Jim Forrester - Implementation of Teleconferencing in Business

Implementing Teleconferencing
in the Business Organization

James Forrester
May 14, 1999

Executive Summary

More and more businesses are using teleconferencing to secure a competitive advantage. This competitive advantage results from both tangible and intangible benefits. Teleconferencing is used in place of traditional business travel, offering the tangible benefit of cost savings to the business organization. While cost savings can be measured, there are other reasons for teleconferencing that may not yield calculable benefits, yet contribute to the competitive advantage of the business. For example, it may be possible to allow more frequent staff meetings within the business because expensive travel is not necessary. Further, employees who would typically spend a substantial portion of their work time traveling, can use their time in a manner more efficient to the business. Thus, teleconferencing provides a competitive advantage for a business by providing more efficient communication options to the organization.

The collaborative technologies that allow for teleconferencing include video conferencing, audio conferencing, and data conferencing. Video conferencing is simultaneous two-way communication of video and audio data between two or more locations. There are two primary forms of video conferencing, room based and desktop (computer). Room based systems offer the highest quality. However, desktop systems are much cheaper to install. These cost savings coupled with the fact that desktop PC’s are nearly ubiquitous, are the driving force for increased interest in this method of videoconferencing. Audioconferencing, historically the first form of teleconferencing available, uses simultaneous two-way communication of audio data only, between two or more locations. Audioconferencing is still a common and useful tool in the business environment, with 1997 expenditures of $2.4 billion. Data conferencing is the third technology available for teleconferencing. Asynchronous dataconferencing is sharing of data or files by email. Synchronous data conferencing allows for the sharing of data files and applications simultaneously amongst participants of the conference.

Teleconferencing is a useful tool in the business environment, commonly used for distance staff meetings, distances learning and training, and job interviewing. Teleconferencing can save businesses money, by saving time required to convey data and information to different groups within the organization. Ford Motor Company estimates the time it takes to develop some vehicles, has already been reduced from five to two years with its teleconferencing system. In another example, Reebok International uses its teleconferencing system for communication between its development centers and designers located in the U.S., Korea, and Taiwan.

In order to insure that this long distance communication is successful, a prudent manager must make a number of considerations when implementing teleconferencing. Even though teleconferencing can offer substantial savings over traditional business travel, managers can not overlook the costs associated with teleconferencing. The manager must also consider the quality of sound and image in videoconferencing. Aside from technical considerations, there are human resource issues that must be taken into account. Workers may become isolated. Some employees are not comfortable with teleconferencing. Failure to address such issues can prohibit the business from realizing the full potential of teleconferencing.

When teleconferencing does reach its full potential, the business organization will gain competitive advantage. Proper planning and strategy can overcome the potential technical and human resource problems associated with teleconferencing. As the examples of Ford Motor Company and Reebok International illustrate, businesses realize competitive advantage provided by cost savings and increased productivity, resulting from efficient communications options. As teleconferencing technologies continue to develop, more and more businesses will be attracted to these communications options for their tangible and intangible benefits.

Implementing Teleconferencing in the Business Organization

A teleconference is a meeting (conference) held over a distance (tele). Using telecommunications technology, two or more parties meet from two or more locations. The collaborative technologies that allow for teleconferencing include video conferencing, audio conferencing, and data conferencing (MMTA, 1998). Spending on these technologies in 1997 totaled nearly $7 billion, up from $5.4 billion in 1996, representing a 29% increase (MMTA, 1998). The importance of teleconferencing in the corporate business world is illustrated by projections of increased expenditures at a 22.6 percent annual rate from 1997, with projected spending of $15.7 billion by 2001 (MMTA, 1998).

Video conferencing is simultaneous two-way communication of video and audio data between two or more locations. There are two primary forms of video conferencing, room based and desktop (computer). Room based systems are very expensive to install, with low-end systems starting at $50,000 (MMTA, 1998). However, these systems offer the highest quality. The market leaders in room based videoconferencing are PictureTel LiveLAN and VTel SmartStation (MMTA, 1998 and Townes, 1998).

An alternative to the expense of installation of a videoconferencing system is rental of teleconferencing services (MMTA, 1998). Kinko’s is the leading provider of room rental videoconferencing, with the world’s largest network of videoconferencing rooms (Anonymous(b), 1999). Kinko’s recently expanded their teleconference rental service, introducing an improved network (Anonymous(b), 1999). This new network offers near television quality service, in 100 locations in the U.S., with 50 additional rooms to be installed on the network in the U.S. and Canada (Anonymous(b), 1999).

