Posted by: Tony Bradley
AIG, airfare, bailout, cut costs, expenses, hotel, junket, per diem, travel, UC, Unified Communications, virtual meeting
Businesses spend a tremendous amount of money on travel expenses. I am not just referring to ridiculous, stupid, borderline criminal travel expenses like the $440,000 insurance giant AIG spent to send 10 executives to a luxury spa after borrowing $85 Billion from US taxpayers (or the $343,000 they subsequently spent and tried to hide for another luxury trip after begging for an additional $40 Billion from the government). No- that is an extreme example where the company should actually lose all of their customers and executives should be held financially and criminally liable for exhibiting such brazen disregard for common sense.
So, AIG aside, let’s talk about normal companies, conducting normal business, and incurring normal travel expenses. American Express predicts that the average cost for a domestic business trip in the United States will increase by 2.8% to $1,139. Their prediction for international travel is that it will increase by 4.3% to $3,556. Depending on the size of the company and the frequency of travel, those expenses add up quickly.
If we assume a small to medium company with 5 sales people who travel to meet with prospective customers and sell new business, and an additional 25 who travel to deliver the products and services sold by the sales people, there are 30 people hopping around the country or globe. If they average 20 trips each per year, and 10% (or 2 trips per year) are international trips, then based on the travel expenses predicted by American Express the company will spend almost $830,000 on travel in 2009.
In addition to the tangible costs, travel introduces other complexities that can be avoided. Airlines oversell their flights and cancel frequently due to weather, risking leaving business travelers stranded and unable to make important meetings. Hotels are often overbooked. Employees are forced to be away from their homes and families. The list goes on.
Unified Communications can solve those problems. Perhaps that is why unified communications is one of the few technologies that seems to be growing in this abysmal economy. Companies are examining whether travel is really necessary when video conferencing, desktop sharing, and other virtual meeting technologies exist.
The savings will be substantially more than the investment in deploying unified communications, and the unified communications investment will continue to return dividends years after the initial investment. The actual delivery of products and services may still require sending personnel to customer sites to implement, but our hypothetical business can cut their travel by as much as 75% per year by leveraging unified communications and virtual meetings. Over the course of three years, that would represent a return on investment for unified communications of more than $1.5 million.
Again- your mileage may vary. This is just a pretend company I made up for my example. What if your company has 50 sales people and 150 service delivery personnel? What it your company is HP, or IBM, or BT- with thousands of employees traveling all over the world to sell and deliver services? Take a look at what your company spends each year on travel, and then examine how much of that travel is really necessary and how much could be replaced by unified communications. Odds are good that the cost savings will be significant and that the business case for unified communications will justify itself.