UC ROI

UC ROI

By Dave Michels August 19, 2013 2 Comments
UCStrategies Experts
UC ROI by Dave Michels

In this Industry Buzz podcast, the UCStrategies Experts address return on investment (ROI) in UC. Dave Michels moderates the conversation and is joined by Steve LeadenMarty ParkerDon Van DorenDr. Joseph WilliamsKevin KiellerBill MacKayMichael FinneranArt RosenbergPhil EdholmJon Arnold, and Roberta J. Fox.

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Transcript for UC ROI

Dave Michels: Welcome to this week’s UCStrategies podcast. Today we’re going to be talking about ROI, return on investment. I’m joined by the team of UCStrategies Experts to discuss how companies are looking at UC, and how companies are realizing their return on their investment. This is going to be a broad topic; there are lots of opinions on this. I’m going to start off with some of the consultants in the field. So let’s start off with Steve Leaden.

Steve Leaden: Thanks, Dave. We’re finding that any client who is looking at UCC on any kind of level, especially if they have to do a forklift or some type of major replacement on their infrastructure as well, or data infrastructure, they really have to have some ROI around it . In fact, every major project that we’re involved with which does not have an ROI doesn’t get past or approved by executive management teams. So it’s obviously a very, very hot and a very critical topic that we run into consistently.

Over time we’ve learned that there are a number of areas, and I’ll just hit on a few here, that can make a marked difference in terms of what the net-net is. Just to kind of start with an example here, we saved a client last week 200k a year just by introducing SIP trucking and reduced maintenance costs in some other areas by leveraging UCC over an older telephony infrastructure. And in the end that $200,000 savings per year actually equated to almost $1,000,000 over a five-year fair market value lease, which was very, very interesting and actually gave them $1,000,000 worth of buying power that they didn’t formerly have. It’s funny how you do the math and how quickly you can leverage as well as reduce the costs.

SIP trucking is one of those areas that I just mentioned. We’re seeing clients save anywhere between 20 percent and even up to 60 percent just by eliminating PRIs and other legacy types of circuits and replacing it with an entire literally fully redundant infrastructure.

Dave Michels: You’re describing replacing old technology with new technology and I understand there’s ROI associated with that, but why does that necessitate a whole new UC investment? Can’t you just put in some SIP gateways and accommodate that without spending a ton of money on replacing or putting in a new UC system?

Steve Leaden: Yeah the other challenge that we see consistently with clients, Dave, to your exact point, is that there are risks associated with older legacy equipment, in terms of non-support, in terms of fewer technicians, in terms of no guarantees for service or spare parts in the event that something goes live. So when we sit down with clients we say, “Listen, you really have to take a look at ROI and UCC, but you have to look at the risk of keeping what you currently have that’s older.” So absolutely, you can save money by leveraging gateways with SIP trucking, with older technology, and we tell clients that. But they would actually rather take those savings and invest in new technology and create if you will, a single interface environment for both UCC as well as telephony. Plus UCC and the newer infrastructure, Dave, gives you the ability for example where you can possibly, in fact we’re talking to a lot of clients right now, possibly reducing the number of endpoints. So instead of having to invest in all new desktop phones, you may replace some of those with soft phone clients, you may replace some of those with a UCC mobility client. And all of a sudden those particular hard costs literally just go away, because we’re taking a certain percentage overnight and reducing the infrastructure by X amount. What have we seen so far? It’s in the early adoptive stage, but we’re seeing anywhere between 10 and as high as 20 percent of some client saying, “I just don’t want a hard phone anymore in certain departments or certain areas; I want a cell phone client or I want a mobility client.” So we’re seeing that.

We’re definitely seeing the migration also, Dave, to remote workers where we can literally eliminate square footage in cubicles or offices and have people working remotely from home either part time or full time. And doing a lot in health care we’re seeing physicians now share offices among sites and again using these soft UC clients to enable that, and again, reducing real estate that way. So there’s definitely that.

We’ve even seen something as simple as IM/chat as a function of UCC to say in a call center, hey, I can actually ping my supervisor, get approval from my supervisor, and reduce the call for a supervisory approved call by 20 percent, even 30 percent, because I didn’t have to wait on the bakery line, so to speak, to get the normal approval and walk over and have to wait online with a supervisor. I can literally get approval and it’s documented. So there’s a lot that we can do there and it’s really very exciting, and of course I have a lot more but I’ll  pause for a moment Dave and I’ll jump in as needed here.

