WAINHOUSE RESEARCH WHITE PAPER. Videoconferencing Managed Services A comprehensive support strategy to drive ROI

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1 WAINHOUSE RESEARCH WHITE PAPER Videoconferencing Managed Services A comprehensive support strategy to drive ROI August 2011

2 Videoconferencing Managed Services A comprehensive support strategy to drive ROI Introduction As collaboration and visual communications become integrated into the enterprise fabric, the importance of having a reliable, high-quality collaboration application grows, while the underlying technical complexity also increases. Furthermore, while visual communications may be core to an enterprise s ability to do business, they are NOT central to the business itself. Hence, organizations of various sizes and types - companies for whom the core business is drug discovery, financial services, energy and natural resources, manufacturing, business management consulting, etc. - are offloading the burden of operating an internal service and turning to a special breed of managed service providers (MSPs) to manage their visual collaboration resources. We refer to these MSP companies with videoconferencing expertise and offering operational support services to customers on a recurring basis as video MSPs or vmsps. Managed Services Definition A videoconferencing managed service provider is a company that provides a support service including a videoconferencing-savvy help desk combined with remote monitoring and management of videoconferencing endpoints and infrastructure. Most vmsp companies offer much more than this basic requirement. Video MSP Services Video managed service providers generally offer a wide range of support services, including:

3 Operational Support Operational support includes help desk services; concierge services for call set-up and in-call support, and operator assistance; centralized trouble management and tracking; and usage reporting.. Remote Device Monitoring and Management This is the essence of a vmsp service proactively monitoring the customer s equipment to make sure it is connected and functional. Equipment Maintenance Equipment maintenance may include warranty services, software updates, non-warranty break / fix support, etc. Hosted CSP Services Conferencing Service Provider (CSP) services are hosted conferencing applications and are sometimes referred to as cloud-based services. Customers use equipment that is owned and operated by the CSP and generally pay for usage by the minute or by the month. Generally, the CSP s equipment is shared across multiple customers. Common functionality provided in this manner includes audio conferencing, videoconferencing bridging, gateway services, NAT-firewall traversal, and webcasting. In today s IP-centric environment, many customers have found it beneficial to invest in their own on-net equipment for audio and video bridging, but to rely on an MSP acting as a CSP for instances when the customer s own equipment is out of service or internal capacity cannot meet a peak demand. This overflow service can be an important benefit provided by some MSP organizations. On-site Staffing Staff augmentation has been a hallmark of the video MSP industry for many years. On-site experts from the vmsp company provide clients with a wide range of hands-on support. The use of on-site staffing frees the client from personnel concerns (training, coverage during sickness and vacations, etc.), and typically helps provide a high level of support. Scheduling The scheduling of videoconferencing and audio-visual meetings remains one of the bottlenecks in many enterprises today. For a videoconferencing meeting, the scheduling task typically involves coordinating endpoint and infrastructure equipment, conference rooms, and people s calendars. Equipment Sales Many customers find it convenient to buy their equipment from the same company that will be supporting their deployments. Other Services Many vmsp companies also offer professional services, customer training, driving adoption strategies, streaming, archiving, and webcasting services, meeting transcription, etc. One important point to not overlook is that because visual communications is the core of a vmsp s business, vmsps must stay abreast of technology and market developments and can often provide their customers with valuable guidance on planning for future deployments.

4 In addition, vmsp financing options may include purchase and lease-back programs. Some MSPs can also provide support (AV, streaming, network services, project management) for large events like customer presentations and seminars. Who should consider using a videoconferencing managed service provider? We do not believe that short term cost savings should be a primary driver associated with the use of a video managed service offering. Instead, it makes sense for clients to look to video managed services if: They are interested in increased asset utilization and ROI. Conferencing investments provide a return only when they are used. Hence, we believe a major goal of any vmsp program should be to drive additional utilization. A vmsp can support this goal via two independent efforts. The first is to ensure a reliable, consistent, and high quality conferencing experience. Such a service will not only allow the users to host productive sessions, but also motivate additional video meetings. The second effort to drive utilization is to create and manage a driving adoption program. This can involve a variety of marketing tasks such as creating frequent flyer type programs, delivering promotional materials at departmental meetings, and making training sessions available for managers and administrative support staff. vmsps should work closely with corporate travel and HR departments to make sure that their internal clients know about conferencing resources and how these tools can help them do their jobs better while saving costs at the same time. They need 24 x 7 support and protection from staff turn-over. Clients with worldwide operations often need 24 x 7 support for their conferencing users. However, providing internal staff with conferencing expertise to meet follow the sun operations can be very challenging. A vmsp, however, can do this in a relatively cost-effective manner because providing such support is his core business and is generally spread over multiple clients. Another benefit of vmsp support is that the vmsp isolates the client from a variety of everyday staffing issues such as covering vacations, local holidays, sick leaves, job changes, promotions etc. Faster and more complete deployments are important. The time delay between making a decision to implement conferencing and actually delivering conferencing services can be very long with some clients. A vmsp experienced in installing, debugging, and delivering conferencing services can shorten significantly the time-to-benefits for most customers. This may be doubly true if the client is integrating visual communications solutions with an enterprise unified communications deployment. In addition, because vmsps provide conferencing support for a living, they are generally up-to-date on conferencing industry trends and can provide clients with advice on moving forward to meet anticipated future needs. They desire improved budgeting and cost control. A comprehensive vmsp program should provide the end user with a clear understanding of what his costs will be, and how they may or may not change over the life of the contract. Many vmsp customers are able to negotiate fixed monthly cost contracts and thereby gain a very high level of cost control. A vmsp may be able to provide other budgeting and cost benefits to the client as well such as leasing programs and equipment buy backs that can convert CAPEX to OPEX costs. Improved management of conferencing resources and processes is considered important. Conferencing

