Commentary. Integrated Workplace Management Takes Hold in 2003
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1 M. Bell Research Note 27 November 2002 Commentary Integrated Workplace Management Takes Hold in 2003 In 2003, cost pressures and an increasingly distributed workforce will accelerate the trend toward a more comprehensive (and more integrated) approach to workplace services. The "place" in workplace is increasingly becoming a virtual location. Therefore, management of the workplace must adapt to two major trends: Telework: In 2002, telework grew by more than 20 percent in the United States where nearly 20 million individuals worked three or more days per week outside of the traditional office. We expect this level will double in the next five years. As the workforce becomes virtual, the enterprise can reduce facilities costs substantially by subleasing or selling off underused real estate. Already, many enterprises are oversupplied with real estate as a result of downsizing and consolidation. As part of the effort to rationalize office space in 2003, many enterprises will embrace telework, office hoteling and other desk-sharing techniques to reduce costs even more. Enterprises adopting these telework and shared-office techniques are reporting a reduction in occupancy costs of 10 percent to 20 percent, which can translate into tens of millions of dollars in annual savings. By 2006, 50 percent of the Global 2000 companies will adopt highly mobile work styles (0.6 probability). By 2006, 50 percent of the knowledge workforce will work "outside the wall" of its formal workplace (0.6 probability). Virtual Interaction: Collaboration requirements and complexity have expanded. The opportunity to collaborate in a face-to-face environment has all but disappeared in most enterprises. Enterprises need to harness talent across geographical boundaries, quickly focus diverse resources on business opportunities and threats, and reduce the requirements for employees to travel to accomplish this. The virtual interaction trend represents a shift from a "place-centric orientation" of the workplace to a "peoplecentric orientation," which demands a more integrated management process that brings together the major players of workplace management the IS, human resources and corporate real estate organizations. These three functional groups must redefine the cost tradeoffs, the technology investments and the employee or work policies required for a virtual workplace. We expect 2003 will be a transitional year for many enterprises; one in which they rethink their workplace service delivery and management models to attack overhead costs and enhance workforce performance. Gartner Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.
2 By 2006, 30 percent of global enterprises will have adopted integrated processes that require the IS, human resources and corporate real estate groups to collaboratively plan, deliver and manage the workplace infrastructure and services (0.7 probability). Prediction: The IS organization takes ownership of the workplace; it drives coordination with the human resources and corporate real estate staffs. The IS organization will increasingly become the dominant owner of workplace support. Traditional assumptions about the workplace are becoming obsolete. The old rules about "nine to five" work hours, one person/one seat and technology delivery that's bounded by the four walls of the office are no longer applicable. Wireless LANs, increased high-speed network access from the home, portable devices and virtual support services, such as 24x7 help desk support, make traditional assumptions about the office increasingly unworkable. IT is the enabler of virtual work and collaboration; that's why the IS organization will emerge as the leader of workplace support. However, the IS organization alone cannot transform the workplace from a traditional place-based model to a virtual model. The transition requires close coordination between the IS, corporate real estate and human resources groups to ensure an integrated approach in the enterprise. This convergence in workplace responsibility will lead to new governance models, new organizational re-alignments, new workplace planning and delivery processes, and more integrated asset management applications that integrate data between facilities, technology and human resources assets. Already, we have seen facilities management applications begin to offer IT asset management capabilities. Aperture Technologies, Archibus and, most recently, MRO Software's acquisition of Main Control, a leading IT asset management application, reflect the trend toward an integrated asset management capability. The move to integrated workplace management and services will continue to unfold in the next five years, but the pressure on costs will provide incentive to many globally dispersed enterprises with large office portfolios to move toward an integrated model in Impact on 2003: Virtual and collaborative work will accelerate in 2003, with added pressure on costs and business agility. The greatest impact will be on highly distributed enterprises with substantial office facilities portfolios. Some employee workplace services will be considered candidates for outsourcing to third-party owned and operated business locations. The increased growth of executive suites (see Table 1), like those from Regus and Global HQ, will reflect this trend. Global enterprises like Siemens and Nokia are contracting for these services on a per-seat basis to reduce the need for fixed office locations. In addition, these services are also being used as back-up support for business continuity requirements. By 2006, at least two major service entities will emerge to offer a third-party, fully hosted workplace infrastructure, including facilities, support services and IT infrastructure (0.7 probability). Office location decisions will be increasingly affected by the need for greater workplace safety and security. Office locations, particularly critical operational centers, will be distributed to mitigate against workplace risk. Work settings will reflect a shift from permanently assigned individual spaces to more group support spaces, like hoteling individual space, team rooms, huddle rooms and conference rooms. The greatest impact will be on knowledge-based organizations such as high-technology and professional service enterprises. 27 November
