E-Work Reshapes Corporate Destinies -- Enterprise Systems

E-Work Reshapes Corporate Destinies

07/19/2000

Remote is all the rage. End-user companies and vendors alike are pouring billions of dollars into networks, extranets, wireless access, and other remote-access networks. Gone are the days when end users were chained to their desks in corporate locations. Geographically dispersed workers and collaborative teams that form and disband on a project-by-project basis are growing. Some companies have adopted the "hotelling" concept, in which employees work in cyberspace, occupying temporary workspaces at corporate locations on an as-needed basis. This is the era of e-work.

"The old model that brought workers to the work is giving way to a model that brings the work to the workers," says Ken Landoline, vice president and director of research at Robert Frances Group Inc. (RFG, www.rfgonline.com). In the future, "Enhanced telecommunications technologies and IP will combine to replace the automobile in getting the worker to work," he notes.

Telecommuting used to be a term describing a formal program where selected employees were allowed to set up a network-connected terminal or PC and work at least part of the week from home. Now, it's a loosely applied term, with employees linking into corporate networks via browser from any location at any given time. To paraphrase Sun Microsystems' mantra, the network is the workplace.

Two-thirds of companies -- 66 percent -- now have telecommuting arrangements, up from 51 percent two years ago, according to a survey by The William Olsten Foundation for Workforce Studies (www.olsten.com), sponsored by Adecco SA (www.adecco.com). About one in 10 of these programs are considered pilot programs. The workplace is "changing from a headquarters-building-centric model to a virtual workplace model," Landoline says. "Corporations are breaking away from the traditional rules of operating within the boundaries of a single company location and looking for ways to allow employees to work effectively and efficiently from remote locations."

Corporations are getting the message, but remote work is still the exception, not the rule. While it is common for off-site employees to connect with their home office via laptop computers and modems, and acceptance of telecommuting has grown, the ratio of employees working off-site remains constant, the Olsten survey finds. On average, about 8 percent of the workforce at companies offering telecommuting are involved in remote work -- the same level as in previous years.

Don’t expect remote work to be a cost-saving measure -- at least in the beginning. Fewer companies in the Olsten study are offering such arrangements based on cost savings compared with previous surveys. In the previous survey, conducted in 1997, 35 percent of telecommuter-oriented companies used this strategy to effect cost-savings. In the most recent survey, 24 percent reported doing so.

From a technology perspective, remote and telecommuting workers actually cost more than their in-house counterparts. Telecommuters may incur IT budget costs more than 150 percent higher than in-house staff, estimates John Girard, research director at GartnerGroup Inc. (www.gartner.com). "Part-time remote workers can still incur high excess costs due to some redundant expenditures in equipment and access to support two alternative work sites," he explains. "Full-time remote users incur increased WAN usage charges, though costs can be mediated in savings in facilities closures."

Engineering Change

Another third -- 32 percent -- of employers in the Olsten study said they used telecommuting to help recruit qualified employees. This is the strategy undertaken at Cisco Systems Inc. (www.cisco.com), where more than 4,000 employees -- primarily engineers -- telecommute on at least a part-time basis.

Product development initiatives required the hiring of many new engineers, and the local labor market in the San Francisco area could not meet all of the needs, according to Cisco officials. While Cisco recruits many technical professionals from throughout North America, not everyone is willing to relocate to the Bay Area. In addition, some engineers already on staff prefer to telecommute from their homes. Cisco addressed this labor shortage by hiring key engineers from remote cities under telecommuting arrangements. The company also incurred major savings in relocation expenses.

Professional/technical staff are the most likely telecommuters, according to this year's Olsten survey. Fifty-four percent of respondents report having professional/technical-level telecommuters, followed by sales/marketing employees -- 40 percent -- and programmers -- 35 percent. "Most of the kind of jobs we're talking about for today's telecommuters don't lend themselves to simplistic productivity measures," says Gil Gordon of Gil Gordon Associates (www.gilgordon.com). "These aren't people who are sitting there processing insurance forms. These are Web site designers or programmers or market research analysts."

Gartner’s Girard estimates that up to a third of corporate jobs can be set up in telecommuting arrangements. "Sales department functions have proven value for remote-enabled jobs," he says.