5 should be managed like any other service or department within the enterprise. Key elements include clear service level agreements, detailed usage and performance reports, and a single point of accountability. A vmsp does all these things for a living. The result should be a stronger degree of control over the conferencing environment, and a significant decrease in the management burden and the customer s internal staffing requirements. Managed Services Economics The economics of video managed services are highly dependent on an individual s customer s video deployment, current usage statistics and support resources, and goals and objectives. And while video managed services can indeed lead to lower overall costs for the enterprise client, as shown in the example below, we also believe that lowering costs should not be the customer s first objective. Rather the client should focus on increased services reliability and increased usage. It is from the increased usage that ultimately drives the return on the investment. Our simple diagram for MSP economics highlights the fundamental cost issues. Using its own equipment and internal people for support, an enterprise incurs immediate fixed costs that are independent of the usage. These costs remain fundamentally flat until such point is reached that utilization requires more equipment or more support people and hence a step function in costs. The opposite end of the spectrum would be a fully hosted service (an example here might be video bridging) where costs are directly related to usage and zero usage generates zero costs. This model does not lend itself to a fully managed service, but does illustrate the point that some services are available with much lower fixed costs but a high variable cost driven by usage. Managed services fit between these two models. A video managed service generally has significant up-front on-boarding costs but then leads to a low incremental usagedriven cost. Equally importantly, a video managed services strategy can support higher usage hours/month. The importance of driving utilization is easily overlooked. However, in an annual Wainhouse Research survey of videoconferencing managers, utilization has always been ranked near the top in the category of barriers to increased group videoconferencing deployments. Group Barriers Y2002 Y2004 Y2005 Y2006 Y2007 Y2009 Y2010 #1 Expense Expense Expense Expense Expense Expense Expense #2 Network Utilization Integration Underutilized Underutilized Underutilized Underutilized #3 Utilization Network Network Need Reliability Need Integration By providing the reliability and support team, managed services can help drive adoption and utilization. Cost Savings In one study conducted by Wainhouse Research, we encountered a large company with 100 video systems scattered over 30 offices. The client averaged 1000 video meetings per month, with 30% of those meetings requiring multipoint

6 support from an external bridging service. Internal resources included four dedicated meeting support staff and two reservationists plus some untracked support staff. The cost analysis for a strategy change was as follows: Original Do-It-Yourself Strategy Meeting support staff (4 people) Reservationists Misc support Break/fix/warranty on hardware via integrator Bridging services Total annual costs $300K/year $120K/year Not included $100K/year $480K/year $1000K/year or $833 per system per month The recommended managed services option included the following: Video Managed Services Strategy Implement web-based, internally branded scheduling system Add 24x7 internally branded help desk Implement automated call launching, pro-active endpoint monitoring, and trouble tracking systems Purchase and deploy internal MCU $250K capital investment Managed services annual support $360K ($300/system/month) Internal staffing (2 people)annual cost $160K Bridge depreciation, network upgrade, and systems support $12K/month = $144K/year Cost per system ~$555/month Conclusion Managed video services can improve the performance and reliability of almost any videoconferencing deployment while decreasing the stress and management burden on an enterprise manager at the same time. Managed video services can provide round the clock support while offering the customer a nearly fixed monthly cost plan that best fits a budgeting model. For many customers, managed video services are the key to driving adoption and utilization, which in turn are the keys to realizing a return on the videoconferencing and collaboration investment. In addition, savvy vmsp companies are well positioned to provide their customers with guidance in planning for future needs. In short, managed video services enables a customer to concentrate on his core business while leaving the operation of a video deployment to someone for whom that is his core business. THIS WHITE PAPER WAS SPONSORED BY: