Virtual presence delivers productivity jolt

Mention VoIP or video conferencing and most people are likely to imagine two things: an internet phone call punctuated by frustrating audio delay, or a jerky video picture that refreshes only every few seconds.

But VoIP (voice-over-internet protocol, or telephony over a data network rather than a traditional phone system) and video conferencing are much more than that.

Both are being seen as the future of not just telecommunications, but productivity improvement as well.

"The early adopters have bashed it about," says Telecom's head of IP voice, Paul Douglas. "It's now come of age ... inevitably everyone will being using it."

IP-based services, both telephony and video, could create significant cost savings for businesses. Telecom estimates businesses using VoIP can cut capital expenditure by 10 to 30 per cent, call charges by 10 to 30 per cent and phone administration costs by 90 per cent.

US-based network giant Cisco Systems, meanwhile, estimates a 35 per cent saving on cabling alone.

The cost savings pale in comparison to the productivity gains, with video calling and multimedia allowing collaboration, seminars, training and remote sales pitches without travel or complicated schedules.

Virtual call centres and call routing can also improve customer satisfaction through faster response times.

Then there are things such as unified messaging - a single in-box for multiple messages, including voice, email, SMS and fax - and presence identification, which makes physical location irrelevant as a single phone extension number follows a person anywhere he or she goes.

Businesses can't afford to do without those gains, Douglas says.

"The more efficient communications it creates can increase a company's overall competitiveness through better customer service, greater work flexibility and improved management capability," he says.

Despite the benefits, adoption of the technologies by New Zealand businesses so far has been a mixed bag.

TelstraClear, the nation's second-largest telecommunications provider, estimates that only about 20 per cent of its customers have switched to IP services. Telecom estimates about 30 per cent of its customers have switched.

David Barker, Cisco New Zealand country manager, says the lag in adopting VoIP can be explained by businesses trying to get the most out of their previous phone system investments. Equipment vendors also haven't been as ready to offer the new technology to customers as they should have been.

"Most organisations will sweat the asset as long as they can; why replace a perfectly serviceable thing?" he says. "[And] if you don't have a product, you're not going to actively advertise a replacement - [especially as] they still make very good margins on an old [system]."

Businesses themselves also shoulder some of the blame, Douglas says. Many small and medium enterprises (SMEs) lack information technology specialisation, which means they are less inclined to persevere with new technology as a productivity tool and consider it an afterthought.

"IT managers understand technology adoption and will be able to sell productivity gains to the company. "Generally speaking, with SMEs it's all hands to the pumps - they only get to think about IT at eight o'clock at night," he says.

The Organisation for Economic Co-operation and Development considers VoIP changeover as part of infrastructure migration, and so does not specifically track uptake. But if the declining number of new traditional phone systems can be used as a measure, New Zealand is faring well - ninth out of the 30 members (Finland leads the way).

New Zealand's move to video conferencing, meanwhile, is steady, according to Norwegian heavyweight Tandberg Data.

Local area manager Jaron Burbidge says New Zealand's development is consistent with the trends in Tandberg's other markets.

"The technology is also moving out of the boardroom to the desktop, enabling our customers to easily connect with their customers," he says.

Among its selling points, video conferencing can unify employees separated by distance, promote a work-life balance by enabling telecommuting, and accelerate decision-making.

"Many organisations are wasting time travelling or sending materials," Burbidge says.

"With video, people are face-to-face working through complex issues to make the most accurate decisions quickly."

Several New Zealand banks are testing Tandberg systems by linking customers in branches with video to relevant experts wherever they may be located within the company, Burbidge says.

Chris Stewart, general manager of Asnet, which is a supplier of Tandberg's US-based rival Polycom, says attitudes toward video conferencing are changing.

Many companies didn't even know what it was as recently as five years ago, but the popularity of consumer applications such as Skype (the free internet calling and video-conferencing program) is bringing the technology into the mainstream.

"Skype and all that sort of stuff are popping up in the consumer space," Stewart says.

"Everyone's getting it, their kids are using it, and people are bringing the concepts to work with them."

"The technology is becoming well socialised."

The introduction of high-definition television at the end of the year should also improve the case for video conferencing, he says.

"I already have two customers who want it.

"It'll have a better picture - better quality than a DVD at home - and real lifestyle presence on a 50-inch plasma or display."

Industry analysts are expecting significant growth in IP-based technologies in the next few years.

Frost & Sullivan expects the hosted IP telephony and VoIP access services market to swell by about 80 per cent in terms of access lines and revenue over the next five to six years. Gartner Group also estimates that 93 per cent of all new business telephony equipment will have an IP component.

Cisco has so far set up IP networks for 15 Government departments and state-owned enterprises, including Inland Revenue, Trade and Enterprise, and Kiwibank - accounting for more than 30,000 phones. Telecom expects two-thirds of its larger customers to adopt IP voice in the next two years.

But despite the expected growth, there is still room to improve attitudes, says Andre Ferdinands, IBM's business unit executive for NZ integrated technology services.

Whereas businesses have so far looked at the new technologies only when their current systems were nearing the end of their lives, they need to think more progressively about their investments.

"The market is beginning to understand that waiting to replace old equipment may not be in their best interests," he says.

"When the focus is on increases in efficiencies, all of a sudden they're not looking at cost but at productivity growth.

"It's dawning on people - they're crazy to not at least look at the technology."

THE SERIES
Connect@Work is investigating New Zealand's lagging economic productivity with a month-long series looking at how businesses can improve through better investment in and use of information and communications technology.

Three weeks ago
The macroeconomic issue: where New Zealand stands among its peers, and what is the best way forward.

Two weeks ago*Leveraging the internet: why businesses have failed to transform themselves through online capabilities.

Last week
*Hardware and software: how automation and mobility can translate into competitive advantages.

Today
*Communications: how Voice over Internet Protocol and video conferencing can save time and resources.