Selling vcon to SMEs

As AV was going to press this month, Polycom was set to unveil a modular telepresence system in conjunction with partner Imago. The system, called the Architected Telepresence Experience (ATX), has been designed with a-v integrators in mind and boasts two major user advantages: it is customisable, and has a price tag that puts it in reach of the small- to medium-sized enterprise sector.

In a nutshell, the ATX system sees Polycom supply the codecs, while integrators provide the other elements – such as screens, microphones, furniture and speakers. Integrators get to add more margin with each separate piece of kit they supply, while end users get a more customisable system than one bought in its entirety. And the list price of the ATX – $60,000 – makes it affordable to the bigger SMEs and those previously scared off by the six-figure costs of other systems.

Polycom is just the latest manufacturer broadening its offer. Although videoconferencing manufacturers have previously aimed for the big corporates, the potential presented by the SME market – estimated to be around the 20,000 mark in the UK alone – has recently lured big hitters Tandberg, Cisco and BT Conferencing.

Scaling down

The adoption of this strategy has been driven by three main factors. First is undoubtedly the recession. Travel budgets have been slashed or scrapped, but business still has to be done, so companies are using videoconferencing to keep staff and clients talking. Videoconferencing’s return on investment is comparatively easy to measure against huge travel budgets.

Compounding the budget issue are fears of terrorism and swine flu, which have affected people’s attitudes to travelling, especially air travel.

Just as significantly, software, hardware and network technology can now enable meetings to take place in HD, without interruptions, and at a far lower cost than ever before. Skype is getting people accustomed to using video as a communication tool on their home PCs, and this is having a knock-on effect in the corporate arena.

Finally, the size of the SME sector means it can no longer be ignored as a potential source of revenue. This is especially true at a time when the large corporates have instigated a wholesale spending freeze; analysts predict a 20-30 per cent decline this year alone for technology providers in general.

While videoconferencing is not exactly bucking that trend, it is set to outperform the rest and fall by just five per cent. According to major vcon manufacturers such as Aethra, the as-yet untapped potential presented by SMEs will help to drive what it predicts will be a 20 per cent year-on-year growth for the industry as a whole over the next few years.

Paul Louden, Polycom’s vice-president for the UK & Ireland, says the videoconferencing sector is missing a trick if it ignores SMEs. ‘There are significantly more SMEs than big corporates, and in order to get mass deployment and market penetration, you need to address the SMEs.’

Not surprisingly, telepresence has made no inroads into the SME sector because of the cost involved – at $300,000-plus, only the largest corporates can afford it. As well as Polycom’s ATX product, Cisco is addressing this with the recent launch of a one-screen offering, called the Telepresence 1300. It comes at a premium $35,000 (compared with HD systems from other manufacturers priced around £5,000), but might tempt the bigger SMEs.

So although the introduction of telepresence systems has demonstrated how impressive the experience can be to a wider audience, videoconferencing is still the tool with which the sector aims to make inroads.

The issues regarding the technology that have plagued it in the past – slow to refresh, jittering images, high running costs, and difficult-to-use systems – have all been addressed, but some negative perceptions remain. The biggest issue is cultural: can people be encouraged to ditch the face-to-face meetings on which they rely?

There is no question that the main companies in this sector are doing their best to break down the barriers to wholesale adoption. They have done their homework when it comes to adapting technology to suit the fairly fixed list of criteria by which SMEs judge – and buy – videoconferencing systems.

Simon Egan, vice-president of Western Europe at Tandberg, says SMEs primarily want a fixed cost, similar to the way in which broadband is priced, ideally split into monthly segments. To SMEs, an acceptable figure for videoconferencing is around $50 per user per month, say the experts.

Simple solution

SMEs also seek ease of use, which so far has been a major barrier to adoption. Andy Wright, managing director of Aethra UK, says: ‘Your average SME doesn’t have an IT manager to ring up and say, “can you show me how to use it?”. So solutions for SMEs need to be intuitive. They have to be able to use the system even though they haven’t been shown how to use it, in much the same way as they use a telephone.’

The system also has to be upgradeable and flexible, since growth is high on the SME agenda and they want their products to grow with them. Additionally, the systems have to work on existing equipment and software, such as PCs with Microsoft Outlook. They have to bypass firewalls when being used remotely, and work using a broadband connection.

What’s more, IT infrastructure in this sector can be small, and products have to reflect that.

SMEs are using videoconferencing for national rather than international meetings, and the two big growth areas seem to be healthcare and legal. Healthcare is often made of multi-site organisations, so videoconferencing is used to cut down on travel time. The legal profession, meanwhile, has embraced the technology as a way to maximise billable hours while cutting travel time.

Usage by SMEs is split between desktop and fixed-room systems. Companies often have limited office space and a mobile workforce, so want a system that can either sit in the corner of a boardroom when not being used or be installed on employees’ laptops.

Fit for purpose

Use is also driven by application: if a meeting is one-to-one, then desktop systems will suffice. ‘But if you are having a three-hour management meeting then it’s a very different affair,’ says Ian Vickerage, managing director of Imago, which supplies and manages Sony and Polycom systems. ‘Desktop’s main application is joining other group meetings, rather than desktop to desktop. That’s one of the reasons it hasn’t taken off,’ he adds.

Another reason for low take-up could be related to videoconferencing’s past – when it was run on ISDN, picture quality was poor and interruptions frequent. Users are demanding a smooth TV-like experience, so if running an HD conference on low bandwidth is going to cause problems, SMEs are happy to stick with SD resolution.

‘SMEs probably want something that works, rather than have it in HD,’ says David Critchley, commercial and small business director at Cisco UK and Ireland. ‘That’s not to say they don’t appreciate HD, but the priority is a solution that increases productivity.’

Because of their unsophisticated IT infrastructure, SMEs sometimes run calls on less bandwidth than manufacturers would recommend. Improvements, such as Polycom’s lost packet recovery (designed to protect IP video calls from the impact of packet loss), are helping to make bandwidth less of an issue. Bandwidth of 1Mb seems to be the agreed amount for most meetings, and the cost of that is affordable for most, if not all, SMEs.

Intelligent sell

The biggest headway seems to have been made in pitching videoconferencing to the SME market. Knowing how to pitch what is quite a complex technology is crucial, and in the past some of the big companies have been guilty of confusing customers by using terminology beyond the understanding of the target market.

‘People have traditionally differentiated by using obscure bits of technological wizardry,’ says Vickerage. ‘They told you their products had H.264 and you were supposed to know what that meant.’ Jon Tracey, sales engineering manger, EMEA, at LifeSize, adds: ‘No one cares what protocol their mobile phone uses. Why is this not the same? Can I physically sit in this room and have a meeting with someone as if they are sat right in front of me? If you can do all that then the terminology becomes irrelevant.’

Now the vendors have wised up and realise that to sell products to SMEs, they have to meet a specific need, rather than blind them with jargon.

An attractive proposition for SMEs is the leasing option. Many believe this will help the technology start to approach the level of adoption it has desired for years. As Polycom’s Louden notes: ‘Leasing is viable for this sector because most SMEs are looking to minimise their capital expenditure, so they will do the very simple ROI calculation in terms of time spent and money saved against how much it cost them. They are comfortable with the logic that it will cost them £50 a month; they don’t have huge financial departments to do their ROI calculations for them.’

The general consensus is that while videoconferencing, like 3D, has always been talked about in terms of potential – ‘next year it will be huge … ‘ – it has never quite managed to fulfil that potential. But just as 3D has seen a real lift this year, videoconferencing looks poised to do the same.