Collaboration. Effective communication aids collaboration. A Datamonitor white paper prepared for. Publication Date: January 2004
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1 Effective communication aids collaboration A Datamonitor white paper prepared for Publication Date: January Datamonitor USA 1 Park Avenue 14th Floor New York, NY USA Datamonitor Europe Charles House Finchley Road London NW3 5JJ United Kingdom Datamonitor Germany Messe Turm Box Frankfurt Deutschland Datamonitor Asia Pacific Room , 24/F Shui On Centre 6-8 Harbour Road Hong Kong t: f: e: usinfo@datamonitor.com t: f: e: eurinfo@datamonitor.com t: f: e: deinfo@datamonitor.com t: f: e: hkinfo@datamonitor.com
2 ABOUT DATAMONITOR Datamonitor plc is a premium business information company specialising in industry analysis. We help our clients, 5000 of the world s leading companies, to address complex strategic issues. Through our proprietary databases and wealth of expertise, we provide clients with unbiased expert analysis and in-depth forecasts for six industry sectors: Automotive, Consumer Markets, Energy, Financial Services, Healthcare, Technology. Datamonitor maintains its headquarters in London and has regional offices in New York, Frankfurt and Hong Kong. Datamonitor (Published January 2004) Page 2
3 INTRODUCTION In the world of business, collaboration is a term used to describe the creation of closer working relationships between a company and its partners, suppliers, customers and employees through improved communications and processes. For a company to ensure that it stays competitive and operates at optimal productivity levels, it needs to develop efficient collaboration between all business lines, processes and staff to maximise worker effectiveness. The use of communicationorientated collaborative applications such as , instant messaging and voice is expected to increase and diversify with visual communications, such as video conferencing, on the increase. This white paper aims to address the key issues faced in today s businesses, to discover which collaborative tools can help with workflow and communications and to understand the potential benefits of technologies that assist collaboration. This paper will look at: 1. Factors affecting collaboration This section investigates the internal and external factors affecting collaboration, such as social and legislative influences and some of the business pain points. 2. How collaborative tools and solutions can help This section looks at collaborative applications, which will be prevalent in the enterprise space, including: conferencing, collaboration tools and enterprise portals. 3. Implications for organisations This section explores how collaborative communications help strengthen partnerships, enhance customer interactions and increase employee productivity. It also looks at the implications that real-time communications will have on the ICT infrastructure. 4. Return on investment for collaboration This section looks at the return on investment (ROI) for collaborative solutions based on their complexity. Datamonitor (Published January 2004) Page 3
4 5. Tailoring collaborative services This section focuses on the types of collaborative tools needed and speculates about future influences on collaborative technology. FACTORS AFFECTING COLLABORATION is about communication. The culture of an organisation needs to be supportive of collaboration, in terms of identifying where, why and how collaboration can yield business benefits. For collaboration to occur, there must be a flexible and dynamic environment to maximise productivity of employees and enhance relationships with partners and suppliers. Collaborative tools are used to support or facilitate different styles of communications to help solve particular business problems. This section addresses some of the drivers behind collaboration. Addressing the business pain points In a recent Datamonitor survey ( Benchmarking collaborative and technical infrastructure in the enterprise ) of the top 250 enterprises across Europe, it was found that companies and their IT departments are under increasing pressure to: Become leaner and justify investment Reduce costs; Produce a demonstrable return on IT investments. Become more efficient Integrate new technologies into existing network environments; Develop and deploy products and services faster to maintain a competitive edge. Become more effective Change ways of working (e.g. teleworking); Use infrastructure more effectively to become more eenabled. Datamonitor (Published January 2004) Page 4
5 Become more connected Connect customers, suppliers and partners; Link disparate offices and departments to work more efficiently. Business pain points are found on technology, infrastructure, economic, social and cultural levels. Datamonitor believes that to address many of these, the culture of an organisation needs to be supportive of collaborative tools to enhance communications, in terms of identifying where, why and how collaboration can yield business benefits. In order to create an environment that actively encourages collaboration, businesses need to address fundamental issues like organisational structure and employee performance. Once these issues have been pinpointed, organisations will be able to solve many of these by implementing the most appropriate applications and processes. Homeworking and flexible working will drive collaborative technology Homeworking and flexible working are on the increase in the UK - According to a recent Government survey, the number of flexible workers has grown by an average of 13% per year since Over the next ten years, the number of flexible workers is forecast to grow by 400%, at which point 25% of the workforce will be working flexibly. This means that by the end of 2003, there will be approximately 3.5 million flexible workers. From April 6, 2003, the Government s flexible working legislation came into effect, requiring employers to seriously consider requests from parents who want to work more flexibly. As this includes the possibility of working different hours from the standard or working from home, IT departments may have to adapt their practices. Employers will be forced to provision for different working routines to address the flexible working legislation, which is high on the Government agenda. Impact - The rapid growth of flexible working coupled with the new legislation will impact the type of collaborative applications that are implemented. The Labour Force Survey shows that giving this kind of flexibility to the workforce results in up to a 30% higher level of output. However, the technology and collaborative applications need to be in place or it will not deliver the expected returns. Datamonitor (Published January 2004) Page 5
