Buyers Rethink Videoconferencing

<B> Buyers Rethink Videoconferencing</B>

By Sarah Welt

With travel budgets rising and videoconferencing prices falling, some travel managers who long have spurned the technology are acknowledging that it's time to take a second look. From Western Digital Corp. to Sun Microsystems to DuPont, travel departments are citing higher productivity and lower costs as they increase videoconferencing use.

Even one of the mega agencies is becoming an intermediary for clients in the videoconferencing game. Rosenbluth International announced today that it will be partnering with Englewood, Ohio-based TeleSuite Corp. to offer clients videoconferencing as an alternative to some travel.

Susan Lapham, senior manager of travel services at Western Digital Corp. in Irvine Calif., plans to introduce videoconferencing this fall as a way to reduce her company's $7 million air spend by 5 percent and save $350,000 annually. "I am the project manager and I am looking at reducing air travel costs by using videoconferencing," Lapham said. "I think there is a lack of awareness in the utilization of this in the company."

Consultant John Heilner of the Stamford, Conn.-based Management Alternatives said he's seen a lot more videoconferencing in the last 18 months and predicted usage will "continue to increase." Heilner cited "an increase in all types of travel costs, especially air and hotel," and the improved technology and transmission quality of the new systems, as reasons for the uptick in videoconferencing. In addition, he noted the time saved and the realiziation that certain meetings are just as effective through videoconferencing, "especially when everyone has more to do these days, with downsizing and decreased staff."

Susan Stowe, consultant for Caldwell Associates in Washington, D.C., said that while she would not yet characterize the use of videoconferencing as a trend, "it is growing." She said she knows of four or five companies that in recent months have put integrating videoconferencing with their travel booking process on their to-do list for 1998-99.

One of Stowe's clients offers videoconferencing as an option to travel, and mandates that agents ask travelers to consider it. The agency produces reports showing if it was offered or not and the response. "This is the only company I have seen that has taken it that far," however, she said.

One corporate videoconferencing coordinator said that since installing the technology four years ago, her company has seen $35,000 to $60,000 in savings a month off its $15 million air spend. "We have advised all managers in the company to try to use videoconferencing instead of travel," she said. While many remain skeptical about the use of videoconferencing for outside client work, "we do a lot of sales work through videoconferencing." And still others are skeptical about the learning curve associated with using it. "It's not a difficult technology to use. It's a lot easier than programming a VCR."

Terry Kenney, Sun Microsystems' corporate travel manager, said the company has videoconferencing in facilities at all its major locations. "If one goes onto our travel page on Sun's intranet, the first thing they open it with is travel avoidance, and we do link out to all the videoconferencing information." While using videoconferencing is not mandated companywide, Kenney acknowledged "there might be certain groups within Sun that have mandated it within their own group."

DuPont, too, has had videoconferencing for several years, but Joyce Bembry, manager of global business travel, said she has looked at videoconferencing as an alternative to travel only within about the last year. Bembry said she'd like to see internal travel reduced by 10 to 15 percent. "I would like to see videoconferencing go up and internal travel go down," she said. "I am definitely working in that direction."

At Rosenbluth, meanwhile, general manager of emerging technologies Edward Barrett said clients have been asking the agency to integrate videoconferencing into its program. "They are really looking to use videoconferencing for the purposes of lowering travel costs," he noted. Barrett cited the steady increase in air travel costs over time as well as the need to be more productive as reasons to use the TeleSuite technology.

Where in the past videoconferencing products failed to deliver quality real-time communication, TeleSuite's product provides life-size conferences to clients through a patented "virtual mirror." While a group sits in a conference room in one location, another group sits at an identical table in front of a huge screen--making it appear as if the two halves are in the same room.

TeleSuite began developing the product with IBM's global services unit in 1994 and began marketing it this year. IBM provides a dedicated network, while the display is by NEC Technologies, powered by VTEL, and has a T1 bandwidth. TeleSuite has seven public locations at Hilton Hotels in major cities in the United States (<I>BTN,</I> June 22).

TeleSuite has signed four corporate customers since November. Spokesman Scott Allen said he believes the company will sign 20 to 24 Fortune 1000 companies by the end of this year, and 40 by the end of 1999.

Allen said a one-hour videoconference at a hotel costs $200 per site. When buying their own equipment, corporations can choose the "professional suite" for up to ten people, or the "learning suite" for up to 40. For the more expensive room, there is a $300,000 installation fee and a $7,200 a month service fee. For an additional $900 a month maintenance charge, TeleSuite manages the system remotely.

Sematech Inc., a non-profit consortium of semiconductor manufacturing companies in Austin, Texas, for example, has a TeleSuite setup in Austin and it also has installed a facility in the Hilton in San Jose, Calif. While the group's videoconferencing usage is still in the ramp-up stage, "we'll certainly be saving time and the cost of travel. That is what drove the decision," said spokes- man Jess Blackburn.

Rosenbluth is in talks with a handful of clients about the TeleSuite technology. Eventually, the agency plans to offer videoconferencing in corporate profiles, allowing companies to offer it as an option whenever travelers call to book travel. It also is considering installing TeleSuite for internal use at its Philadelphia headquarters.

Other vendors, including Sony Electronics and Lucent Technologies, also offer advanced videoconferencing.

PeopleSoft Inc. recently began deploying Sony's systems. While its goal was not to cut down on travel per se, that's been "a good byproduct," said director of global telecommunications Neil Hennessey. He said the company plans to put a videoconferencing system in every PeopleSoft office around the world by the end of October. PeopleSoft's corporate travel manager Rebecca Moddelmog said that while videoconferencing is a separate initiative from travel, "the end goal is the same. We are all basically looking at ways to put fewer people on planes all the time--and videoconferencing is a way to do that."

Cigna, too, wants to save on travel between its two headquarters in Philadelphia and Hartford and is looking at videoconferencing as an option. Two divisions within the company mandated pre-trip reporting in April--and travel operations manager Louisa Brown said they may well use the system to identify travelers and send them messages advising they can "save XYZ if they do more videoconferencing."

For every supporter, though, there is a travel manager who doubts that videoconferencing will ever reduce travel costs.

At Pitney Bowes Inc. in Stamford, Conn., where the travel department has been using videoconferencing for some time, manager of travel services Connie Cirillo Freeman said she doesn't see a correlation to reducing the travel spend. "We see this as just another additional communication channel, like phone, fax or e-mail," she said.

"Even in the most advanced versions of videoconferencing there is still a distinct difference to meeting someone face to face," said Tom Wilkinson, president of the Alexandria, Va.-based Travel Management Group. "I don't know anyone who would risk a major deal making a presentation to a client on videoconferencing. Until they do, I don't think videoconferencing will have any measurable impact on travel.