Original Date: 10/10/2005
Revision Date: / /

Raytheon Integrated Defense Systems migrated to audio teleconferencing from its contracted AT&T System to maintain uniform control and service levels to realize substantial cost savings. A Six Sigma cost-avoidance project was initiated in 2001 to develop the infrastructure for audio teleconferencing services using in-house resources that have resulting in significant cost-avoidance savings.

It is often impractical and not cost-effective for large companies to assemble meeting participants in one central location every time a meeting is convened based on such factors as lost hours from work and travel expenses. The demand for an alternative means for bringing large groups together in a dialog can be now be met by using telecommunication providers. Technologies that allow interconnecting multiple callers into a joint call where everyone can freely participate are well established and have been provided under the banner known as teleconferencing. Companies with large public branch exchanges (PBXs) and extensive telecommunications infrastructures depend on telecommunication providers such as AT&T for teleconferencing, paying premium prices for this service without realizing any value-added from the features built into the cost structure of that service.

In 2001 Raytheon Integrated Defense Systems (IDS) identified audio teleconferencing as a Six Sigma cost-avoidance project. This was due to the perception that AT&T’s substantial per-minute, per-caller conference charges were not cost-effective for all teleconference scenarios. In addition to the basic charge concerns, the fact that a 20-caller conference bridge would incur the 20-caller charge even with less than 20 users added to the notion of potential cost- avoidance. However, there is a significant value-added feature provided by AT&T service with its access to Wide- Area Telephone Service (WATS) telephone numbers, better known as 800-numbers, which allow conference call participants to avoid toll charges. While the 800-number is an acknowledged benefit, it highlights the cost avoidance potential since a vast majority of conference calls are set up within the local calling area where using the 800-number provides no value-added benefit.

To capture the cost-avoidance, IDS decided to bring audio teleconferencing capabilities “in-house” by leveraging the existing PBXs, the telecommunications infrastructure, and the associated support staff. IDS purchased a turnkey conference bridging system with associated system management software that could be integrated with the existing PBX and network infrastructure. The system was successfully installed and is currently configured to a capacity of 282 ports, with the potential to grow to 576 ports. The system was introduced to the user community on a voluntary rather than a mandatory usage basis to accommodate the learning curve associated with introducing a new system. This approach also retained a certain level of AT&T usage for conference calls where using the 800-number remains a value-added benefit.

The transition from AT&T to in-house audio teleconferencing has enabled IDS to realize significant cost-avoidance savings. For the period of June 2004 to January 2005, savings are calculated to be approximately $456,995 and approximately $879,000 for the period from January 2005 to September 2005. The system has demonstrated a minimal sustaining cost, with a $17,000 software support fee being the only associated annual expense. The system software provides system management capabilities with associated data collection and reporting features. The teleconference bridge setup-process is performed within the existing telecommunications staffing structure since there is no intervention required after the initial setup.

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