6 HOW COLLABORATIVE TOOLS AND SOLUTIONS CAN services Integration of Integration of audio - IM and Web conferencing with data Single sign-on and conf conferencing. Initially directory for text (application IPT but ultimately based messaging sharing etc.) business grade Text based application driven Unified, Presence aware, services Increasing integration Integration of of services delivering applications to provide presence and availability single directory or Information to make users schedule and communication launch sessions etc. completion more successful Voice based application driven Adoption of business grade IP telephony technology Management Integration Scheduling IM Web conferencing Audio conferencing VoIP/IPT TDM Voice Comms building blocks HELP For collaborative tools and solutions to help solve problems, providers need to offer an array of communications applications ranging from to video conferencing. Once the company has chosen the most appropriate forms of communication, which will suit its needs, these can be combined to form the building blocks of a unified collaborative communications infrastructure. Figure 2 sets out how organisations can work towards collaboration to enhance communications. Companies are at different levels of implementation, but all of them will eventually need to consider which communication building blocks they need, how they are going to integrate them, and how they will manage them to finally achieve true collaboration. Figure 2: Working towards collaboration Source: BT D A T A M O N I T O R Communications building blocks will form the foundation of collaborative services Collaborative application tools for real-time document sharing & editing, discussion forums, brainstorming & idea generation, multimedia documents and group productivity is where much of the short- and mid-term value in collaboration lies. Datamonitor (Published January 2004) Page 6
7 These applications come in many forms and can be based on text, voice, or video. In addition to communications functionality, these applications often have additional features such as synchronising calendars and tracking personal schedules. Applications include: has been an integral part of working life for a number of years now and is one of the most rapidly adopted forms of communication ever known. It enables end-users to collaborate more effectively by sharing relevant information when required. s can deliver timely and personalised information very cheaply. Instant messaging (IM) Sometimes even the rapid response of is not fast enough and this is one of the reasons that IM is gaining popularity. IM allows users to interact directly with colleagues or customers online and allows the user to see who is online. One of the main benefits of IM is that it facilitates real-time dialogue, which could potentially increase the speed of problem solving. Video / audio conferencing Datamonitor believes that initially conferencing-type applications will drive collaborative working as these are a cost effective way of holding meetings, saving time, eliminating unnecessary travel and cutting accommodation expenses. Many companies already use audio conferencing for meetings, allowing people at two or more locations to speak / hear each other at the same time. Datamonitor believes video applications will improve effectiveness and personalisation further by allowing the participants increased interaction. Webinar also referred to as online conferencing and collaborative conferencing. It allows organisations to integrate audio conferencing and Web based presentations into an interactive experience. Webinars run directly from a Web browser and, as a result, facilitate simple and effective communication with geographically dispersed employees, partners and customers. This cuts costs, saves time and eliminates the need to purchase additional hardware. VoIP - By converging networks and centralising services and applications, companies will benefit from the resulting economies of scale and simplified operations management. Companies are already realising substantial cost savings with a converged IP network, particularly when calls can by-pass the PSTN. Cost savings gained by operating an IP-based network will be very attractive for many companies. Datamonitor (Published January 2004) Page 7
8 Integration is key in allowing seamless collaboration The next step is to effectively integrate these communications applications allowing content and information to be transferred between different users and then delivered to the appropriate audience when it is needed. This will save time, increase efficiency and make sure timely, up-to-date information is delivered. End-users need the ability to effortlessly switch between different types of communications tools, which mean increased ease of use (through single sign-on) and enhanced security depending on if a fixed or wireless connection is being used. Effective management of systems will help optimise communications Datamonitor expects to see an increase in the use of portal solutions allowing quick configuration and deployment of a centralised hub of information for the organisation. As businesses mature, many have developed numerous online properties Internet portals, intranets, extranets, partner extranets and other Web-based applications. Other business benefits include quick access to relevant information for employees and a single sign-on, which brings greater ease of access and use to the end-user. Enterprise information needs to be effectively managed across an enterprise-wide network to ensure that Web applications, intranets, extranets, databases, ERP software and CRM systems work seamlessly together in real-time. If portals are supported by content management systems, any information that is changed will be automatically updated with a consistent look and feel across the firm, meaning that there is a reduced reliance on technical resources. With this type of centralised solution, communication processes can be tracked and monitored and the most appropriate applications deployed in an on-going process. Collaborative services between all parties will increase productivity Collaborative services incorporate tools that allow proactive continuation of the dialogue / interaction with colleagues or customers through a variety of methods. This will improve the quality of each user relationship, help build a higher rate of customer retention and foster long-term customer profitability. There are also productivity benefits to be gained from avoiding duplication of effort and increasing the speed of products and services to market. Datamonitor (Published January 2004) Page 8