Although room systems offer the highest quality, videoconferencing is evolving toward desktop computer systems. Ed Thomas, Senior Product Marketing Manager of the teleconferencing company Octave, notes that "A new trend in teleconferencing is that it is cheaper to do the call if you use the Internet" (Anonymous(d), 1999). The cost savings of desktop systems extends beyond the call of the conference itself to the development cost for establishing a desktop conferencing system. The cost of upgrading a PC with a desktop videoconferencing kit, which includes software for compression of video and audio data for transmission, has dropped from $5000 to $1000, and this cost is expected to continue to drop (Cole-Gomolski, 1999). Further, the fact that personal computers are readily available makes the logistics of desktop conferencing easier than room conferencing, allowing flexibility such as unscheduled conferences. These cost savings coupled with the fact that desktop PC’s are nearly ubiquitous, are the driving force for increased interest in this method of videoconferencing. However, as one analyst from Dataquest has noted "The [desktop videoconferencing] products are still evolving and are not easy to use," (Cole-Gomolski, 1999). The biggest problem with desktop videoconferencing at this point is limited bandwidth. This translates to poor video quality. As desktop videoconferencing quality continues to improve, and setup costs continue to decrease, more and more small to mid-sized businesses will be able to implement this technology. The market leaders in desktop conferencing are Microsoft’s NetMeeting, Intel’s Proshare, and White Pine’s CU-SeeMe (MMTA, 1998 and Townes, 1998).

Standards for videoconferencing are necessary to insure successful communication of multimedia data. These standards are set by the International Telecommunications Union (ITU) (http://www.itu.int/). There are three ITU standards for videoconferencing, H.320, H.323, and H.324. The H.320 standard describes the requirements for multimedia communication using narrow band telephone systems (http://www.itu.int/itudoc/itu-t/rec/h/s_h320.htm). This standard applies to ISDN based videoconferencing. The H.323 standard was adopted by the ITU in 1996, and was revised in 1998 with a broader and expanded scope (http://www.itu.int/itudoc/itu-t/rec/h/s_h323.htm). This standard describes multimedia communication over packet based networks, which allows for videoconferencing using the Internet (http://www.itu.int/itudoc/itu-t/rec/h/s_h324.htm). The H.324 standard, adopted in 1998, describes low bit rate multimedia communication, using V.34 modems (http://www.itu.int/itudoc/itu-t/rec/h/s_h324.htm). This standard applies to teleconferencing with a modem and a POTS line.

In addition to the three videoconferencing standards, the ITU has adopted a standard for conferencing with data files. This standard, T.120, is pertinent to desktop videoconferencing systems that provide dataconferencing features, such as file sharing and whiteboarding. T.120 adopted in 1996 by the ITU, defines "multipoint data communication service for use in multimedia conferencing environments" (http://www.itu.int/itudoc/itu-t/rec/t/s_t120.htm). This standard was created to allow simultaneous collaboration on data files, such as spreadsheets and databases.

Audioconferencing, historically the first form of teleconferencing available, uses simultaneous two-way communication of audio data only, between two or more locations. Although expenditures for audioconferencing represents only half of that which is spent on videoconferencing, it is still a common and useful tool in the business environment, with 1997 expenditures of $2.4 billion (MMTA, 1998). Audioconferencing uses the standard POTS telephone system. Additional equipment is not necessary. One important observation regarding the use of audioconferencing, is that it lends itself to communication external to the business, as opposed to videoconferencing, which is typically used for communication within a business. This is because additional hardware or software compatibility is not an issue for audioconferencing. This also means that additional telecommunications standards are not necessary for audioconferencing.

