Filed by KOSU News in Business.
January 26, 2010

As the recession took hold in late 2007, officials at Genworth Financial went looking for ways to cut the bottom line and found one big discretionary item: business travel.

That’s when the Richmond, Va., company’s CFO turned to one of the company’s managers, Perry Lombard, to study how expanded videoconferencing might trim some of the company’s hefty domestic and international travel expenses.

A half-million dollars later, Genworth, a Fortune 500 insurance and financial services firm, now has videoconferencing suites at branch offices in several cities and is saving about $1 million a year in “travel cost avoidance,” Lombard says. The company forecasts it will save an additional 10 to 15 percent of travel costs this year.

In the past, Lombard says, Genworth had used some videoconferencing, but it was difficult to use and the quality not very good.

“Now, it’s so good and so simple that [employees] don’t even realize that they are using technology in their meeting. That’s really what we’re trying to accomplish,” he says.

Growing Internet bandwidth and advances in high-definition video have combined with the need to cut costs in recent years at companies such as Genworth, causing them to fundamentally change the way they do business. It’s part of a paradigm shift that Tracy Paurowski at American Express Business Travel calls the “new normal.”

In the past 18 months or so, corporations have encouraged strict compliance to travel policies and implemented technology to keep costs down, Paurowski says.

“I think we are seeing an evaluation at a department level in companies asking why an employee wants to travel or whether it makes sense to do this virtually, via teleconference,” she says.

Paurowski says business travel has started to pick up a bit since the depths of the recession, but “in this ‘new normal’ the practices put in place to strategically manage travel will continue for the foreseeable future.”

“I don’t know that anyone right now is anticipating levels to come back to where they were,” she said.

When employees and executives do fly, new corporate travel restrictions increasingly shove them to the back of the airplane, where they rub shoulders — literally and figuratively — with passengers in coach class rather than enjoy the comfort of business-class seats, she said.

That’s a trend that is good news for Polycom, the company best known for the triangular-shaped phone that has become ubiquitous in business conference rooms around the world. It is a global leader in videoconferencing, including high-end systems that typically involve dedicated suites with multiple large-screen plasma displays that give the feeling that people in multiple locations are all in the same room.

“The sort of reset on the economy has been a driver of our technology,” says Bob Preston, Polycom’s chief collaboration officer.

Preston says that as another benefit, “People are starting to realize that there’s not only this cost savings side to it but there’s also this productivity gain that comes back into the organization.”

It wasn’t long ago that teleconferencing was a hard sell, he said, because the quality and the price were just not good enough. The technology was getting in the way.

Not now. Today, you can “see if someone is comprehending, see if someone’s even watching the meeting and not playing on their BlackBerry, to see if people are nodding in agreement,” he said.

Corporate training departments have been especially quick to embrace the new technology.

“You can imagine the old-school way of doing this was that a company would make a bunch of new hires, maybe they would train people once a year and fly everyone from all over the world into a central location, take them out of the field and … into a training facility — a hugely expensive undertaking,” Preston said.

Today “you cannot only do the training by videoconference, but you can record the session so it can be viewed at a later date,” he said.

That’s been the main use of videoconferencing at Genworth, where Lombard says the company’s training department is sold on the technology.

“Once they threw the switch on this, they fell in love with it,” he said.

Paurowski says it’s impossible to tell just how much business travel has been replaced by technology or what percentage of it will return when the economy improves. In any case, no one is predicting the end of the business meeting.

“You may see more internal meetings going virtual, but I don’t think you will see an end to face-to-face meetings” with customers, she says. “If you’re not visiting your clients, your competitors are.” Copyright 2010 National Public Radio