Seizing a greater ROI from video conferencing: Part one

Part One in the Value of Video Series

A recent survey found that 80% of IT professionals believe video conferencing will be extremely important to their companies over the next two years.  While the growing value of video to connect teams across an enterprise may be evident to most IT leaders, communicating its value to other executives, who may be championing other company needs, will likely require a clear-cut demonstration of the ROI video conferencing delivers. To help you make the case for your company’s need for a video conferencing solution, part one of this series features an easy-to-use formula for calculating the ROI of video for your organization.

In part two of this series, we’ll share best practices for leveraging video across different departments; the correlation between video and revenue growth; and a list of the many benefits video provides.

Estimating the value of video for your company

Estimating the ROI video can provide for your company is fairly easy to do, but will require some fact-gathering from your accounting and travel departments in order to get the most accurate estimate. It is important to note that ROI does not account for soft costs that deliver major value to your company such as:
– A reduced carbon footprint
– Faster time-to-market for strategic projects
– Ability to meet employee demands for flexibility
– Increased morale due to better employees work/life balance

To help you calculate the value of video for your company, we’ve compiled a list of information you will want to obtain in our sample estimate below.

The formula for a video ROI estimate

The mathematical formula for calculating ROI is:
ROI = Investment Revenue – Investment Cost / Investment Cost

Investment Revenue is the money video helps to save or generate for your business and includes:
– Reduced time spent troubleshooting
– Reduced travel expenses (Plane tickets, mileage, car rentals, hotels, meals, etc.)
– Reduced time spent traveling (AKA increased productivity and ability to meet on-the-fly which enhances collaboration)

Investment Cost is the money spent on hardware, software and support for the new solution.

Sample ROI for ABC company

In this example, ABC Company is a medium-sized business with 200 employees and a location on each coast. They are considering installing video conferencing equipment in five of their meeting rooms to foster collaboration between the two offices.

Investment Revenue for ABC based on financial information gathered from one year:
1. ABC employees participate in an average of ten 30-minute meetings per day. Forty percent of these meetings require an average of 15 minutes to set up a video call and screen sharing. This means that every employee wastes an entire hour each day while someone in the meeting sets everything up. The average employee makes $35 an hour, which equals approximately $7,000 lost per day and over the course of 261 working days per year equals a cumulative loss of about $1,827,000.  

2. IT spent 187 hours last year troubleshooting legacy meeting technology. The average IT helpdesk employee makes $18 an hour, so the current annual cost of support is $3,366.

3. Five executives at ABC spent an average of two days a month traveling for meetings, and the typical expenditure per person for each trip was $1,500. Total annual costs for travel are approximately $180,000.

4. The average executive salary is $125,000 at ABC, which is equal to a little over $60 an hour. All five executives estimate they spend a total of 22 hours a month traveling for meetings for a total of 110 lost executive hours each month and 1,320 each year. The total cost of time spent traveling for ABC is $79,200.

Total Investment Revenue = $2,089,566
Investment Cost  – ABC is considering a standard subscription for five Highfive video conferencing devices. Current standard subscription rates for Highfive are $149 per month/room. For five devices a year this equals $8,940.

Using the ROI formula, we take the total investment revenue of $2,089,566 and subtract the total cost of the investment, which is $8,940. This gives us a numerator of $2,080,626 and a denominator of $8,940, which reveals an ROI of 23,273%!

Highfive delivers real value

Empowering companies to realize the full value of video is serious business at Highfive. It’s why we offer smart, economical, all-in-one video conferencing devices that are so easy to use everyone in your company can connect quickly and share slides – right out of the box. Featuring HD video and audio and a wide-angle lens, Highfive enables your team to collaborate face-to-face anytime, anywhere. Experience video the way it should be, give yourself a Highfive.

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By Sara Moseley