Each of the three largest domestic long distance carriers, MCI, Sprint, and AT&T, provide audioconferencing services. NetworkMCI offers three different levels of service with regards to the participation or availability of an MCI representative, which can be selected on a call by call basis (http : //www. mci.com/aboutus/products/glossary/conf/ audio.shtml). In addition, NetworkMCI offers flexibility with the way in which a conference can be accessed. The call coordinator can call each participant individually, or each participant can call in with a passcode to access the meeting. The NetworkMCI website does not provide information regarding the number of connections that can be made with a single conference call. AT&T Audioconferencing offers operator dialed, dial in, or host-dialed service (http://www.att.com/conferencing/ general.html). With the operator dialed service, AT&T boasts global connectivity and unlimited connections. Sprint offers two choices with regards to the participation of a Sprint Conference Call coordinator (http://www.sprintbiz.com/ conferencing/types.html). Similar to AT&T and MCI, Sprint offers dial in options or dial out options. Sprint does not provide online information regarding the number of connections that can be made. As well, none of the three companies provide pricing information on their websites; businesses must contact the companies directly for this information.

Data conferencing is the third technology available for teleconferencing. Data conferencing can be either synchronous or asynchronous. Asynchronous dataconferencing is the sharing of data or files by email. In this case, data that is worked on in one site is forwarded to one or more sites. This is particularly useful for forwarding a document to multiple locations. However, email is limited in that it does not provide simultaneous communication.

Synchronous data conferencing allows for the sharing of data files and applications simultaneously amongst participants of the dataconference. This form of teleconferencing is accomplished using specialized software. Microsoft’s Netmeeting is a software application that supports dataconferencing by enabling "Internet based multi-point data conferencing, text chat, whiteboard, file transfer as well as point-to-point audio and video" (http://www.microsoft.com/ netmeeting/). Netmeeting is a prominent dataconferencing software application because it is included in Microsoft’s Internet Explorer web browser, which in turn is bundled with the Windows operating systems. Therefore, Netmeeting is a widely available tool for data conferencing.

Another real time data conferencing solution is MeetingPlace, by Latitude. MeetingPlace combines the phone with an Internet connection for its dataconferencing. Conference participants work on a document using a web browser, while at the same time participate in an audioconference over the phone (http://www.latitude.com/products/ index.htm). MeetingPlace also provides value-added service, allowing users to record conferences, and post audio and data files to the meeting web site (http://www.latitude.com/products/index.htm). Therefore, the business benefits, because individuals not able to participate can retrieve the pertinent information from the missed meeting. A March 1999 PCWeek article notes that a typical installation of the MeetingPlace conference server starts at $100,000 (http://www.zdnet.com/pcweek/ stories/news/0,4153,391824,00.html). Alternatives to MeetingPlace, providing similar conferencing services are PlaceWare’s Conference Center 3.0, and Contigo’s Conference Center System (http://www.zdnet.com/pcweek/stories/ news/0,4153,391824,00 .html).

Teleconferencing is a useful tool in the business environment, commonly used for distance staff meetings, distance learning and training, and job interviewing. The most obvious use is that of staff meetings of dispersed personnel within the organization. This can take the form of management meetings, where personnel meet from different hierarchical levels of the business, to review management objectives, performance, goals, or other management issues. However, teleconferencing can also be used as a means of sharing information, such as product design, within the same hierarchical level of the business.

The large retail chain Bloomingdale’s, regularly uses teleconferencing to communicate product and sales information between staff within its US stores (Zimmerman, 1997). These electronic staff meetings are so effective that the department store is "increasing both the depth of information shared through video conferencing as well as the breadth of visual content collected and broadcast to its stores" (Zimmerman, 1997). For Bloomingdale's, teleconferencing has increased productivity by enhancing communication.

Teleconferencing can also save businesses money by saving time required to convey data and information to different groups within the organization. In one such case, Ford Motor Company has implemented videoconferencing to support communication amongst its "far-flung" designers (Wallace, 1998). Ford has begun to build an "Asynchronous Transfer Mode network that simultaneously supports voice, data and video traffic among 120 designers on five continents" (Wallace, 1998). This network allows for videoconferencing, simultaneously with CAD data conferencing, between designers around the world. Previous to this simultaneous communication, paper drawings and magnetic tapes with the CAD data were sent back and forth using overnight express (Wallace, 1998). Ford estimates the time it takes to develop some vehicles, has already been reduced from five to two years (Wallace, 1998).

