w o r d - h a d he met with Jack and the others without leaving the home office. Personal B e n e f i t s
atellite Business Systems ~(SBS) and the National Opin! ion Research Center surveyed videoconferencing users in ten large business enterprises to determine the effects of videoconferencing on a number of m e e t i n g - a n d travel-related-variables. 4 As shown in t h e a c c o m p a n y i n g Figure, fully 70 percent of the respondents rep'orted increased personal productivity as a result of using videoconferencing. Faster
S
60
decisions, more effective meetings, and less travel were the three factors contributing most to individual productivity. "We're coming to good decisions in a shorter a m o u n t of time," stated Deere & Co. Executive Vice President Thomas A. Gildehaus. Although exact minute-to-minute comparisons were not quantified in the study, 50 percent of the users surveyed felt decision time had decreased. Dr. Lawa'ence Gould, former CEO of M/A-COM, observed that decisions were being made in " t w o or three days which would have taken a week or two" by conventional means. Time savings are realized because meetings are shorter and because participants tend to prepare better for a videoconference than for a meeting. It is a common observation that most business meetings could be more effective. Videoconference users in the study attested to their increased effectiveness at videoconferences. Better preparation contributes to this effectiveness; in4. Kathleen J. Hansell, David Green, and Lutz Erbring, "Videoconferencing in American Business: Perceptions of Benefit by Users of Intra-Company Systems," Satellite Business Systems, 1982.
creased cooperation among participants accounts for most of the observation of heightened effectiveness. The pressure of limited time in the videoconference room and the increased orientation to the task at hand may explain wily participants are more inclined to work toward a common goal. When asked, "What do you like most about videoconferencing?" the most frequent response was saving travel time and costs. Savings in travel time seem to be a strong motivator for users of local (crosstown) systems as well as for users of long-distance (cross-country) systems. These three variables-faster decisions, more effective meetings, and less t r a v e l - m o s t influence user perceptions of increased personal productivity in a videoconferencing environment. Productivity is not merely a private concern of individual managers and professionals; it is uhimately the cornerstone of organizational performance and competitive Success.
R e t u r n s to the Enterprise
n addition to increased employee productivity, users in tile study perceived substantial benefit from decreased travel costs. Travel savings reports can be found in almost all organizations with a successful videoconferencing system. In one division of IBM, 1981 travel savings exceeding $1 million were attributed to the corporation's investment in videoconferencing. Allen J. Kxowe, IBM Senior Vice President, Corporate Finance and Planning Staffs, stated, "We could pay for our videoconferencing out of the next year's travel budget and come out way ahead. ''s Hercules Incorporated CEO Alexander F. Giacco, in his 1983 statement to shareholders, pointed out that, "As a result of teleconferencing and
I
5. Think
1982,
Magazine
(IBM),
July/August
better travel management, travel was down 22 percent last year, resulting in savings of $1.5 million." Aetna Life & Casualty documented 1983 savings of more than a quarter of a million dollars from professional time savings between their two locations in the Hartford area.
In addition to travel savings, there are other returns on a videoconferencing investment. Anecdotal evidence is accumulating that the timeliness and greater inclusiveness of videoconferencing can increase an organization's responsiveness in a dynamic market. "It's possible to quickly gather the people involved to resolve the problem . . . Because we can include more people, the need for further inquiries and follow-up is significantly reduced," stated one executive. Arthur Watts, Regional Vice President of Aetna's Employee Benefits Division based in Chicago, commented on the large amounts of information required and huge stakes in marketing a new policy: "To remain in a competitive position, our analyses and decision[s] . . . have to be made in all accurate and timely f a s h i o n . . . [Videoconferencing is] reducing the time it takes to review data with the home office, make decisions, determine strategies, and develop competitive pricing structures." Ill a very different marketing environment, Hercules Divisional Marketing Vice President Robert J. Leahy stressed the special value of videoconferencing "in a matrix organization-helping solve the communications problems with diverse business centers and functional g r o u p s . . . [thus enabling] prompt and timely decision making." The ability to gather the right people together quickly to make a decision is, according to users, one of the most valuable attributes of videoconferencing. Senior executives stressed this aspect three to one over rank and file. he b o t t o m line for organizations that have invested in videoconferencing is, sim-
T
Videoconferencing
"The bottom line for organizations that have invested in videoconferencing is, simply, competitive advantage the results of more productive professionals, reduced travel expense, and improved responsiveness to market opportunities." 61 ply, competitive advantage-the result of more productive professionals, reduced travel expense, and improved responsiveness to market opportunities. Of the three factors,
reduced travel expense appears easiest to quantify. Professional productivity and market responsiveness, although more difficult to measure, nonetheless underlie the
organization's ability to develop and maintain a competitive edge. r---1