Collaboration paying off, says Cisco-Verizon study

A new Frost & Sullivan study, commissioned by Cisco (NASDAQ:CSCO) and Verizon (NYSE:VZ), claims investments in advanced IP-based collaboration such as videoconferencing and VoIP softphones pay off at four times the rate of investment and enable enterprises to outperform peers who aren’t using collaboration.

The study involved interviews of more than 3600 enterprises in 10 countries and seven vertical markets, exploring the way collaboration is being used and how it is paying off. One result was creation of the ROC index or Return on Collaboration, which measured the impact of collaboration on business performance and efficiency. According to the study results, the ROC value goes up as more advanced collaboration tools, such as immersive video or telepresence, are used. Those businesses using the greatest amount of collaboration saw a four-fold return on their investment, according to the study, Meetings around the World II. Businesses which used collaboration the most earned more than twice as much on their investment in collaboration technology than peers who used collaboration less.

“Businesses are always asking us what is the return on investment for collaboration technology,” said Bill Versen, director, Global Unified Communications & Collaboration (UC&C), Verizon. “It’s been real easy to say reduced travel expenses, because if you are able to reduce travel by X amount by using collaboration tools, that’s measurable. Once you get past travel, it becomes more squishy to say what the ROI is for deploying these tools, and that’s what we wanted to get at.”

MAW II asked enterprises to detail what they spent on UC&C and what improvement they saw as a result in areas such as research and development, human resources, sales, marketing, investor relations and public relations. Businesses were asked to quantify whether such improvements as bringing products to market faster were the result of collaboration or of other business initiatives such as a company’s strategic orientation or market turbulence.

“What we found was that the return on collaboration was four times a company’s investment and it gets better as more tools and a more collaborative culture are deployed,” Versen said. In fact, there is an impact similar to Metcalfe’s Law about networks, he said. “The larger the size of the collaboration network, the greater the return. And we see that positive network effect for organizations that deploy beyond their four walls” to connect with partners, suppliers and customers, Versen said.

MAW II also showed that a collaborate culture – driven usually from the top down – was as important to a company’s success as having the right tools to collaborate, said Mike Batross, manager of product management of WebEx for Cisco.

“You need to have a champion so it’s not just a matter of throwing technology out there and waiting to see if people use it,” Batross said. At Cisco, CEO John Chambers has driven the change to a collaborative culture that includes a ban on any travel that can be replaced by a Webex or telepresence meeting.

One surprising aspect of MAW II was how rapidly the Chinese are embracing collaboration technology, with 89% of businesses using some form of VoIP as their primary phone. Indian businesses had the lowest average spend on UC&C but the biggest ROC at 6.7 because of the way Indian businesses are using the technology to provide human resources to the countries around the globe, Versen said.

“AsiaPAC is definitely leading the way on this, and that surprised us,” Versen said.
The economic downturn doesn’t appear to be slowing investment in UC&C, the study showed. Forty-four percent of businesses have deployed the technology and 80% of those who haven’t deployed plan to do so in the next two to three years, the study said. Forty percent of the current UC&C adopters say they’ll increase their investment, despite economic conditions.

MAW II is a follow-on study to MAW I, conducted in 2006, but is broader in scope, Versen said. Three times as many businesses were interviewed, more countries were added, and a seventh vertical market – retail – was included. The other six verticals are: healthcare/pharmaceutical, government, financial services, manufacturing, professional services and high-tech.