There has been a lot of hype recently about telepresence as a future driver of collaboration, reduced costs and saving the planet. There is even a conference called Telepresence World with Al Gore espousing the eco-friendly benefits. A recent article in Information Week (Cisco's Emerging Collaboration Strategy) provides a neutral analysis of the topic, albeit with some glorifications. But this comment from the article really stood out for me:

The system weighs in at just over a ton and requires a room at least 15 by 19 feet. It uses the Cisco MCS 7800 series server and the 7970G IP phone, running SIP over a 6-Mbps or better connection for the ultrahigh-def, 1080p version. There are three 65-inch HD plasma displays and an internal Gigabit Ethernet switch, which means if you look behind the curtain, as it were, you'll see that the whole thing runs through a single Ethernet cable. It's a superb chunk of technology.

It's also damned expensive. A single-room Cisco TelePresence 3000 unit goes for about $300,000, and since having one telepresence room is like rowing half a canoe, a full dual-room system, including furniture and other overhead, runs in the range of three-quarters of a million bucks. Which raises the obvious question: Who's going to buy these things?

The short answer: C-level execs who want to demonstrate their techno-progressivism--and their deep pockets. "Telepresence is not going to be purchased by the same people as traditional videoconferencing," says Ira Weinstein, a senior analyst at Wainhouse Research. "Telepresence is an executive purchase that comes down from the C-level and is pushed down through the ranks." Think of it as the corporate Lear Jet for a new sensibility.

I have no doubt that video conferencing can be a powerful tool for communicating on a more emotional level to colleagues and business partners in a dispersed world of work. It has the potential to eliminate the need for some business travel and do it’s bit to saving the world. It’s also an eye catching toy in the often mundane world of enterprise technology. As a result, many people have been getting excited about the technology rather than stopping to contemplate the real value to the bottom line.

Let’s say you purchased a $300,000 telepresence set up that was physically located in one place and an annual operating cost of $150,000 which included dedicated bandwidth and support. That place was accessible by 10 people who typically rack up $500,000 of travel costs per year. If these people reduced their travel by 20%, the company could save $1M per year, you have a pay back of 5-6 months and an ROI of 80%+. Great huh? Not necessarily.

First, this is an expensive hardware solution. Video conferencing technology is progressing rapidly and investing in a physical piece of equipment where you are locked down to the technology does not necessarily allow you to take advantage of future innovation. Some vendors require pretty expensive underlying network investments to make the solution work which hides the true costs of the system.

Second, this can be difficult to use. Anything that requires a managed service is probably not “easy to use” and can drive up total cost of ownership over time. You either get locked into ongoing service contracts, or actual usage peters out over time.

Third, this is an isolated solution. You’ve added another isolated solution to your infrastructure that only shares the network in common. You can’t manage it centrally using the tools your IT folks generally use. You need specialist services. This can build a heterogeneous system that can actually increase costs within your company. Often times the expensive solutions don’t integrate with the rest of your communications or applications infrastructure, reducing their potential.

Fourth, there is a lack of interoperability. The users of the system may need to communicate with folks who do not have the same system, which may usually be the case. If your business has a lot of meetings between a few fixed branches, it may make sense. But if it has many branches or if you want to talk to outsiders, you need to interoperate with their system. As soon as you do this the quality becomes the lowest common denominator and your investment value is reduced to what everyone else is paying.

Fifth, you are ignoring the masses. If your company has more than 10 people chances are you would save more money by reducing their travel. Even if an average executive racks up 10 times as much in travel costs as his average traveling worker, there would have to just 10 times more traveling workers than executives to tip the balance. So let’s say you have 10,000 employees and 1000 of them travel often, racking up $50,000 in costs. If you could reduce their travel by 10% you would save $5M. Five times the executive savings with a lower reduction effort.

Sixth and most importantly, there are limited productivity gains. The real benefit in these technology is not just the travel cost savings but the incremental ability to reduce sales cycles, improve customer satisfaction, improve time to market and so on. These are often called “soft costs” because they don’t have immediate bottom line savings. But the benefits are real and can be critical in a competitive and more demanding business context.

Telepresence can be a great tool as part of your overall video conferencing strategy. But you should look for systems that are flexible to meet your future needs, are integrated into your IT infrastructure, are interoperable with your existing investments, can benefit your broader worker base and can deliver real improvements in productivity. Otherwise you may have an expensive shiny new toy that is left on the shelves in a few years.