Other functions open for remote arrangements include distribution, logistics, production, service, and support. In fact, within the next few years, more than 40 percent of supply-chain transactions will be performed by remote workers, Girard adds. Soon, at least a third "of all inbound customer service requests will be conducted over the Internet," he says. "Network-based collaboration with partners will substitute for more than half of all potentially face-to-face working sessions." As a result, "the amount of daily business transactions controlled by road warriors and telecommuters will reach a point where external commerce and internal access are fully entwined and demand equal priority."

A majority of the companies -- 60 percent -- in the Olsten survey expect to increase telecommuting activities over the next year. All of the largest companies in this survey -- those with 10,000 or more employees -- reported offering telecommuting/remote work initiatives. At the opposite end of the spectrum, only one-third of the smallest companies have such initiatives in place.

More Than Widget Counting

Productivity is an area where telecommuting shows great promise, but it is hard to quantify. Slightly more than half the companies in the Olsten survey with such initiatives -- 52 percent -- say they are implementing telecommuting to increase employee productivity, compared with 45 percent who stated this in the last survey. The effect on productivity varies from company to company, and results are hard to pin down, Gordon says. Generally, it ranges between 15 percent and 25 percent, he notes. "Unfortunately, some of the best and most convincing studies have been proprietary," he says. "The companies that have done internal studies don't want to advertise it to competitors. However, the absolute worse cases we see in well-managed programs are break-even. People are doing as much work as well as they were in the office. Generally, they're seeing increases either in the amount of work they're doing, quality of work, or the ability to meet deadlines on time. It isn't just productivity in the sense of widget counting. It's all things that make up the quality of someone's work, and those tend to increase. We do see improvements in the quality of their work, the amount of time it takes them to do something, and their ability to juggle multiple projects at once."

Surveys of Cisco’s full-time telecommuters and their managers calculate about a 20 percent increase in productivity as a result of eliminating commuting time, and an enhanced ability to focus on projects. This is in line with Gordon’s estimates of a 15 percent to 20 percent productivity boost once a telecommuting effort is under way.

Technology Traps

Organizations need to put remote management technologies in place to support these growing legions of workers, analysts urge. In many cases, popular network management solutions are weak in supporting remote workers, Girard says. For example, he says, "applications sanctioned for universal remote use will have to be designed to function to connections with speeds at or below 56 Kbps."

Earlier teleworking solutions focused on providing data connectivity to employees, requiring access to company databases via the LAN, RFG's Landoline says. "Voice traffic was handled as an afterthought, and often provided by a simple analog phone connection via a second line. New approaches must meld voice and data into a 'single-wire-solution' and deliver simultaneous PBX and LAN connectivity. The ability to retain current circuit-switched voice equipment while transitioning to converged, packet-switched networks will become crucial."

The ramifications to the telecommunications systems needed to support the change are substantial. "A new generation solution that extends the company's voice and data functionality to distributed workers' desktops -- whether working from home, in a hotel while traveling, or in a smaller remote office -- is required," Landoline says. The key to achieving such connectivity is IP-based telephony, he says.

Regulatory Release

Attempts to build and support a telecommuting workforce could be hampered by poor management practices, Gartner's Girard warns. He estimates that 50 percent of first-time remote access programs will fail because of ineffective management. Once the bugs are ironed out, however, the failure rate for follow-up programs drop to 15 percent. "The fundamental laws, regulations, and assumptions about employment have not been changed to address a mass exodus from the office," he explains. "Basic employment laws still define work as being done in managed locations by supervised employees."

The US Department of Labor, not to mention state and local regulatory bodies, are debating the rules governing the health and safety of home-based or remote workers. While it's still not clear what impact workplace safety regulations may have on white-collar workers, the specter of such regulation could create a headache for telecommuting companies. Analysts recommend that companies establish their own guidelines for the health and safety of home-based or remote workplace. These include establishing a separate workspace, apart from the rest of an employee’s home, and equipping the space with ergonomically designed furniture and equipment. Gartner's Girard recommends working proactively with representatives from affected business units, personnel, and facilities management organizations, "to ensure that technology choices made by the IS department will support business needs, as well as uphold and enforce remote work policies."

Cisco developed a comprehensive set of guidelines to standardize the way that its full-time telecommuters would be treated. The company's human resources department spearheaded this process, with input from line managers, telecommuters, and a number of other department personnel. Previously, telecommuting arrangements varied from department to department, and there were inconsistencies in the type of equipment used and travel expense reimbursement.

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Telecommuting Goes Live
(Percent from companies responding)