Author: Paul Cannon, Sr. Product Marketing Manager
I started in the computer industry on a helpdesk team managing projects. My first “fly solo” project was evaluating the roll-out of ISDN video conferencing between 3 sites in San Francisco, Chicago, and London. When I went in front of my CEO to justify the expense of the project – he politely swept away all of my “supporting documentation”. Instead, he asked me 3 simple questions: Costs? Benefits? What is the business value?
It was a painful but great learning exercise in how to justify projects – one that sticks with me to this day. So when we assembled a v-team for Lync 2013 business value evidence, my hand shot up. The team approached the work from multiple directions: We commissioned a Forrester Consulting Lync 2013 Total Economic Impact (TEI) study, started building TCO comparisons between Lync and the competition, and gave Lync customers a platform to share their experiences through written case studies and in-person customer sessions. All of this work landed at our 2nd annual Lync Conference in Las Vegas in February.
A Forrester Consulting TEI study looks at the benefits versus the costs to determine overall business value. For a typical TEI study, the work starts with actual customer interviews. Next, Forrester develops a composite company based upon those interviews. The costs and benefits come from those same customers along with Forrester industry data. Finally, the financial results are produced from the data.
Besides producing the study, there were compelling stories that came from this work that we wanted to share. The goal is to help you start the journey toward understanding Lync business value in your organization. Let us know if this helps.
Hopefully by now you have downloaded the TEI study – let’s walk through some of the key benefits and understand how real-world customer case studies reflect these savings.
Legacy PBX solutions are generally expensive to maintain and as your business grows, acquisition costs for new PBX systems also soar. For our study, the composite company chose to remove its PBX infrastructure entirely. Lync gives you the option to completely eliminate separate PBX infrastructure for better cost savings.
Another area that prospective Lync customers often want is to reduce their dependence is on “pay as you go” web conferencing solutions. Lync provides conferencing as part of Lync – no per minute charges, no sudden true-up in years 2 and 3 for existing users. Our composite company for the study chose to completely eliminate other web conferencing solutions.
Our customers experienced even greater savings then reflected in the study. In their recent case study, UCB, a global biopharmaceutical company, states that they have reduced web-conferencing costs by more than US $1.4 million a year since replacing its legacy conferencing services with Lync 2013, Lync Server 2013, and Lync Mobile.
When your organization is spread around the world as our composite company is, international call cost begins to add up. Conference call usage and international roaming charges are also significant costs. After discussions with our pool of customers, the study modeled telephony savings of $1.7 million for our composite company. But it's about more than reducing traditional phone calls. Lync naturally adds new modes of collaboration. Many phone calls are easily replaced with Lync’s instant messaging. Presence can insure better opportunities to get the right person at the right moment – and that improves efficiency. Conferencing pulls the team together at the right time eliminating the usual back and forth.
Customers like Mitul Shah, Head ─ IT, of Blue Star Infotech Ltd saw reduced telephony costs as well. Shah explains, “The introduction of Lync has reduced telephone calls across various locations, as the employees can chat (text/audio/video) on the move.” And, “With one-one, one-two, or one-three audio conferencing using Lync, we are saving costs on telephone lines by 5─10 percent…”
One interesting outcome of the TEI study was understanding how staffing changed and was optimized by the introduction of Lync. Our customers report that there is a fair amount of contractors and maintenance contracts in different countries to manage their legacy PBX infrastructure. Other customers reported not having a homogeneous infrastructure which introduced additional costs. By standardizing on Lync, they saw several benefits. We modeled this with our composite company to calculate these savings.
Chris Maxey, Systems IT Analyst at Tampa General Hospital, shares that "When our nursing and business staff can communicate more efficiently, we can get answers, test results, and other information to patients faster…”.
One interesting choice made by Forrester for this TEI study was to avoid the old tried and true “travel avoidance savings” that so many vendors claim. But in the real world, Lync customers continue reporting these savings. Adventist Health System has saved millions of dollars in travel costs by using video conferencing to supplement in-person meetings. The company has reduced management and maintenance work as well.
All of these details really help paint a picture of real world results for our customers. Let’s take a look at the key takeaways from the Lync 2013 TEI study to understand the financial results.
Payback period is really the “break even” point for your project. After crunching the data, the TEI study showed a payback period of 14 months. Customers report even faster results. Steve Hanson, Global IT Manager, Cargill, notes “We’re on track to achieve ROI in less than 12 months.” EPAM Systems has also seen savings. “And with Lync, we’re seeing fewer service requests, reduced maintenance costs, and lower TCO.” - Siarhei Harbukou Project Manager.
NPV, or Net Present Value, helps you to understand the future benefits in today’s dollars. Our composite company experienced an NPV of $2.46 million over the 3 years. Real world customers report compelling numbers as well. Steve Hanson from Cargill states: “…we expect to return a net value of $1 million annually to Cargill business units through this cost offset.” And when you translate to a “per user” basis, the composite company of 5000 employees experienced a positive benefit of $493 dollars per user over the 3 years.
I am excited by these findings and the success of our customers – it demonstrates something we have known intuitively here at Microsoft. Lync delivers solid value for many organizations. And we understand that “your mileage may vary”. We encourage you to begin thinking about benefits and costs for your company.
One great way is to apply our framework to your situation. I would suggest reaching out to your local Microsoft account team or partner to meet with you. They can conduct a personalized assessment so you can decide for yourself the business value of Lync for your organization.