Dave Michels: Great – thank you, Steve. You’ve covered a lot around cost reduction, and you touched a little bit there on the speed of business changing. Let’s go over to Unicomm. Marty, why don’t you share with us some of your thoughts?

Marty Parker: Yes, we do have a number of suggestions about ROI from our Unicomm Consulting client experiences. We’ve written a number of white papers and posts on this and those cover two broad categories: cost savings and business transformation. All of this deals in hard dollar benefits, that is, savings or business improvements that can be measured, which is the definition of hard dollars. Cost savings or cost avoidance ROI usually happens within the direct control of the telecom or IT organization.

Here are nine quick examples:

  1. Stretch the life of your PBX.
  2. Reduce your PBX maintenance costs.
  3. Use Ethernet backbone instead of T1 or SIP trunks.
  4. Use directories rather than session managers.
  5. Shift communications to lower cost, more efficient tools such as instant messaging instead of voice calls.
  6. Tune your network and voice topologies to the realities of your communications.
  7. Use mobile devices rather than desk phones, maybe even without PBX licenses.
  8. Move users to the optimal platform based on user profiles.
  9. Bypass the PSTN with UC federation.

Now business transformation creates benefits by changing and optimizing the work flows or processes in the operating departments of the organization, and here are more quick examples:

  1. Work remotely and save on facilities costs.
  2. Avoid out-of-pocket travel expenses.
  3. Increase customer interaction time to increase sales or billings or to reduce staffing levels.
  4. Allocate work more effectively to increase the organization’s transaction capacity.
  5. Accelerate work flows to complete collaborative projects in less time with less labor.
  6. Shorten time to benefit in R&D, marketing, recruiting, decision making and elsewhere.
  7. Transform the value chain to leverage resources outside the enterprise.
  8. Transform the business model in communication-intensive areas.

So here’s the bottom line. Every major new technology breakthrough creates opportunities to rework or reinvent how work gets done. Unified communications and collaboration and social business are major new technology breakthroughs. So an opportunity has been created. Our intention at UCStrategies is to help channels deliver solutions, which will make these benefits real for enterprises.

Dave Michels: Thank you, Marty. And Don, how about yourself from Unicom?

Don Van Doren: Thanks, Dave. I’d like to follow-up on some of Marty Parker’s points. When Marty and I work with the Unicomm Consulting client, we typically meet with the staff throughout that company to better understand the work that they do, how they do it and the barriers and bottlenecks that get in the way. What’s startling to us is the dramatic shift that we’re seeing away from sort of classic PBX-based voiced communications. More and more the people we interview say phone calls are fewer, and many feel they don’t need their desktop phones anymore. For the remaining voice calls, they either use a mobile solution or perhaps voice through the computer at their desktop; they feel this approach is fine and in many cases much better because of the other benefits that they get – the ability, for instance, to dial through the device without looking up a phone number, or the ease of escalating from an IM to a voice connection.

So our finding is that, you want ROI? Well, consider the value of not replacing many of the desktop telephone sets, or significantly reducing the number of licenses that you need on the next piece of PBX-like infrastructure that you purchase. It’s these kinds of things that we’re seeing really are driving pretty dramatic ROIs.

What we typically find in our consulting assignments is that the majority of the users benefit from kind of the user productivity kinds of enhancements that are brought on by unified communications; nice to have, but it’s really sometimes challenging I think to build a hard ROI case. But what we find in almost all enterprises, there’s always a number of specific opportunities to fundamentally change how work gets done within certain groups or certain departments. We find that these barriers and bottlenecks are often the result of some kind of communications breakdown. And by introducing a new capability that simply wasn’t supported by the current communication solution, you really can transform the business operation. The impacts of those kinds of changes can be huge, so things like insurance companies more rapidly able to interact with independent agents. That directly increases the volume of business and that kind of thing translates into dramatic ROI improvements, or an R&D team that’s maybe spread across six locations that can now use a communications workspace to develop a product concept in a third less time. Again, these are measurable savings and measurable ROIs. These kinds of things are what we’re seeing in our consulting board. These transformative uses of unified communications, we find, can really produce measurable returns on investment. Thanks.

Dave Michels: Excellent thoughts. We’ll come back to the consultant in a minute and I want to appeal a little bit to a broader picture. Joseph, why don’t you share some of your thoughts on UC ROI?

