When an enterprise decides to integrate a new technology into their facility, there is a lot of thought that goes into the process. Considerations must be made. Technology decision makers need to understand what the best technology is for their purposes. They need to learn how that technology will fit into their existing systems and the existing structure that their company operates within. They need to understand the benefits and drawbacks of all of the different types of tech that they might be considering.
That isn’t all of it, either. With all of these considerations there comes a cost. Perhaps there is a new type of technology that just barely fits into your budget, but it will streamline all of your processes and solve the problems that you have been having. Great!
The problem is that this type of technology isn’t compatible with the system that you have been operating on, so you’ll have to upgrade that as well. To upgrade that, you’ll need to tear out some old hardware that has been hanging around. That hardware has been around since the initial build, so you’ll also need to tear out a wall in order to replace it. Not to mention the heat that this new technology will generate —that’s going to require a better HVAC system, which will require more space to install, which means you’ll be tearing down a wall between two closets and adding in some extra ventilation while you’re at it.
All of a sudden you’re at twice your budget with all of the labor, time, and materials you need in addition to this new technology. Meanwhile, a slightly older technology that will give you about 80% of the productivity of this new one can be installed without the need for all of the extra work. Will that 20% be worth the upfront cost of all of this extra work? Will the 80% be worth upgrading from the system you have now. In the long run, will installing these systems save your company money or not?
What you are trying to figure out is the return on investment (ROI) for this project. ROI is a term used in the industry to help understand what a company is getting back from installing a technology; whether that be saving time or money, increasing production, increasing safety, streamlining processes, etc. It is generally believed that decreasing time spent on or headaches caused by certain processes is akin to saving money.
“Any time that I invest one dollar I hope to see two or three on the other side,” says Michael Hester, owner of Beacon Communications and NSCA President. That means either making dollars in profit or saving them in time or expenses.
Now, it isn’t easy to calculate such a thing. There is no mathematical formula that is going to tell you how much money is being saved or gained by installing a new videoconferencing system into your boardroom. You might save money on bandwidth usage, as well as save money on time to set up the system before a conference call, as well as gain money from sales made through videoconferencing that were once only able to be made on site. When the variables start to pile up like that, you need to utilize sense and gut feelings to get an idea for the ROI.
Hester has a pros-and-cons formula to utilize at Beacon Press. “We sit down as a group and we draw a T, and on the left are the pros and on the right are the cons. We list them all — the pros will save us this, the cons will cost us this. What we do is give a weight to them, one to ten.”
If the new system will save time, they will rank it as a three on the pros side. If the system will cost 100 grand in hard cost and another 100 grand in soft cost, that will be a ten on the cons side. Increasing process for the business is a five on the pros side. They add up all of the pros and cons based on their worth, and compare the overall number on the pros and cons side. If the pros outweigh the cons by enough, then they have found the right system. The system works because the team is able to argue the merits of each point, and a consensus number is put together that takes everything into account.
Now, there is also the possibility that more than one system offers similar potential as far as ROI is concerned. Typically what integrators will do in that case is offer three solutions: the good, better, and best model of systems. This doesn’t mean that the ROI will be best with the best system, only that that system is most productive (and likely most expensive) for the companies purposes. It is up to the company to decide what type of investment they want to make up front, although it is typically best to listen to the integrators suggestion. They have worked on a lot of systems and have a good idea of what companies need.
“The quality of the imagery, and the audio pickup and distribution, and the size of the screens truly enter into that,” says Scott Farrara, Integrated AV System Sales for Verrex Corporation. You may wish to go with the most expensive system because it will provide a wow-factor that you are looking for. You may wish to go with the most base because, for your purposes, quality of image isn’t necessarily important. There are a lot of factors that can be placed into ROI that have to do with preference.
When it comes down to it, you’re looking for a system that will serve you the best while simultaneously saving you time, effort, and/or money. It’s not going to be easy to quantify the ROI, but if you think about it and work with a good integrator, you’ll end up with the best system for your company.