9 In short, collaboration can help the enterprise to better unlock the vast reserves of knowledge, experience and intellectual capital found in its employees. Organisations must be aware of this when implementing collaborative technologies such as enterprise portals, shared workspaces and messaging systems. If the technology does not help the user, or it is not a seamless part of their operational processes, it may not deliver the expected returns. IMPLICATIONS FOR ORGANISATIONS The change of working practices will alter the way businesses deploy technology. Some of the ways collaborative solutions can help develop relationships between the business and the work force include: Increasing employee productivity - Employees need the option to work outside the office, at a time and place that suits them and the business. To achieve the highest levels of productivity, employees need easy access to and other collaborative applications that will help them be more productive on a day-to-day basis. For example, audio and video conferencing allow virtual meetings to be set up so employees can be involved in decision-making from any location. Virtual meetings in the technology sector - Technology companies have embraced virtual meeting place (IP) technology in order to: give presentations, hold collaborative project sessions, provide etraining and give remote support. In one particular company, 130 formal virtual meetings, and many more informal ones are held per day worldwide. This company now uses virtual technology to cater for spontaneous, informal meetings resulting in a big step forward in terms of interaction volume and value. Think about the number of meetings a typical professional attends each week both internally and externally and it becomes clear that the benefits this organisation is seeing are by no means unique to it. Benefit: the virtual meeting place has improved productivity gains, enabled more regular knowledge exchange and facilitated the ability of home workers to remain in the loop while travelling less often. It s all about bringing the network to life. CTO UK technology company, (from the Datamonitor survey Benchmarking collaborative and technical infrastructure in the enterprise ) Datamonitor (Published January 2004) Page 9
10 Enhancing customer interactions Employees need flexibility to communicate with customers and clients from any location. For example, PDAs with their always-on, wireless capability are a good way for employees to attend to their customers needs while away from the office. Similarly, address book and personal scheduling features keep end-users in the loop anytime and anywhere allowing them to improve customer satisfaction through the optimisation of productivity and customer response levels. Virtual meeting places also add value to the customer experience by allowing remote parties to communicate wherever they are. Many hotels are now providing these facilities for their customers, thereby further enhancing trial and uptake. Video conferencing in hotels - Hotels are installing IP-based video conferencing suites for client rental in their UK hotels. The project is driven by a trend for companies of all sizes to reduce travel costs. The hotel chain has recognised that this translates into a greater need for accessible, reliable video conferencing facilities. Success: large corporates can use the hotel facilities as an overflow / addition to their existing facilities. Smaller companies using the hotel facilities as and when required, without having to invest in new equipment themselves. The key is to humanise communications and anything visual helps to do that. CEO leading hotel chain, (from the Datamonitor survey Benchmarking collaborative and technical infrastructure in the enterprise ) Strengthening partnerships The integration of communications systems is imperative to better managing and strengthening partner relationships. Companies are partnering more and more to deliver end-to-end capabilities to the customer making access to real-time and updated information essential. Datamonitor (Published January 2004) Page 10
11 in retail: removing the links One of the earliest beneficiaries of collaborative technologies is the retail sector. Historically, there were long delays between communications from one element of the retail supply chain and another. Manufacturers would supply distributors and logistics companies with goods based on sales and demand forecasts from the retailers that were fed back to the manufacturers by the distributors. This, by its very nature, added unnecessary time and complexity. As retailers have increasingly gained power relative to other elements of the supply chain, they now seek to take their messages directly to the manufacturers. At a basic level, this can involve periodic sales and demand forecasts being sent back to the manufacturers. Increasingly, retailers are demanding real-time connections to manufacturers to speed the process further and are seeking real returns. Progress: There is now one link between manufacturers and retailers instead of two, leading to real-time inventory checks. You need to improve collaborative processes in order to improve your position in the market. CIO US retail company, (from the Datamonitor survey Benchmarking collaborative and technical infrastructure in the enterprise ) The implications of real-time communications on the ICT infrastructure For collaborative communications applications to work together effectively, firms will have to invest in the underlying infrastructure. ICT departments need to consider the implications on the WAN, desktop, devices and remote connectivity and put in place security measures to help end-users access different types of communications applications from different locations. For example, technologies such as DSL and IP VPN connectivity will play a significant role in enabling remote working. Once the infrastructure is in place, significant cost savings can be made and productivity increased. With IP convergence, only a single network has to be managed for voice and data, which lowers operating costs and saves on moves, adds and changes. Datamonitor (Published January 2004) Page 11