Joseph Williams: There are a number of takes here, and let me walk through each of them in turn. First let’s take a look at this from a UC-as-a-service perspective. One of the things that -- for company’s which are moving into the cloud world to provide UC services, these are traditional SaaS companies, or they’re traditional IB/PBX type companies. When they move into the UC space and they start to do their ROI calculations, one thing that consistently pops up is they dramatically underestimate the support costs associated with offering the service and supporting the channel, if they have a channel organization. So I just want to highlight ROI, of course, is an incredibly important exercise and metric to be involved with, but you’ve got to be realistic about what you’re doing with the customer and this is a demanding customer and if you’re moving from providing email to somebody to providing real time telephony, it’s an incredibly different support model and you have to appropriately address that; so that’s one item.

The second thing is, as you know I come from a Lync background and we did a lot of work internally at Microsoft as well as with large enterprise customers around trying to work with the real estate and facilities folks on how to, when they’re redesigning their work space, to incorporate UC in order to reduce the amount of real estate per square foot. That turns out to be really effective and the results have been impressive; it’s just not a Microsoft phenomenon it’s actually an industry phenomenon. Others will be talking or have been talking about tele-work. But one of the ways to reduce real estate per square foot and improve the overall ROI is to have a tele-work program that is supported by the collaborative software that the company is running.

Third point I’ll make is almost all of the estimates that I’ve seen from enterprises for funding the investment in UC focus on the reduction of conferencing costs to pay for the implementation of the UC service. And although in fact, there are dramatic reductions in conferencing costs, companies tend to overlook the fact that they’re going to have to upgrade their network infrastructure and so there has to be an informed, probably using outside consultants who have experienced implementing UC perspective on what the full equation looks like and so this a big concern because as we worked with enterprises that have gotten kind of a surprise at the end about what their total bill looked like, we want to make sure that the ROI analysis is done properly up front. Thank you.

Dave Michels: Excellent Joseph. I think it’s interesting – you introduced a couple really interesting points because a lot of organizations, when they make an upgrade from say traditional TDM to UC, there are so many variables at play, like the number of devices, the number of users, the types of communications. It can be very difficult for them to predict what their actual costs are going to be thus very difficult to justify an ROI with any kind of validity to it, which is why it’s good to get some expertise around this.

Joseph Williams: It’s difficult to do in a silo, and that’s why having outside data that you can tap into, outside experience, is really important.

Dave Michels: You introduced Lync there as a concept, and Lync is going about this in a totally different direction because they treat voice as the add-on, where everybody else is starting with voice. I want to jump over to Kevin for a little bit to get his perspective on ROI.

Kevin Kieller: Thanks Dave. I think from a Lync perspective, it’s really very similar to other UC system implementations. I’ve implemented large Cisco UC systems and large Microsoft Lync UC systems; I think having done more business cases around the Lync systems, audio conferencing as has been pointed out, is always a great area where organizations look for and seem to be able to show significant opportunity for savings.

I think Steven pointed out that soft phones are another area. We’ve certainly worked with large organizations, multiple thousands who’ve aggressively decided to move to 90, 95 percent soft phones. Now we have to make sure that that is the right match for the type of organization.

And then I think that there are a number of cost avoidance strategies that have also been mentioned by some of the people ahead of me. The real estate savings, and a lot of times it is looked at, in terms of real estate avoidance. So we are bursting at the seams in terms of our office space. Option A is we acquire more office space. Option B is we implement a work-from-home program so that we don’t need more office space. And a lot of times, Lync, because it does provide very strong remote worker capabilities, is able to claim the cost avoidance associated with that. I think Joseph made a great point; you need to be realistic about ROI. Steven mentioned SIP Trunking cost savings, and absolutely there are opportunities for that. But you have to be realistic.

Sometimes, if you have got a whole series of PRIs, and if the equipment that you are terminating those PRIs on, you may need to replace that equipment. And as Joseph rightly points out, even the audio conferencing cost reductions by implementing a UC system like Lync, requires that your network can support the VoIP traffic and so you have QoS implemented, and CoS across your LAN/WAN.

So you really need to do the math to make sure that you get the ROI savings. In terms of ROI business cases, those are really the hard savings, and that’s really the only business case that I have seen. And then sometimes the business case is, they just add as bonus, things like the faster time to decision, and improved moral. But none of those are actually how the business case is made. They are just kind of thrown in at the end. As I said, as bonus features.

