Video Conferencing Return on Investment (ROI)

The following is a general overview of web and video conferencing return on investment (ROI). Beyond the overview shown here, feel free to contact WiredRed for an ROI checklist, standard ROI calculator, or a comprehensive analysis (Excel document) tailored to your application. You can further edit the spreadsheet and fine-tune it for your needs.

What is ROI?

Return on investment is a performance measure, often used to evaluate an investment. It is calculated by taking the sum of total savings (or benefits) less all related expenses, divided by the investment. The result is usually expressed as a percentage.

ROI = (savings–expenses)/investment

There are more authoritative resources on this subject, the remainder of this page will focus on it use in web and video conferencing applications. The sections below cover each of the inputs, followed by related topics.

Video Conferencing Applications & Savings

The most typical saving is travel reduction. A standard ROI model easily compares the cost of in-person meetings for sales and customer training staff, versus meeting online. The savings figure is the difference between travel and other in-person expenses, versus meeting online. Sample ROI:

Click to enlarge.

Sample applications and financial benefits (savings) include:

Travel Reduction	Net savings between in-person meetings, versus meeting online

More Sales	Benefits of being able to present and meet with more customers

Accelerate Sales	Financial benefit of accelerating the sales cycle (less waiting for meetings)

Customer Training	Financial benefits of improving reach and frequency of training Programs. This many include better adoption, retention and loyalty.

Customer Support	Improving call resolution times with desktop sharing & remote control. Solving more problems on the in-bound call.

Less Mistakes	Reduce costs of expensive mistakes in product launch, major project reviews, and other inter-office team meetings

Total Investment

The total relevant investment for this type of calculation is usually the sum of the hardware and software (or online service involved). In addition, start-up costs such as training are included. If there are any additional start-up costs relevant to your organization, they should be included.

The ROI Calculation – Areas to be Careful

The calculation is straight forward, but depending on your scenario, there may be a couple areas to watch out for. Costs that are equivalent between alternatives and sunk costs should be excluded. In theory, there is nothing you can do about the latter. Be careful not to double-count any savings or expense. Bandwidth is a tricky subject, in most cases, it is not included, because the existing network is being used. In others, additional bandwidth may be required. For example, full-screen video for boardroom conferencing, in which case new Internet connections are required specifically for this application, and these additional costs are relevant. Please contact WiredRed Sales, for a custom ROI analysis.

Related Topics

Video Conferencing Break-Even

A closely related topic is break-even. This says, for example, that if your investment is recouped in savings by the end of the second month of implementation, the time to break-even is two months. This can be very handy in video conferencing applications where often the first saved cross-country or trans-Atlantic flight pays for an entire system.

Soft-Dollar Benefits

In addition to “hard dollar” returns, there is also the topic of subjective, or “soft dollar” benefits. The following are examples of soft-dollar benefits that may apply to your organization:

Improve business continuity - key staff stranded by airport closures, bad weather and so on, can still make scheduled meetings via online conferencing server
Improve telework - dramatically improve communications capabilities to select staff that work from home and/or from small remote offices
Improve employee benefits and morale - providing state-of-the-art online meeting tools can motivate staff and boost morale. In addition, for employees that travel for long durations, reconnecting with friends and family during off-hours video conferencing sessions can be a nice benefit at no incremental cost to their employer (e/pop has no usage based fees).
Document vendor promises - record vendor presentations and major project reviews. Note: this is a customer-discovered application!
Reduce expensive mistakes - use visual tools in web & video conferencing sessions for major project reviews across teams of people separated by multiple offices. These tools can reduce very expensive mistakes. e/pop has many engineering/project management customers that use e/pop for this purpose. If this benefit can be quantified, then it can be used in a “hard dollar” ROI analysis.
Green initiatives – web and video conferencing support green initiatives and greenhouse gas reduction efforts.

Schedule a Live Video Conferencing Demo

If you haven’t seen the latest in web and video conferencing, click here to schedule a live demo. See high quality video conferencing using standard PCs and existing Internet connections, right from your own desktop! In addition to live demos, we would be happy to provide an ROI checklist, standard or comprehensive worksheets such as those mentioned above.