Buyer Cuts Cost Via Video Use

<B> Buyer Cuts Cost Via Video Use</B>

By Chris Davis

For Quantum Corp., travel cost containment wasn't the primary goal for developing a state-of-the-art videoconferencing program. Nevertheless, the program has resulted in bottom-line savings of about $120,000 monthly.

Videoconferencing may have its detractors, but reports of Quantum's substantial savings only can increase what seems to be growing interest among corporate travel buyers and executives in the the technology (<I>BTN,</I> Aug. 3). With network costs dropping dramatically, videoconferencing, once the sole province of well-heeled corporations, is now able to appeal to the little guy too.

At the National Business Travelers Association annual convention and exposition in Orlando last month, two educational sessions were devoted to the use of videoconferencing as a travel management tool for the first time in years.

"It is no longer a matter of if you will be using videoconferencing, but when," said session facilitator Ann Earon, president of Telemarketing Resources International, a Skillman, N.J.-based consulting firm specializing in teleconferencing.

Susan Dupart, Quantum's manager of worldwide support systems, and a panelist, said, "In the four years I've been here, the capabilities of the systems have become huge and the systems more user friendly."

"We're all looking at ways to communicate without spending $2,000 to fly to Boston. This is a way to do it and still accomplish what we need to accomplish."

Dupart began developing Quantum's videoconferencing network, which now sports three U.S. and four international sites, after conducting an extensive four-month analysis and evaluation in 1995.

"As a company, we looked for things that we could do that would effectively increase communication, and as an added benefit, hopefully reduce some travel costs, but we really did not go into it with the expressed purpose of reducing travel costs," she said. "Quantum's headquarters are in Milpitas, Calif., and we have a large facility outside of Boston and we have two entities in Colorado. We didn't have a lot of offices close to California. It was fairly long distance travel and videoconferencing was a means to communicate not only more frequently but to also have a broader base of people attend meetings without having to travel. That was the initial driver of using videoconferencing."

That decision was made company-wide, relieving Quantum's buyers of the need to sell the idea to upper management or vice versa. The company surveyed customers of companies with existing videoconferencing networks to find their wants and needs and likes and dislikes. They audited their travel systems and found $17.6 million spent on travel between October 1994 and May 1995.

Once the technical aspects of the network were established, Dupart and her staff developed an electronic scheduling system and a training package, and marketed it through open houses and presentations.

They established a travel savings formula: The average airfare multiplied by the number of people traveling plus the average cost per day of miscellaneous travel expenses, less the cost of videoconferencing, led to the net savings Quantum sees by using the network instead of traveling.

"In just travel costs alone, we prevented the company from spending about $120,000 a month," said Linda Walker, Quantum's audio/video program manager. "In our busiest month so far, we've saved $300,000 in travel after we subtracted the cost of conferencing."

Today, the 8,500-employee Quantum holds about 300 videoconferences monthly at its sites and about 40 to 45 face-to-face meetings of 10 or more people. Air spend is about $25 million annually, compared with about $22 million annually pre-videoconferencing--a modest increase considering the rise in airfares.

"We use it very broadly," Dupart said. "We do a fair amount of training through videoconferencing and we do a fair amount of videoconferencing within our engineering units, where they actually look at product. People use it as for staff meetings at all sites."

Employees seeking access to the network must schedule a time through Dupart and her staff, who maintain an intranet-based schedule for all sites. Only a few people have access to the schedule, even within the company. "We don't let everybody get on there and book it."

Quantum doesn't have concrete guidelines that dictate when employees must videoconference as opposed to attending a meeting. But experience has given them a good idea of when each is the preferable option. Meetings particularly suitable for videoconferencing are those called on short notice, or that must lead to a quick decision, or are for small groups that meet on a regular basis, or are brief. Traveling is more appropriate when new business relationships are to be established or social situations are critical elements to the meeting's success.

As videoconferencing continues to get easier and less expensive, Dupart said, other companies will follow the same road. "We did have people here, and even in upper management, that thought videoconferencing was plug and play, like a TV set. They wondered why can't you just plug it into the wall and be ready to go. It's not plug and play, but as it does become more and more user-friendly and people begin to use it more, they're not as afraid of the technology. The use of it has skyrocketed. My boss, who obviously supports it, recently had a videoconference that incorporated three sites and was very interactive. He couldn't believe it was so easy."

"And business fares are such that they're going higher and higher. Companies, especially here in Silicon Valley, are facing some tough times here."

Dupart deserves the recognition she's received for the program, said East Hartford, Conn.-based travel management consultant Donald LePard, and companies may soon find they have no choice but to take similar action.

"If you want to save money, don't travel, that's the first rule of the game," said LePard, a former business travel technology manager. He noted that while Quantum may have been more amenable to videoconferencing because of its high-tech background, he warned that non-technological companies cannot be afraid.

"They have to wake up to reality. With airlines raising rates, we can't keep throwing money away," he said. "There's no jet lag, and that's extremely valuable. I would rather get up at 4:00 a.m. to talk to someone in India than fly there. It's mostly the corporate culture, because the technology's there to do it.