That’s what we have seen, and with that, I will pass it along for some additional comments from others.  

Dave Michels: Excellent. Okay let’s move over to Mr. MacKay, Bill what are your thoughts on ROI? What are you seeing with your clients?

Bill MacKay: When I was looking at the overall outline of today’s calls there was something that struck me, and that was the ROI pitfalls, and I heard this voice in the background and I could just hear Samantha saying, “You know, it really wouldn’t matter what the technical solution looks like as far as the UC solution is concerned, if the people and process functions are broken, there isn’t a UC solution in the world that would generate the ROI that’s going to be needed to justify it.” And it’s something that’s very, very basic but I think sometimes it may get overlooked is that people may be heavy into a UC project and forget that there’s a real people in process portion that needs to be addressed in any UC undertaking.

The second suggestion or idea is that remote workers might be the focus of the initial UC project, but you really do need to take a look at enterprise wide. So if you’re considering the ROI, what are the business drivers for all departments, not just the remote workers? And there really is a need to be able to quantify some of the savings so you can really start generating some ROI. So that way the objectives can be, at the outset of the project can be quantified, and real ROI can be generated.

Dave Michels: I think it’s interesting because Steve mentioned earlier IM, we heard about UC as a service, we’ve heard about remote workers. Is it reasonable to assume that we could just do all this with consumer or free apps and keep our TDM systems, use a presence engine, use some face time for video and things like that? Bill I’ll throw it back to you and if anybody else have any thoughts on that? If it’s all about saving money and ROI, let’s throw that out there.

Bill MacKay: I think some of that’s going to be dependent on the organization and the ability to be able to support multiple platforms. A lot of the smaller enterprise organizations really can’t take on, and be able to handle with any kind of expertise, multiple platforms, they need to be able to focus on one organization, to be able to provide them with some kind of platform to work from. So yeah, there are a number of apps that could be used or leveraged, but I think it’s really going to be based on the enterprise organization to be able to handle all of that.

Dave Michels: Michael, let me ask you a question. Do you envision a future where an organization uses nothing but mobile phones with a smart phone being robust with video and presence, and of course voice, and other directory applications and things like that? Do you think we’ll get to an environment where the mobile phone is the only UC part of the solution?

Michael Finneran: Well the difficulty, and the difficulty we face with enterprise wireless, is that the tools are really designed for the consumer market; so things like group pick-up, all the PBX-type features really would be needed to be added to mobile network. For years we talked about the idea of mobile Centrex, but it’s never actually appeared anywhere. So all mobile? I don’t see it in the near term unless we really go for, as you would suggest, a real consumer-oriented solution.

Dave Michels: Interesting, Stephen, you had a point?

Steve Leaden: Yeah Michael, when we interview clients that these needs assessments, occasionally you’re going to get one user in one of the groups who says, to your exact point, why can’t we go just towards the consumer-based total model? I would really throw out some caution here to the enterprise community at large, that if you’re really going to make your entire enterprise, which is commercial and it’s baseline and really get a support model as a consumer based only kind of model I think there’s some real risk there. There are no SLA’s really in the consumer-based market as we know, there’s no mean time to repair, mean time to respond, which are all standard SLAs from any channel partner that provides any kind of UC solution. So it’s a thought why, simply because I think, to Michael’s point. the mobile market, is consumer based but really the feature functionality that’s in the consumer market is finally catching up now in the commercial end of the market; so there’s definitely a thought around that but I would definitely throw a question around that for sure.

Dave Michels: All right. Art what are your thoughts on ROI?

Art Rosenberg: My first question, for which I don’t have an answer, is who in the organization is responsible for defining expected ROI? Because if you look at IT they’re saying, “What would it cost to support,” and all the things that have already been discussed. But if you look at it from another perspective, which is where is the revenue generation coming from? Now you have to look at customer services and so on. And not how much it costs, but how effective it’ll be and will it increase revenue generation, customer satisfaction, retention, etc. So it’s really got to be looked at from those two perspectives. In regards to some of the comments made earlier yes, there’s a lot of complexity that comes in; we’re trying to do everything and integrating everything and so on, and quite frankly I don’t think any business organization wants to do it themselves. They just want to use that technology, so I think the trend towards cloud-based services is starting to expand to everything you need, not just the end points, not just the applications, not just the connections but all of the above. And I think that’s what you’re going to see happening. So we’re still evolving and the people who are interested just in cost reduction can start looking at number one, having it as a managed service in the cloud because you can certainly see cost reductions there. And the second thing is, so if you had it all for free what would it do for you in terms of revenue generation, and that’s where everybody has to have the right use cases to do that properly.

