by Ben Worthen

Conferencing Technologies to Drives Down Costs

Dec 01, 200110 mins

Between the economy and the attacks of Sept. 11, companies are turning to other means of doing business besides air travel. Of the 2,390 respondents to a Quick Poll that asked how the attacks affected corporate travel policy, 48 percent said their company had a new policy banning nonessential travel requiring flight, and 17 percent had a new policy banning all travel requiring flight. It should be no surprise then that San Francisco-based industry analyst firm Collaborative Strategies reports that the tech-based conferencing business (video, voice and Web) grew between 30 percent and 50 percent during September alone.

If conferencing technology wasn’t something CIOs paid attention to before, now it should be. Employees are turning to a variety of communications tools that put stress on networks and can in some cases open up holes in firewalls. The tools are coming?business needs will dictate that?but how they are introduced in a company is up to the CIO. It can unfold in an ad hoc manner, or the CIO can build a comprehensive communications strategy, including a controlled tool set and an understanding of when to use each. In other words, by sticking to the right set of communications technologies, CIOs will be able to drive down costs, reduce bandwidth clogs and generally help their company through these difficult times. The following facts about each of the three major communications tools as well as emerging peer-to-peer technology will help you form your own communications strategy.


Phone calls are already a part of daily business, and no one really considers them cutting-edge IT. “There aren’t a lot of challenges, and the technology is all well-known,” says the CIO of a global management consultancy. “It all comes down to how much [calling] you do. And if you do a lot of it you need to come up with a low-cost solution.”

Teleconferencing software typically offers a set number of ports (each port supports one caller), the caller’s access point and the ability to create connections, known as bridges, that allow multiple parties to join a call. If teleconferencing is part of your company’s daily life, buying a teleconference package?as opposed to setting up one-shot calls through a carrier?can save you money. Buy enough ports, and you can negotiate your rates. Buying a package may also let you integrate the service with other communications tools such as e-mail and calendars, allowing employees to set up a conference call when they schedule a meeting. The software can even keep track of the total available ports and alert employees if there aren’t enough for a requested call. Employees can then reschedule at a different time or set up the call through a carrier.

Beyond plain teleconferencing, some companies are beginning to deploy voice-over-IP (VoIP) networks. With VoIP, voice and data travel over the same network, which allows for some useful features, such as the capability to let callers on VoIP phones connect automatically to their scheduled call instead of having to remember access numbers. As an added bonus, the quality of service over the new network is actually better than it had been with the traditional system it replaced, says Chris Duncan, global leader for e-communications technology at Midland, Mich.-based Dow Chemical.

But there are caveats with VoIP. Lewis Ward, a senior analyst with Collaborative Strategies, says that while the cost per call of voice over IP may be cheaper, building an IP network is expensive. (Duncan says the cost of Dow’s five-year project “starts with a B.”) Furthermore, Ward says, packets could be bounced when calls travel over the public Internet, reassembling the speaker’s words out of order.

Data Conferencing

When you share information or applications over the public Internet, private network or an internal intranet (for example, two engineers in different offices working on the same computer-aided design file), you’re involved in a data conference. While relatively new to the market, such conferences can be ideal if the parties involved know each other well and have a set meeting agenda. Most data conferencing services have the same features, including whiteboard tools that allow users to see and work in the same file, and application sharing so that the different parties can, for example, work on the same Excel spreadsheet.

To control the information traveling over the network and negotiate better prices, a CIO should find one data conferencing vendor and decide between using a subscription-based hosted service or deploying conferencing software on company servers. There are several factors that will help you decide if you want to subscribe or buy, including usage (which controls cost), bandwidth, firewall constraints and security.

It just doesn’t make sense to buy and manage software if your employees aren’t going to use it. Mark Levitt, research director for Framingham, Mass.-based IDC (a sister company to CIO’s publisher), says about three-quarters of all data conferencing is hosted by vendors but points out that this is changing as usage grows. Since hosted services usually charge by the minute, the financial crossover point between the two is usually about a few thousand users over a year’s time.

Mary Odson, CIO of Los Angeles-based law firm Paul, Hastings, Janofsky & Walker, brought conferencing in-house because of security and control concerns. Prior to the last quarter of 1999, the firm’s attorneys would use whatever conferencing tools they saw fit, mostly hosted Web-conferencing tools, but sometimes such absurd nonbusiness tools as file-sharing services Napster and Scour. These sessions, especially the hosted services, had occasional security problems. “We had instances with Webex and Placeware when we had someone stay on those sessions,” says Odson. “Someone piggybacked onto our session, hacked in and then used our account to do a series of online chats lasting four days.” Odson didn’t find out about the breaches until she received the bill.