12 Implementing collaboration infrastructure - Cisco is one of the biggest advocates of IP-based applications, such as VoIP and last year, it installed an IP Telephony system which will help it save 2.4m every year. BT was given the task of planning and installing the IP telephony system at Cisco s Bedfont Lakes sites, which involved around 1,600 handsets and 1,200 employees. A further 1,400 handsets had to be installed in two other buildings at Cisco's Reading site and linked via a WAN. Improved productivity: At the end of the process, Cisco had an easy to upgrade network architecture capable of supporting applications that would fuel improved employee productivity, savings and long-term growth. Achievable ROI: Cisco recovered its initial 700,000 investment within 10 months, and by the end of year one had realised a 126% ROI. By utilising its LAN for both voice and data, the company saved a one-off cost of 317k by reducing the number of cabling ports to each desk. Cisco has also realised an annual recurring savings of around 400k. In addition, a savings of around 287k, comes from eliminating rewiring associated with moves, adds and changes (MACs). "We have to show the technology works in terms of our own deployment and, like any other business, we also have to look for hard cost savings and productivity improvements." Kevin O' Donnell, Internet Business Solutions Group Manager, Cisco ROI FOR COLLABORATIVE SOLUTIONS As with all technology implementations, prospective customers for collaborative solutions are demanding to see whether or not they can achieve a return on their investment before making the decision to go ahead. Many companies have previously invested heavily in technologies that have failed to live up to their revenue-generation potential and are keener to reduce overall costs rather than invest in new solutions with no proven effectiveness. Like all ICT solutions, it is very difficult to come up with definitive, all-encompassing ROI calculations for collaborative applications because it depends on which technologies have already been implemented and where companies see the true benefits for their business. When companies are looking to understand the ROI argument for collaborative solutions, they should compare the overall cost of any Datamonitor (Published January 2004) Page 12
13 solution to estimates of the potential losses they could incur from not having a certain collaborative technology, as well as looking at cost savings, revenue enhancements and productivity improvements. While some costs are easier to identify and calculate, others are less obvious. The lack of integration of business processes, for example, is likely to impact operations in the short- and medium-term but is challenging to assign an exact value to. TAILORING COLLABORATIVE SERVICES Enterprises of all types and sizes face similar communication problems every day. Every business needs to think about ways to streamline its supply, to improve the efficiency of its workers through fewer and more effective meetings and to create new revenue streams by leveraging existing infrastructure more effectively. By deploying collaborative communications with vertical-specific applications, companies will be able to use them more effectively and increase productivity. Visual communications are one tangible application of collaborative technologies that can be more effective when verticalised. And these are just one part of the overall collaboration story. Datamonitor has highlighted some of the innovative uses of visual communications in various industries in which they are ahead of their time (see figure 4). Figure 4: Verticalising visual communications Support Manufacturing & extraction: sending videos & pictures from offshore oil rigs back to the mainland for faster resolution Promotion Retail: stores use n/w to observe traffic & buying patterns to boost sales Support Promotion Training Hospitals: video rare operations for reference, training & second opinions Training Fast information Effective networks can drive a range of applications Fast information Banks: creating their own newscast to speed trader updates Cheap voice Cheap voice Technology: sales people & execs using IP on the road to cut phone costs from hotels and elsewhere Source: Datamonitor D A T A M O N I T O R Datamonitor (Published January 2004) Page 13
14 CONCLUSIONS The need for collaboration is driven by the needs of organisations to improve productivity, increase ICT efficiency and enable flexible working. Changing processes to foster collaboration is only part of this picture however. To create the kinds of flexible, productive working environments that today s businesses seek, investment also needs to be made in collaborative communications technologies to create a unified ICT infrastructure to support effective interaction between employees, customers and partners. Communications building blocks, such as , instant messaging and Web conferencing, are the foundation of firms ability to supply these collaborative services to their various stakeholder groups. While many firms recognise the value of these technologies, they are often hesitant to invest in new technologies in today s fiscally tight market. As a result, strong ROI cases are needed to foster investment in these technologies. For these calculations to be valuable, a range of soft and hard factors needs to be taken into account. Amongst other things, these factors need to include the added value gained through using specialised vertical applications. The ability of some banks to use visual communications tools to create newscasts to update their traders is an excellent example of this, as it provides an invaluable boost to the productivity of these highly paid workers. Other sectors, such as manufacturing, retail and healthcare, see similar benefits. By taking the decision to invest in a collaborative communications infrastructure, firms can benefit from improved productivity, happier customers and more effective employees. Datamonitor (Published January 2004) Page 14
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