Dave Michels: Great. Phil, what are your thoughts?  

Phil Edholm: Thanks Dave. For those of you who were at the UC Summit, we introduced at that point a new tool we call the UC Benefits and ROI Calculator. It’s actually designed to enable a channel partner to actually use it to determine what the ROI, payback, and benefits will be of a UC solution for a specific customer. We are actually very close to being able to release that. When we release it, I think it is going to be pretty exciting.

Blair and I have been working very heavily on this over the last few months to really create a tool that lets you predict what the UC ROI is, what the benefits are, and analyze that. The tool is actually incredibly complex. It has over 300 variables that can be entered into it. But it’s actually designed for simplicity by answering 15 simple questions. Are you going to deploy as a cloud, premise, or hybrid solution? Are you augmenting or replacing an existing PBX? What percentage of your users will use UC? Simple questions like that enables the tool to run an analysis first of your benefits. And as you have heard today, there are a lot of potential benefits of UC. The tool actually takes into account seven different areas of benefit and allows you to see exactly what those are, and sorts them by hard and soft benefits; hard benefits being ones that are actually pure cost avoidance; soft benefits being ones that are actual going to be attained through productivity gains. It starts with SIP trunking, and goes to business continuity, collaboration, mobility.

Then it has the communications enabled business process, something you have heard a lot about today. The idea of how can I change my business processes? And then general business value – how can I change, for example, my churn? And finally, contact center.

By taking and naming all of these benefits and allowing users to see them and control them, and within a category like collaboration, for example, we take into account meeting efficiency and time saving, collaboration effectiveness, internal and remote site travel reduction, internal local site travel reduction, reduction in external conferencing co-charges. It is a comprehensive view of all the potential benefits of UC.

For example, in CEBP, can be tuned to a specific business process of the organization. By enabling this type of a tool, what we now allow us to do is calculate what are the benefits over a six-year period. So from 2013 to 2019 in the current version of the tool. Then the tool allows you to enter the cost of the UC system. It actually predicts this and predicts the support charges. It is actually conservative in that analysis. Then it says, what is the ROI and payback?

Further, if you are replacing an existing telephony PBX system, it actually does a complete P&L ROI analysis of replacing your existing system with a new UC system. Or, if you are just augmenting, will do a P&L analysis of just the augmentation. Finally, it prints out a complete report that is five or six pages, depending upon whether it is augmentation or replacement of all of the benefits, the configuration, the cost, the ROI; both from a cash flow and an accounting P&L basis. This is something that a customer can use, that an end-user customer can use to make a decision about the ROI and the P&L.

This is a tool that UCStrategies is going to make available to resellers, VARs, and channel partners to use in their engagements with the customers. The cost per salesperson is about $300 or less in volume, less than taking someone out to dinner. And it can be used in two different ways. It can be used first to qualify customers very quickly by asking a few questions to see if the benefits you can generate justifies a proposal. But also, as was discussed earlier with management to justify the final purchase decision.

Look over the next couple of weeks on the UCStrategies site for more details about this, more information. It will be available as a trial package where you can try it for a couple of weeks and see if it really can impact your business. Thanks Dave, and back to you.

Dave Michels: All right, Jon Arnold, I haven’t heard from you in a while, what are your thoughts?

Jon Arnold: Thanks Dave; I would like to just add a few thoughts to this. Certainly, the idea of the ROI concept with UC is a little anomalous. Certainly other people I’m sure see the same, especially the consultants, that the traditional model for ROI has always been hardware-based and capital-intensive based, and of course, UC as being a service, it is very difficult to put those numbers in place. So I think in terms of the pitfall that buyers have to look out for is that the ROI concept, they have to look at it a little differently when it comes to UC. Especially if they are going of course, for a cloud-based solution, because they are going to need to be having almost everything hosted off site. At which point, there is very little capital investment up front.

So really, in a lot of ways, it looks like an ROI versus a TCO discussion, and I think the more meaningful long-term view is to talk about that TCO idea. Because when you go, especially for a hosted solution, the idea is the upfront investment is pretty minimal and the out-of-pockets are pretty manageable. But of course, over time, because you are only renting and not owning, UC will reach a point where if it is a cloud model, it’s going to be more expensive long-term than actually owning. Now we have not had the market really running long enough to determine whether that’s a fact or not, but at some point, of course, leasing is always more expensive than buying.