While security gaps like those experienced by Odson have since been fixed by the vendors, the problems convinced her to find an application that she could run on her own servers?especially important for her law firm because it handles confidential data. Odson bought a conferencing package from Latitude in the fall of 2000 and has it deployed on two servers, one for internal use only and one for use with clients. Odson says that in the long run this setup is less expensive than renting time from a host provider. While the initial cost of the hardware is high, she believes that her company will recoup the outlay within 18 months, given that the cost of teleconferencing is three cents a minute versus 20 cents a minute with AT&T. The package she has purchased also provides security benefits and allows Odson to closely monitor usage.


It may be the next best thing to getting on a plane and going somewhere?you can read someone’s body language or tell who is speaking no matter how big the crowd?but the logistics of videoconferencing are almost as complicated and sometimes nearly as expensive as flying. Videoconferencing started as a Jetsons-like novelty in the ’70s. In the ’80s it evolved into a toy for Fortune 100 executives, who would communicate between offices over dedicated network connections. In the ’90s, things got easier and less expensive?but far from cheap. A good videoconferencing system still cost around $50,000?mostly for hardware?and all communications were sent over expensive ISDN lines leased from telecom providers. Today, the hardware costs between 5 and 10 grand, and video quality has improved significantly. According to San Antonio, Texas-based market research company Frost & Sullivan, 85 percent of videoconferences still happen over ISDN; the rest use video over IP. But IP’s cost savings are rapidly changing the balance, and the two should reach equilibrium by 2004.

Besides the hefty price tag, the biggest knocks on videoconferencing have been complicated interfaces and inconsistent connections. During the past couple of years, vendors responding to the complaints have made interfaces less complicated. But a Frost & Sullivan study found that 13 percent to 15 percent of videoconferences over ISDN still expire partway through. And it’s not unusual, says Odson, for it to take 15 minutes to reestablish the connection?a real problem when you have a roomful of lawyers each charging $500 an hour.

Video over IP decreases the cost and eliminates the need for bridging, but there are other issues. “We have tried it over IP, but you have to have a lot of bandwidth,” says Odson. The typical video stream is 384Kbps, and to be safe, each two-party videoconference probably needs a megabit of bandwidth. Over a standard 10Mbps LAN it doesn’t take long for the stream to start looking like a poorly dubbed kung-fu movie, with the audio several seconds behind the picture.

VoIP, however, does allow you to control the amount of bandwidth that you use, says Dow’s Duncan. “With ISDN you are limited to the number of lines that you have,” he says. “With IP you can be flexible with your bandwidth and control the amount you deploy for data.” Roopam Jain, a Frost & Sullivan analyst, agrees that the quality of service is better over IP, meaning a better picture and greater stability. IP video users can still communicate with ISDN video users, but that requires a gateway?something the IP user must usually provide.

Peer to Peer

While peer-to-peer technology is most commonly associated with teens downloading the latest ’NSync single, the technology does have the potential to eliminate some of the bandwidth challenges confronting companies that commonly stream audio or video. If, for example, a company makes a speech by its CEO available over the Internet via peer-to-peer technology, the technique could help eliminate the bandwidth clogs created by people downloading the stream directly from a webpage.

Radio Free Virgin, a Los Angeles-based online radio station run and owned by the media conglomerate Virgin Audio Holdings, is currently beta testing software that allows it to create peered networks on the fly. Radio Free Virgin has 46 stations with continuous streams, and it tested the peer-to-peer technology on one of its channels. CTO Brendon Cassidy says that between four and seven out of every 10 listeners ended up downloading the stream directly from another listener rather than the company’s server, saving the company 40 percent to 70 percent of its bandwidth costs.

Other peer-to-peer technologies such as instant messaging (including ICQ and AOL’s Instant Messenger) and collaborative tools from vendors such as Groove Networks and NextPage allow users to trade text messages or files directly without hosts. These technologies are potentially more cost-effective and efficient than traditional Web-based tools because they take advantage of the user’s computer to store data and use direct connections to avoid company servers. Of course, these benefits come at the cost of some control. The decentralized nature of peer to peer essentially means that there is no one point from which to monitor the network. Business-oriented vendors are starting to build management and reporting tools into their products.

A Final Word

All the aforementioned technologies can work, but each has quirks and kinks that need to be managed. Establishing a communications strategy, as opposed to letting employees adopt technologies at random, will help mitigate risks and control costs.

Using the right technology for the task at hand helps as well. In general, follow the progression from voice to data to video. If you want to discuss a document, e-mail it ahead of time and then talk on the phone. If you want to edit a document, try a data conference. And if you want to negotiate over it, use video.

While a monthly bill or license fee will let you know how much you spend on communications tools, it’s hard to measure the value of using the tools. Of course, until (and if) business travel returns to its previous levels, the greatest benefit could just be the ability to communicate at all.