Can you afford telepresence systems?

Travel costs are quick to go in tough times, so many companies are looking at high-end videoconferencing tools

With companies worldwide feeling new constraints on their budgets, what was once considered a routine travel expense to visit global branches and global partners is now under scrutiny by the CFO. The tech industry -- especially Cisco Systems and Hewlett-Packard -- is hawking telepresence systems as the answer, but can a telepresence system with monthly costs ranging anywhere from a few thousand dollars to as much as $20,000 actually be the answer?

Like the technology itself, the definition of telepresence is morphing as the costs go down and the market increases. Originally, however, telepresence professionals referred to using immersive technologies. Perhaps not as radical as the virtual reality headsets depicted in movies, immersive is about the creation of an environment -- a space designed and set aside exclusively for telepresence conferences -- that lets participants feel as if they are in the same room with those who are actually elsewhere in the world.

[ Discover how to save both money and the envcironment using technologies such as telepresence in InfoWorld's "25 things you should know about green IT." ]

Telepresence is designed to simulate reality
Telepresence typically starts as a simple SIP (Session Initial Protocol)-based IP phone call from one phone number to one or more others. If the phones identify themselves to the SIP query as telepresence-capable, the video signal is sent to them. If it doesn't detect video, it just does audio.

There are typically at least three voice-activated video cameras set up around the room, plus multiple large screens and sophisticated lighting and audio equipment. The telepresence computer system that can process all of this AV input with no visible latency also requires high-speed network connections. The necessary bandwidth needed for a true immersive experience varies: If you want six different rooms linked together, you're looking at 12Mbps to 15Mbps of bandwidth. A single screen at high-definition quality may need only 1.5Mbps to 2Mbps.

At the high end of HD video, 1080p, participants can see the wrinkles around their fellow conferee's eyes and follow the movement of the mouth. This level of video quality may not appear to be critical, but if it is true that real communication is non-verbal, much of it conducted through what is called micro-expressions, then the key to a positive meeting result -- especially if telepresence is used to negotiate a deal -- are the high-end 1080p systems that can pick up every facial expression.

As one telepresence participant puts it, when done right, a few weeks after such an appointiment it is hard to remember whether or not you actually came face to face with the other people in the meeting or if it took place in a telepresence environment.

The cost of telepresence
Gartner estimates that for an all-inclusive setup -- including the equipment, network, and management -- comprising a multiscreen telepresence suite, companies can expect to pay anywhere from $12,000 to $28,000 per month. (HP runs its own fiber-optic network for telepresence, while Cisco contracts that to AT&T; in both cases, you need to make sure the connections are available to your facilities.)

But the monthly charge doesn't quite address the actual bottom-line cost. You also need to pay for the room setup. Creating a networked connected telepresence room, with all the bells and whistles, that holds up to 18 people costs $340,000 from Cisco and $349,000 from HP.

Of course, not everyone in a conference can or will travel to a specially outfitted telepresence room. But you can bring in other people to these conferences. On the low end, you might use Avaya's 1X Communicator, a software client that runs on a PC that connects users to telepresence rooms. Avaya also offers a high-definition video workstation for about $8,000.

Gartner suggests that companies should look for a managed service and frame their requests for proposal accordingly: "This isn't about buying equipment; it's about buying the fully managed experience," states a recent Gartner report on telepresence.

There are also hidden costs, says Robert Mason, a telepresence analyst at Gartner. Once installed, the ability to connect to other companies' telepresence systems can be difficult, he warns. "Sometimes it's impossible to do," and so you keep traveling the old-fashioned way. Fortunately, an emerging set of standard services is beginning to break down those barriers.

But such interoperability is in the future. When InfoWorld asked Yossi Meshulam, the vice president for HP's Halo telepresence service, if an HP-designed telepresence room could connect to one designed by Cisco, he said no. HP is seeking interoperability with all vendors, he notes -- but it's not there today.

So what's the ROI of telepresence?
A one-night business trip costs about $1,000 if people fly coach and stay in mid-priced hotels, and can be twice that for executive-class travel. In these terms, the initial setup costs of a telepresence system in two locations equals about 350 one-night trips per room over the lifetime of the telepresence rooms, and the monthly fees equal about 20 one-night trips per month. For executive-priced travel, these numbers fall to 175 and 10, respectively. Thus, you need to cut a lot of travel to balance the costs of telepresence.

Gartner analyst Scott Morrison estimates that a telepresence system must be used 25 percent of the business day to justify its investment.

Although "the overwhelming hard benefit is travel displacement," says Mason, he notes that reduced travel should not be the only benchmark when considering a telepresence solution. There are other benefits.

For example, once global teams start coming together, companies may realize that they are building products faster and with fewer misunderstandings simply because teams are talking and meeting more often.

You can also get faster results in many cases. Whether it is a team looking at a garment your company is going to manufacture, or engineers looking at a circuit board to figure out why the wave soldering machine is making a mistake, the ability to see a 65-inch high-definition image of whatever they're discussing can quickly uncover the issue, without waiting for someone to spend a half day or more in flight. Management, in turn, can make a decision far more quickly.

Morrison argues that such non-travel-reduction benefits are required to justify the deployment of telepresence: "Cost mitigation alone won't make the model fly." Among Gartner's recommended uses of telepresence are boardroom reviews, project team meetings, and brainstorming sessions among creative teams.

Can you get telepresence on the cheap?
For many businesses, the costs and complexity of telepresence are simply too high. By not trying to create an immersive experience, Avaya claims it can reduce the need for travel at a lower cost. "It shouldn't be just for the high-end executives at 1080p," says Anne Coulombe, an Avaya product manager for video collaboration.

Avaya's product line starts with a voice call that has video and moves up from there to familiar videoconferencing via USB cameras (its Windows-only Video Telephony Solution product), and then to the 1X Communicator system that can connect a user into a full telepresence meeting.

Cisco also has an offering for the sub-immersive market, announcing recently a system designed to be used in a multipurpose conference or team room, not in a telepresence room built from the ground up. Unlike familiar videoconferencing systems that use fixed cameras or even computers' built-in cameras, Cisco's CTS 1300 system allows you to switch among three cameras; the system has just one screen and one video processor. The bandwidth requirement is 1.5Mbps, but the frame rate is just 5 frames per second (for context, a TV displays at 30 fps).

Of course, there are plenty of quick-and-dirty videoconferencing services available that also use USB and built-in cameras, such as Adobe Connect Pro, Cisco WebEx, Skype, and Yuuguu, plus the instant messaging-based video chat utilities that come with Windows and Mac OS X.

Copyright © 2009 IDG Communications, Inc.

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