So in terms of thinking of a real ROI for UC, and I am thinking mostly for hosted, I think what really needs to come in to discussion is, what is the long-term value of the service that you are getting with UC. But more importantly, to make that long-term value real, you have to be able to provide, as a vendor, more than just the actual underlying service, because the expense of keeping it going is just going to keep adding up over time. So the offset to that, of course is, there are new forms of value that come with a hosted model. And that really takes the shape in terms of being new applications, propagating updates seamlessly through the network that are done in a more efficient way than an enterprise or a small business can do on their own, via their IT path.

So I think you have to get beyond the actual dollars and cents cost to look at that TCO and say, well the long-term value of this for leasing versus owning, really bears itself out. Because the burden that you save, for having to run everything yourself, is offset by the headaches that go away when you deal with a hosted provider. And that sense of TCO means a little bit more, because now IT, whatever kind of level of staffing you have, it will focus on other things and not worry about the UC infrastructure. How you can put a dollar value on that, I think is unclear, but I think there is a real opportunity here for the channel, in particular to kind of help reinvent the concept of what an ROI/TCO needs to look like for this type of scenario.

So I will leave it at that for now Dave, and I will move on to other people. So thanks for having me contribute.

Dave Michels: Thanks, Jon. Roberta I want you to wrap this up with a couple points. I want to set you up with a couple things here. Marty has talked about process improvement, Steve talked about a little bit of speed of business but a lot of cost reductions. Are you using the whole concept of voice, the way they’re using voice, as changing?

Roberta J. Fox: Oh absolutely, Dave, and I would also agree with what my fellow associates said. I think there is a couple of other factors that haven’t been stated today, but we’ve probably -- those of us that are working with the end user clients have seen and one of the ones for Steve’s is we’re seeing things like not just tele-work but actual meeting rooms and reduction of office desks through hotelling. Also I think Art mentioned about the reduction of the number of vendors, which is a good thing because that impacts legal departments, IT departments and procurement so you’re minimizing the number of vendors you have to deal with, manage and maintain. Another one we ourselves within Fox Group and some of our clients is you get to, actually by using some of the cloud or UC apps, you get to extend the life and get longer life of your laptop and desktop because you can load the lighter weight applications on top of the older machines.

A couple more funky ones we’ve observed is the reduction of printed materials and supplies with people able to view documents and smart phones and tablets and video desktops and even room-based systems. I guess also a big one is the reduction in overall client and project management through using these application; so once you have the collab applications you don’t have to print things out. You can pop up an application in a minute, you can go through it real time and get things done in significantly – anywhere from 25 to 40 percent less time on business projects or even IT projects because the information is all being viewed, changed and adapted real time.

The last one is an example of organizational benefits that can be more of a return on revenue or padding on revenue and so using some of these UC apps we’ve tracked a couple of clients and ourselves where the pre sales time to sell services has been significantly reduced – a matter of cutting days and weeks; so this is again about efficiency and effectiveness so these are adding onto the things that you mentioned.

And I guess the last part you had asked earlier Dave was about does tele-work actually save money and that may be a topic for another podcast but I would say, yes definitely but it’s got to be really well done and planned like any other project that effects across the organization. So hopefully that helps give some other insight.

Dave Michels: I’m really glad you brought up the printing supplies actually because as an early tele-worker myself it was impossible. Not being in the office disrupted the paper flow. You had the expense reports on your desk, things that have to be signed. There was a big routing envelope that had 25 names on it and yours on the bottom and everybody was complaining because you were holding things up because you weren’t in the office. And so almost all these things, including online meetings and some of the other things have turned into a digital format now and really enabling tele-working. But I had never thought about just the cost reduction of printing and printer, my printing has gone way down; I don’t have a bunch of curly faxes on my desk anymore either.

One thing we barely touched on was the desktop phone and I want to throw that back out there.  A lot of times the desktop phone is used as one of the ROI, (as in) let’s eliminate desktop phones; headsets are cheaper than phones. There are some concerns around that because headsets don’t last as long as phones. And there’s some resistance to soft phones. Some people actually have resistance to desk phones; so I want to throw out there and see if there’s any response to the hard phone versus soft phone debate in terms of ROI.

