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By CIOinsight  |  Posted 07-05-2005 Print

Convergence costs money—and ROI is hard to come by.

Although vendors claim cost savings as a benefit to convergence, many companies, such as Leonard, Street and Deinard, actually report increased spending as a result of their new rollouts. Costs vary, but vendors report that a communications platform that includes VoIP, IM, Web conferencing and calendaring capabilities could cost more than $60 per employee just for the license, not including installation, consulting, and other related fees. Gartner Inc., however, puts the price tag much higher, saying that systems could cost up to $400 per user. "It's a significant investment across the board," says Jim Murphy, a senior analyst at AMR Research Inc. For that reason, he says, be cautious when evaluating new software. "You don't want to be too aggressive when adopting this technology, because it may mean overspending," he says.

For the most part, companies that have installed a new communications platform are too early into their deployments to benchmark its success. And the few companies that can report actual ROI are using their systems to address very specific needs. At Birmingham, Ala.-based Pemco Aviation Group Inc., a $201 million global maintenance, repair and overhaul servicing company for the aerospace industry, Director of IT John Griffith was looking for a cost effective way to upgrade the company's order and billing process. Because the company works with so many different—and often very low-tech—parts manufacturers, Pemco receives thousands of faxes, and had hundreds of fax machines throughout its headquarters and three satellite offices.

Griffith wanted to integrate the faxes into the company's e-mail program. "We started looking at plug-ins to our Microsoft Exchange e-mail application and licenses from Microsoft, but it started getting expensive." So expensive, he says, that it made an entire communications suite from Oracle Corp. look cheap—and that's what he ultimately chose to install. "It was very attractive from a management and cost standpoint," he says. Although he won't share exact figures, Griffith says, "We started out with a ten-month ROI target, but it only took six months to save the money we spent on the system." Faxes are now delivered directly to e-mail inboxes as TIF files, saving the company thousands of dollars in paper costs and fax machine equipment. Today, the same two people who once managed just e-mail now take care of e-mail, voice mail, fax, Web conferencing and calendaring.

But saving money on a few fax machines is hardly enough justification to invest in a communications overhaul. And the potential for increased productivity, which is widely touted as the largest benefit these systems provide, is always difficult to measure. "Productivity alone is difficult to sell to anyone in the enterprise user base," says Murphy of AMR.


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