Adam Gartenberg's Blog

Business Analytics and Optimization, IBM and Social Marketing

Re: UC and ROI


Mike Gotta posted a thoughtful analysis of last week's posting, "The ROI of Unified Communications & Collaboration". You can find it here. Based on our examples, He gave us 3 thumbs up and 5 thumbs down. (In reality, it was 3 thumbs up and 3.5 thumbs down. He repeated one down twice and two others were minor variations on a theme.)

First, the thumbs up. Mike liked the cost savings opportunities around:

  • replacing expensive telephone calls with IM & VoIP chats.
  • minimizing international roaming fees on cell phones by using IM & VoIP chats.
  • reducing travel through greater use of online meetings.

He dinged us on:
"...the total cost of ownership is not clearly outlined, a reasonable TCO model would establish a timeline (say 3 years) and include the total costs, including various weighting factors for planning, operational support, integration costs, help desk, change management, and so on."

As I helped work up these estimates, I'll take the heat for this one. While our goal for the Lotusphere keynote was to provide concrete examples of how Sametime could pay for itself within a year, we did not set out to provide an exhaustive TCO model. We have to leave something for folks like Mike to do. :-)

But... if you were at the keynote, you may have noticed that our composite Renovations, Inc example was followed by one from a German manufacturing firm. They provided data on their 3 year costs including things like education and support. Their return was 9 times costs. So, while Renovations, Inc was not a full TCO, I'd argue the composite return of 3.5 times costs was actually fairly conservative. Of course, your milage may vary and you should examine the TCO in light of your specific organization.

On replacing the licensing fees of a hosted web meeting service with Sametime:
I dislike this example because IBM fails to accurately portray the total cost of ownership for an on-premise implementation of Sametime vs. a SaaS solution.

To an extent, this is the same issue as above. Yes, there are costs associated with running your own infrastructure versus outsourcing it. However, the point stands that you can pay for the software licenses, hardware and a full-time administrator with what you would save by eliminating 1000 Webex Meet Me licenses - in year one. And since you don't have to "rebuy" Sametime every year - maintenance fees are only 20% of the purchase price - the savings go up dramatically in the out years. AND you get a full unified communications platform with an extensive range of capabilities above and beyond only online meetings. I'm not saying that the hosted model isn't attractive for some - just that there are scenarios where it makes more sense to own the infrastructure.

On using Sametime to IM enable a support site to reduce the number of calls.
This example is a stretch for me - a big stretch - most customer-facing applications on web sites that are handled by call centers do not use off-the-shelf generic IM products. They typically use real-time collaboration tools that are included within their call center suites and/or CRM applications. The reason is that call centers do a lot of multi-channel management so you do not want someone involved in an IM chat to appear available to handle a phone call or email response. You need to integrate on-hook/off-hook signaling, integrate with other customer response management tools (telephone, web, e-mail, IM, etc). IBM is correct that organizations should be looking at these tools - but incorrect that they should look at IBM and Sametime

Sorry, Mike but I have to completely disagree with you here. We specifically included this scenario because we have customers who use Sametime for exactly this purpose. How long have we been talking about the benefits seen by companies like Celina Insurance? Or a large financial services firm that is using Sametime on their loan website? In the latter case, they integrated Sametime with a partner application to route the IM to the next available agent and are evolving the implementation to connect to their telephony system to show onhook/offhook status. This way IM's wont be routed to someone already on the phone. I probably get this question once a week from our sales teams... so clearly companies are thinking about extending their web sites and call center applications with Sametime.

The "time saved" argument is one that has been used over and over again to justify technologies ... if you save someone 10 minutes it does not mean they will take that 10 minutes and apply it to real work. The more structured and directed the activity is (e.g., call center) the better that argument resonates. But the more discretionary the work, there a greater chance that the person will just chat with a co-worker, go grab a coffee, etc.

This is the one Mike brought up twice, so I'll address it last. (And I really got a kick out of his example of what people would do with all their new-found free time.) But... we didn't go near the productivity gain potential in the Renovations, Inc composite example. While nearly every customer I've ever spoken to has told me that the productivity gains are the reason Sametime is such an invaluable tool, the gain is usually difficult to quantify ahead of time. So for Renovations, Inc, we stuck to what could be quantified with a reasonable degree of certainty before an implementation. I'm not sure why we got two thumbs down for an argument we didn't use.

Beyond that minor detail, I'm afraid this line of reasoning wouldn't hold water for me anyway. Perhaps we should go back to using typewriters because word processors have led to too much golf? Seriously, though, IBM has documented that it closes its books 3 days faster every quarter because of Sametime. While they maybe hard to quantify beforehand, productivity gains should not be dismissed when it comes to Unified Communcations & Collaboration software.