3 Table 1 Executive Suite Service Offerings Fully furnished and equipped office facilities in most major global cities Open and closed offices that are available for rent on an hourly, daily or monthly basis Support staff on-site Conference rooms Copy and mail services Telecommunications and data communications equipment rooms Videoconferencing Fully featured private branch exchange telecom services High-speed network access Virtual private network service Answering service Disaster recovery back-up facilities Source: Gartner Research Reacting in 2003: We believe telework and virtual interaction will grow at an increasing rate in the next five years. The impact on workplace management and services will be more pronounced in the next three to five years as the economy improves, business expands, and there is pressure to expand or scale the infrastructure. In 2003, in geographically dispersed enterprises, the workplace owners (IS, human resources and corporate real estate departments) will be forced to collaborate to respond to immediate needs and to develop a strategy for dealing with the major workplace changes that will require action in the next two to five years. Changing business facilities requires long lead times, typically two to four years, so planning must begin in 2003 for major facility project decisions that require completion in 2005 and beyond. Workplace owners will need to hone collaborative and cross-disciplinary planning skills to ensure tight integration between IS, human resources and corporate real estate budgets, projects and implementation processes. For enterprise senior management (CEO, CFO, COO): Form a workplace leadership team that reports to executive management and consists of representatives from the IS, human resources and corporate real estate organizations to evaluate business unit needs for telework and virtual collaboration in both the short and long term. Create a project plan and business case to respond (see "Work Systems: What's Your Style?"). The workplace agenda in 2003: 27 November
4 In 2003, evaluate business continuity and workplace safety issues in all physical locations. Communicate priorities and benefits to business unit leaders and executive management. Integrate into enterprise business continuity plans. Target major office locations that require relocation or lease renewal in the 2004 to 2006 time frame. Evaluate alternative workplace scenarios such as office hoteling in combination with telework options for a portion of the office population. Conduct financial analyses that use a blended costing metric such as enterprise total cost of ownership (ETCO) to test alternative feasibility. (For additional research on ETCO, see "Trading Bricks for Clicks: Using (E)TCO for Cost Effects.") Identify job categories, including first line workers, that can be effectively moved into a telework mode. Recruit a business unit or department to pilot a telework initiative. Develop plans and methodologies to evaluate workplace services and processes for redesign or replacement. Consider new approaches to workplace service provision such as employee and manager self-service or business-to-employee initiatives. Evaluate the possibility of immediate usage of and requirements for improved collaboration and Web conferencing applications. Consider bundling workplace services, such as new employee "on boarding" processes, employee relocations, office moves/adds and changes, and consolidated help desks that can respond to IT and facilities-related employee requests. Evaluate external service offerings such as executive suites or instant office services. Identify opportunities to replace company-leased premises such as telework centers or satellite offices with externally managed and provisioned office environments. Review the current office premises and determine whether a greater deployment of collaborative office spaces and wireless LAN technology can enhance employee productivity and efficiency. Trend indicators: CoreNet, the world's leading professional association for corporate real estate executives, hosted a global summit in San Diego, California, in November Of 42 presentations, 10 presentations (24 percent) focused on integrated workplace strategies and services (for IS, HR and corporate real estate groups). The American Business Collaboration (ABC), a consortium of nine global enterprises, produced a report in mid-2002 that surveyed 2000 employees in the United States and concluded that "one-half of U.S. employees in midsize and large companies have work arrangements that define them as 'off-site' workers." In ComputerWorld s 2002 survey of Best Places to Work in IT, 89 of the top 100 U.S. companies offer telecommuting. Bottom Line: The workforce is becoming more virtual and collaborative. The static, place-centric model of the workplace is transforming into a more "boundaryless," virtual and people-centric model. Accordingly, the principal managers of the workplace IS, human resources and corporate real estate departments will increasingly need to: Develop a shared ownership of workplace infrastructure and service delivery to support employees, irrespective of where or when they work. 27 November
5 Create integrated workplace planning, project management and service delivery processes. Establish the IS organization in a leadership role for these endeavors. This will be particularly true for global enterprises with large office portfolios. Enterprises that fail to adopt an integrated workplace management process will risk increasing competitive disadvantage, particularly in the longer term as the business cycle turns to growth and expansion, and pressure re-emerges to compete for talent and to scale workplace resources without adding expensive brick-and-mortar facilities. 27 November
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