Recapping UC ROI

Introduction

For the past several years, my presentations at VoiceCon/Enterprise Connect, InterOp, and other venues and my posts at UCStrategies.com have featured this chart on UC Value by Category:

This chart is based on work in 2007, at the same time that we were defining the leading UC Applications and were being asked about the business value of those applications. 

Yet, the market continues to evolve, favorably to the results shown in this chart, suggesting some commentary on the trends. This article has an explanation of the basis for the information from 2007, with comments on the trends since that time. These are net benefits per user per year, i.e. the benefits after deducting the costs of implementation. For all savings examples, the model is based on a 4,000 employee organization, though the costs of implementation are relatively low, so the benefits will be similar for organizations from even a few hundred employees on up to many thousands. For UC-B savings, the benefits are the bottom-line results, based on a 50% gross margin (which varies by industry) from additional revenue.    

UC Benefits Recap

On the left side of the chart, we see UC-U (User Productivity) types of savings. 

Conferencing benefits $3,034: 10% of benefit as savings from eliminating 90% of monthly audio, video and web conferencing charges estimated at $68K per month; 40% of benefit from time savings and improved productivity for Information Workers as users increase their use of in-house conferencing (since available to all employees and there is no incremental per-minute charge) to complete their work more quickly and efficiently, without the need for physical gatherings; and 50% of benefit as savings from avoiding airline and local reimbursable travel expenses. The model assumes approximately 20% of estimated time savings will actually be converted into net benefits.   

This is supported by numerous case studies such as Advocate Health Systems and Credit Agricole.

Trends now show increasing productivity benefits and travel savings as UC conferencing becomes a best practice for most businesses and is accepted for customer relationship support.

Communication Efficiency benefits $1,137: This is a productivity benefit based on using presence and Instant messaging to eliminate sending and receiving two-thirds of four (4) e-mail messages per day and two (2) voice messages per day for short information requests.  This is about 7 minutes per day or less than 3% of net time for Information Workers and similar roles. 

Case studies and surveys reflect savings of 15 minutes (3%) to 45 minutes (9%) per day from use of presence and IM, of which this is one component.       

Trends now show even greater reductions in e-mail messages and voice messages when presence and IM are installed and used in an enterprise. 

Eliminate Delay benefits $1,005: This is a productivity benefit based on time not spent in stopping and restarting tasks when resources are not available as well as dealing with the inevitable inquiries when a task is on hold and not completed. Presence, presence search, and IM enable many more tasks to be completed without delay. This is about six minutes per day or less than 3% of net time for Information Workers and similar roles. 

Case studies and surveys reflect savings of 15 minutes (3%) to 45 minutes (9%) per day from use of presence and IM, of which this is one component.

Trends now show approximately the same level of benefit.       

Toll Cost Savings benefits $246: This is the toll savings when UC communications can flow over the enterprise wide area network or the Internet rather than over the toll-chargeable Public Switched Telephone Network (PSTN) or cellular network. 25% of the calls are assumed to be international. This is very similar to savings from standard Voice over IP PBX systems, though in 2007 the vast majority of users moving to UC solutions were also moving to VoIP for the first time. 

Case studies still show toll cost reductions, especially for remote workers and international travelers. 

Trends now show declining  value from the toll savings category, though the increasing use of presence indication and IM on mobile devices is producing cellular phone bills savings of an equivalent amount.

Admin TCO benefits $43: This is a savings calculation for IT server administrators (often with the title of Data Base Administrator) and other support groups due to the consolidation of multiple separate services (PBX, conferencing, mobility, instant messaging, call detail recording, reporting, and perhaps unified messaging) into a single software system; the savings are then amortized over the entire user population to calculate the per user per year savings. Licensing acquisition savings are not included.

Trends now show some increases in this savings category since (1) the trend is for integrated UC software systems (though many vendors still require multiple software servers to deploy UC, but claim single server solutions based on multiple virtual machines on a single VM chassis; and (2) the trends toward virtualization of UC solutions can reduce some administration costs for server maintenance. 

On the right side of the chart, we see UC-B (User Productivity) types of savings. This means that the benefits are both tangible and measurable as a result of improvements in specific business processes. Note that each of these areas derive benefits from some subset of enterprise employees; these are improvements in specific business processes, often using Communications Enabled Business Processes (CEBP) methodologies. 