Steve Leaden: Dave, clearly the soft phone is a whole lot cheaper than a desk top phone. Desktop phones, including discounting, tend to run in the $200 to $300 range capital; equivalent soft phone licenses (are) $20 maybe $30 tops. So obviously you’re only paying 10 percent of the price of hardware. You do have less hardware to remain, but there is a shift going on for sure that you have to have an organization that’s ready to take on soft phone as a replacement. You also have to deal with a lesser than not five-9s model, in the world of lap tops as opposed to a desktop phone just because they just don’t have that kind of level of reliability. Although in general people have learned to work with -- that we’ve learned to work with cell phones as an example and that cell phone areas. You know five 9’s is not really a reality when I can get my cell call anyway, that’s the more important piece; so there’s definitely a lot of dynamic going on there for sure Dave.

Roberta J. Fox: And Dave, I would add we’re seeing a pattern that is about 60 percent of the client replacement projects are soft phone, 40 percent are hard phone, but the skill sets required to use the soft phones and the comfortability to use them and also good quality headsets are about the same Lync-enabled or proper sound masking are about the same price as a phone; so it’s really more shifting with the culture as well and the people. But there seems to be about a 60/40 split in our projects.

Joseph Williams: Not to pile on, but it’s a “it depends” answer because as work places are re-engineered and people are losing their office and they’re going to more of a bull pen environment a desktop phone is less productive than a head set. There’s still though the movie executive that wants to have something that looks like a turret system. I mean it all depends and I think that the enterprise has to be comfortable with the fact that they may have to do a blended strategy of desk phones, headsets, and of course you see kids walking down the street talking to their iPads, so they may not need any devices.

Dave Michels: The turret phone is a really interesting phone for those of you aren’t familiar with the turret phone, it’s a phone with two hand sets typically used in trading environments – buyer  and seller – one on each handset. I keep on telling people and no one listens to me, but I want a turret soft phone with a two headed/two eared headset that has different audio channels in each ear so you can have two conversations at once. But so far that hasn’t been invented, but you heard it here first for the record.

Just one last closing point – we didn’t touch on CapEx versus OpEx. I just wanted to mention that I personally dislike it when companies make decisions based on accounting rules as opposed to technology or their needs rules, and I just want to stress that you can indeed do an operating lease to get OpEx; there are other ways to get OpEx besides hosted, not that there’s anything wrong with hosted, but you should go for hosted for the right reasons, not for accounting reasons.

So with that let’s go ahead and wrap it up and we’ll be back next week with our discussion on the Gartner Magic Quadrant for UC. Thanks.

 

2 Responses to "UC ROI" - Add Yours

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Hyoun Park 8/22/2013 12:20:57 PM

I've heard about UC ROI! ;) The key to ROI is that there are only three types of benefits for ROI: reduced costs, increased productivity leading to additional work, and increased revenues (which Art and Roberta both mentioned). The majority of this podcast was focused on reducing CapEx or OpEx costs, which leads to an assumption that UC is really a cost center that eventually leads to a call and routing application at the cost running in the cloud connected by smartphones. And I think that's ultimately a commodification story, meaning that UC ROI is actually mostly about UC TCO.

It'd be interesting to also talk about how reduced support for legacy technologies leads to increased video or mobility support, increased end user productivity especially in recruiting, sales, and service use cases, and translations of multi-channel campaigns through improved UC. This dives into contact center and CRM use cases, as well, but that needs to be part of the UC story if there's any chance of talking about UC as a strategic investment or a profit center. And there are stories out there.
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Kevin Kieller 8/23/2013 6:39:53 AM

Hyoun,

Good points however I have seen most businesses have a difficult or impossible time making a business case based on improved efficiency or increased sales. Too many assumptions are required to drive the numbers (even if the assumptions are valid) and as such execs tend to discount the improvement UC can bring and focus on ensuring there are hard dollar savings.

Part of the trouble promoting the benefits of UC can be blamed on the industry that initially over-hyped the benefits, much like what is happening with WebRTC now.

While vendors happily list all the wonderful things UC can do for an organization, my favorite is increased attraction and retention of staff, for which their remains few or no actual cases, organizations creating true business cases need to be able to measure adherence to specific objectives.

Appropriately match UC systems can provide great efficiency and even top line growth for organizations. Inappropriately matched UC systems just cost money and might actually decrease efficiency -- this is often due to excessive complexity (think legacy video conferecning) and lack of training.

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