Another case where teleconferencing is used for global communication and management, is that of Reebok International, "a leading worldwide designer, marketer, and distributor of sports, fitness, and casual footwear, apparel, and equipment" (Anonymous(c), 1999). "With development centers and designers located in the U.S., Korea, and Taiwan, RD&D (Research, Design & Development) embraced the opportunity to reduce travel time and expenses through videoconferencing." (Anonymous(c), 1999). To allow the internationally dispersed RD&D teams to develop products without the necessity of sending prototypes to each of the teams, Reebok implemented TANDBERG’s Vision portfolio for teleconferencing (Anonymous(c), 1999). This reduces travel time and expenses, because each of the RD&D teams can work on a prototype without having to travel to a central site, or ship the prototype around the world. Reebok’s Human Resource department also implemented teleconferencing for interviews, in order to save money by reducing the number of candidates that need to be flown in for interviews (Anonymous(c), 1999).

In addition to meetings, businesses utilize teleconferencing for recruiting and interviewing potential employees. One of the benefits of teleconferencing in the recruitment process is that the business has the ability to interview more candidates for the same expense, than if the candidates were to be flown in for the interview. Further, interviewers from more than one geographical location within the same business can participate in the interview process, in a team effort, without the hassle and expense of travel to a central site. This particularly beneficial if the potential employee will be working as part of a dispersed team with in the organization.

Many companies have begun to utilize teleconferencing in their employee recruitment process. An operations manager for HQ Business Centers, which provides telecommunications and teleconferencing services in 18 countries, states: "I don’t have to fly the candidate in, and still get a chance to meet with them outside of a telephone interview. I’ve hired some of the candidates I interviewed through video conferencing." (Guilty, 1999). While some companies may choose to substitute a videoconference for an in person interview, others may use a videoconference as one step of the process to narrow down candidates, while saving travel costs. Still others may prefer to use a teleconference to allow more than one manager to interview a candidate at one time. Chip Perry, MIS Director at The Pillsbury Company, feels that videoconferencing "will become increasingly popular because it’s a hell of a lot cheaper than an $800 plane ticket," (Oullette).

Deere and Company, maker of John Deere farm and lawn equipment, also benefits from competitive advantage offered by teleconferencing. Deere utilizes its own PictureTel videoconferencing system on a private network, for staff meetings (http://www.microsoft.com/netmeeting/corp/). However, the company found that its videoconferencing facilities were inadequate for certain meetings because of the inability to collaborate on data files. In addition, the videoconferencing facilities worked well for planned meetings, but were not always available for spontaneous, unscheduled meetings (http://www.microsoft.com/netmeeting/corp/). Therefore, Deere sought to supplement its PictureTel videoconferencing facilities with dataconferencing capabilities that would provide additional flexibility. The information systems team decided to utilize Microsoft’s Netmeeting for its dataconferencing needs, because: 1)it utilized existing infrastructure, 2)it was compliant with the H.323 standard, and 3)it is very easy for the IS managers to control which Netmeeting features are available to users (http://www.microsoft.com/netmeeting/corp/).

One of the first uses for the Deere and Company dataconferencing system was distance training of IS staff members for an upgrade of existing email systems to Microsoft exchange, an upgrade that will affect 30,000 users (http://www.microsoft.com/netmeeting/corp/). Staff training is a useful application of teleconferencing. It is in the best interests of the business to have a contingency plan in the event that an employee is not able to perform their function. This comes in the form of cross training. In addition to the necessity of cross training is employee in-service. Teleconferencing can be used to train employees from multiple sites. Likewise, employees from a central site may benefit from a trainer who is in a different location.

One large corporate travel firm, recognizing the benefits of teleconferencing, offers teleconferencing as an alternative to traditional air travel (Field, 1999). Rosenbluth International offers technology, such as videoconferencing and email conferencing, when travel is not necessary or desired. To determine what factors determine the "necessity" of business travel, Rosenbluth has hired Professor Eric Clemons, of The University of Pennsylvania’s Wharton School of Business (Field, 1999). When an alternative to travel is desired, the travel firm offers TeleSuite teleconferencing services. According to TeleSuite Vice President Tim Gebard, an afternoon teleconference session typically costs about $600, while a business trip typically costs $2000 (Field, 1999).

In order to insure that this long distance communication is successful, a prudent manager must make a number of considerations when implementing teleconferencing. The manager must make technical decisions, as well as personnel considerations. Managers must first appraise the type of communication that is desired when establishing a teleconference. Can the meeting be handled with asynchronous email, or is it necessary to schedule a audio conference or a videoconference? While email is the cheapest form of communicating, it may be hard to detect reservations from the participants. One manager notes that conference calls give everyone a chance to speak, "You can determine the levels of joy and frustration," (Lorge, 1997).