Increase Sales benefits $115,909: This bottom line (net margin) benefit comes from improving sales productivity (revenue per year) by 11.6% per annum. An average 10 week sales cycle is reduced by one week based on eliminating 50% of the short (half-day) delays due to unsuccessful customer attempts to reach the sales team on first attempt and by 2.4 weeks by applying UC collaboration tools to reducing complex events such a proposal reviews, requirements clarifications, redesigns and re-quotes. For sales people with $2 million per year quotas, revenue will increase by $231K and margin by the amount shown.

Many case studies document this magnitude of benefits for sales roles (about 10% of employees assumed based on US Bureau of Labor Statistics (BLS) data in 2007) across many industries.

Trends show increases in this benefit category due to the improvements in UC solutions, especially in mobility functions and CEBP capabilities. 

Speed Projects benefits $95,000: This bottom line (net margin and net profit) benefit comes from reducing the collaboration time (Information Worker staff time) by 25% and elapsed time by 10% for shorter projects (duration of about ~10 weeks) and by reducing the collaboration time (Information Worker staff time) by 15% and elapsed time by 15% for shorter projects (duration of about ~1 year). The improvements come by reducing delays for meetings and collaborations and by improving information content during meetings and collaborations. The benefits come from both the time savings and from the increased revenues or project benefits due to the earlier delivery of the cumulative projects for a year.

Many case studies are documenting this magnitude of improvement for the collaborative roles (about 10% of employees assumed based on BLS data in 2007) engaged in this type of collaborative projects. 

Trends show an increase in this benefit category based on continued improvements in the integration of UC with collaborative software solutions such as Microsoft Office SharePoint and IBM Lotus Quickr. The emergence and integration of social networking tools with UC and collaboration software is another positive factor.    

Lower Process Costs benefits $12,880: This bottom line (net profit) benefits are based on Communications-enabled Portals. Between 10% and 20% of employees in most enterprises get their job done via a business application interface such as logistics (SAP), healthcare (GE, Siemens, Cerner, EPIC, et al.), CRM (Oracle, Microsoft, Salesforce.com, et al.), and similar systems in various vertical industries. It  is now clear that the transactions and processes served by those employees can operate more efficiently if the communications functions are embedded into the software application rather than being served by separate e-mail, calling, or conferencing systems. UC tools reduce staffing required to do the work (or let volumes grow without more staff) and get the transactions completed more quickly improving cash flow, patient care, customer relationships, etc. 

Case studies document the examples of these UC benefits. 

Trends show increasing benefits in this category, especially as the vertical market software companies and systems integrators create the CEBP integrations to those packages and related processes.

Cut Operational Costs benefits $11,875: This bottom line (net profit) benefit comes from applying the application known as "Resource Identification for Problem Resolution" in various enterprise support departments (non-overlapping with other UC-B categories). This is primarily the application of Presence and Instant Messaging with smart search for resource access. Collaboration and mobility tools can also assist in this category. The benefits are primarily from eliminating process blockages in enterprise support departments (IT, HR, Legal, Purchasing, Facilities, Execs, etc.) in order to cut costs and/or to increase the benefits from those departments’ work products. 

Case studies are documenting this magnitude of improvement for enterprise support roles (about 10% of employees assumed based on BLS data in 2007) engaged in these process dependent roles. 

Trends in this area show increasing benefits as enterprises expand the set of processes being addressed with UC-B solutions. 

Drive Transactions benefits $7,813: This bottom line (net margin and net profit) benefit comes from improving performance in mobile roles such as field services, professional services, and logistics. The employees in those roles can perform their own jobs much more effectively if they have the needed information and communication tools at hand on their mobile PCs, Smart Phones or Tablets. Field activities are performed more quickly and call-backs are reduced. Also, field personnel have make far fewer calls back to the home office for support, thus reducing staffing needs in those support roles

Many case studies highlight the value of UC services for mobile personnel and smaller but growing number illustrate the value of delivering information along with that communications capability.

Trends in this area show increasing benefits as mobile UC functions and CEBP capabilities expand.

Summary

UC benefits documented in 2007 are continuing and expanding based both on:

• Improved UC functionality
• Positive learning and feedback for customers and systems integrators
• Successful adoption as proven by hundreds of UC case studies

Enterprises should expect, even demand, UC justifications from themselves, their vendors, their system integrators, and their consultants. The data exist, so why not find it and prove the value of the investments. Further, enterprises should eagerly participate in measuring their UC results and in reporting their successes to others via case studies, presentations, and peer-to-peer reference calls.