Even though teleconferencing can offer substantial savings over traditional business travel, managers can not overlook the costs associated with teleconferencing. In a Jacksonville Business Journal Article, Bernice Guilty states that "there are four components that make up video conferencing pricing." (1999). These are "…the rental of the video conferencing facility, the scheduling fee, the telecommunications charges and optional equipment and services" (Guilty, 1999). Whatever form of teleconferencing is chosen, the manager will have different options with different costs.

The manager must also consider the quality of sound and image in videoconferencing. If the quality is poor, attendees may become easily distracted from the meeting, or they may become more focused on the poor quality of the communication, rather than staying focused on the discussion. John Burnham, a project director of the Schroeders investment bank, notes that poor quality images and sound are common complaints about videoconferencing (Anonymous(a), 1999). Burnham states that poorer quality is acceptable "for an hour or so", but not for longer meetings (Anonymous(a), 1999).

Renee Hall, operations manager for the video conferencing company HQ Business Centers, recommends 384 Kbps speed for video conferencing as opposed to 128 Kbps, for acceptable quality (Guilty 1999). However, the cost of a 384 Kbps connection ($150) is three times higher than that for a 128 Kbps connection ($50 per hour) (Guilty 1999). Further, Hall notes that videoconferencing participant’s clothing is important for a successful video conferencing session, as clothing impacts the image quality (Guilty 1999). "Dark colors and pastels are recommended. Prints, plaids and red should be avoided because those colors bleed." (Guilty 1999).

Aside from technical considerations, there are human resource issues that must be taken into account. As implementation of teleconferencing in business continues, one consideration for managers is the increased feeling of isolation of employees. Workers may "become isolated, less productive and possibly even depressed by the heavy use of computers, faxes, emails and voice messaging (Bruzesse, 1998). The lack of face to face interaction can lead to employees losing perspective of their place in the business organization (Bruzesse, 1998). Managers need to recognize that this may develop, offering proper counseling and other services to help employees maintain their sense of position within the organization.

Managers must also realize that some employees are not comfortable with teleconferencing. This discomfort often arises because of the different "feeling" of electronic communication. For example, some employees may not feel at ease in front of a camera, coming across very poorly in a videoconference, even if they are well prepared for the meeting. Some statements that are quite clearly made in humor in a personal conversation, may appear very inappropriate or out of place in an audioconference or email conference when facial expressions do not accompany the statement.

While it was previously mentioned that teleconferencing can be useful in the employee interview process, some recruiters and candidates are reluctant to use videoconferencing for interviews because of the quality of image and sound, as well as personal lack of comfort with videoconferencing. While participating in a Communication News roundtable discussion on video/voice convergence, Larry Fromm of Dialogic Corp noted that "There may be a [video] application there, but it will only be when the technology is several orders of magnitude better that it is today." (Benson, 1998). This lack of comfort may result from a sense of loss of person to person contact. Further, some recruiters or candidates may just be camera shy.

Paul Gordon, the managing director of the London based marketing communications company Banner feels that "There is no substitute for pressing the flesh. Two thirds of communication is nonverbal. When you do it electronically, you miss out on that" (Anonymous, 1999). Managers need to realize that success of teleconferencing in their business will depend at least in part on the comfort that employees feel with teleconferencing communication.

Stan Gibson, writer for PCWeek, calls videoconferencing "one of those cool technologies that just can’t quite make it into the mainstream (1999). Gibson lists the following as some of the reasons that videoconferencing hasn’t become more mainstream: "It’s still too costly, ease of use isn’t what it should be, and there’s the big one –ourselves." (1999). To follow up on the last reason, Gibson notes a statement from the vice president of research at VTel, that "People, especially adults, are fundamentally shy." (Gibson, 1999). Failure to address such issues can prohibit the business from realizing the full potential of teleconferencing.

When teleconferencing does reach its full potential, the business organization will gain competitive advantage. Proper planning and strategy can overcome the potential technical and human resource problems associated with teleconferencing. As the examples of Ford Motor Company, Reebok, Deere and Company, and Bloomingdale's illustrate, businesses realize competitive advantage provided by cost savings and increased productivity, resulting from enhanced communications options. As teleconferencing technologies continue to develop, more and more businesses will be attracted to these communication options for their tangible and intangible benefits.

Works Cited

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