InformationWeek

It's more than just fantasy. In fact, virtual teams are saving money and boosting
productivity at America West, IBM, and elsewhere.

By Bruce Caldwell and Jill Gambon
Issue date: Jan 22, 1996

The virtual office is more than a fantasy for the future, more than a few scattered trials involving a mere handful of workers, and certainly more than a fancy term for taking hom e work at day's end. Instead, the virtual office-made possible by new information technologies and innovative ideas about the office and the way people work-is a reality now at hundreds of companies.

How real? Just ask America West Vacations. When the company, a unit of America West Airlines, was preparing to add to its crew of 250 reservations agents last April, it sent 10 experienced agents to work at home rather than expand its Tempe, Ariz., call center. Though managers worried about the productivity of these stay-at-homes, now the agents actually get more work done each day than they did when working at the call center. They do so with a relatively simple technology tool kit:a PC, two phone lines (one each for voice and data), and a copy of Symantec's PC Anywhere, remote-access software that links their PCs to America West's network.

Telecommuting helps America West Vacations in several ways, says Bill Reed, manager of operations. Most obvious is the money saved by not expanding the Temp e facility. Also, telecommuting employees save time and money since they no longer need to drive to work or dress up for the office. In addition, more work gets done in less time. Consequently, Reed says, the company is now expanding its telecommuter program. Another 48 agents will soon start working at home, and America West may let some accounting and marketing personnel telecommute, too.

What is the virtual office? One expert describes it as "a series of loosely coupled workplaces, including the home, office, remote offices, and hotel rooms." No matter how you define it, the payoff goes beyond real-estate savings. The technology used by virtual workers can be faster, better, and cheaper, and all signs indicate that more workers will be asked to stay away from the office.

The desire to save money on office space has led to much of the early experimentation with the virtual office, says Michael Howard, president of Infonetics Research Inc., a network-technology research firm in Sa n Jose, Calif. Yet his firm predicts the cost of supporting mobile workers will reach $10,000 a year by 1997, up from $6,400 in 1995. Perhaps that's why only 16% of 160 companies-all users of remote-access software-recently surveyed by Infonetics called real-estate savings important. Two-thirds cited as important increased worker productivity, added sales, and improved responsiveness to customers. "Remote-access technology helps increase sales," says Howard, "and that is much more important than reducing real-estate costs."

One of the biggest gains delivered by the virtual office is productivity. Virtual-office workers are 10% to 20% more productive than they would be in permanent offices, says Franklin Becker, director of international workplace studies at Cornell University in Ithaca, N.Y.

One reason: The virtual office allows looser work schedules. Becker, an expert on the virtual office, points out that half the people he has studied say their most productive times ar e early in the morning and late at night. Virtual offices, he adds, let these people "work at the times they are more productive, instead of at 2 p.m., when the best thing to do might be to take a nap."

While the precise number of virtual-office workers is unknown, no one doubts their ranks are growing rapidly. A 1993 study by the Department of Transportation, for example, found that 8.4 million employees telecommute at least eight hours a week, up from fewer than 1 million in 1985. Gartner Group Inc., a Stamford, Conn., information technology advisory firm, predicts there will be more than 30 million U.S. telecommuters by the year 2000. Contributing to the increase is the fact that many companies-among them, AT&T, IBM, and Price Waterhouse-are uprooting salespeople from the comfort of their corporate cubicles and sending them into the field to be closer to customers.

Equipment Jumble
The typical virtual worker needs a dozen or so information technology products, in cluding a notebook computer, pager, terminal emulation software, E-mail, fax modem, groupware, and remote network access. Although these items need to work together, few are produced by the same vendors. That leaves users with the difficult task of creating an integrated kit, which, in turn, can lead to frustrating, time-consuming glitches. Surprisingly, technology suppliers do not yet provide integrated telecommuting packages.

Compounding the problem, few virtual-office workers receive sufficient technical support from their employers. Only 40% of the 160 companies surveyed by Infonetics provide help-desk services to support their telecommuters. Also, anecdotal evidence shows that most virtual workers receive little to no technical training.

Then there's the even murkier area of culture. How do companies that once rewarded high performers with corner offices provide incentives when the office now looks out over an employee's backyard? How do managers supervise far-flung employees? What kin ds of technology and training do virtual workers need to perform adequately?

Bill Yeack seeks answers to these questions. The president of Tandem Services Co., the Cupertino, Calif., systems integration unit of computer-maker Tandem Computers Inc., Yeack has run his group virtually for more than a decade. He's so convinced that these "soft" cultural issues are key to making the virtual office succeed that he has retained two cultural anthropologists for advice. One of them, Cindy Smith, believes the answers are to be found in the culture of the !Kung bushmen of Africa's Kalahari Desert. "The characteristics of virtual teams are high mobility, very weak notions of property-like having an office-and a high sense of egalitarianism," she says. "Exactly like the characteristics of a band of hunters and gatherers."

Of Tandem Services' 700 employees worldwide, 400 lack a traditional office. That includes Yeack and his 12 immediate subordinates. They work from home off ices equipped with two or three telephone lines-including integrated services digital network (ISDN) where available-and $12,000 road-warrior kits. The eight-pound kits include a Hewlett-Packard Omnibook portable computer, HP DeskJet 340 printer, two cellular phones, and a CD-ROM.

Yeack's notion of the virtual office was born in the mid-'80s, when he worked on an urgent project for investment house Salomon Brothers. Key developers worked in London, Tokyo, and several U.S. cities. Yeack sought an alternative to requiring everyone to stay up late or get up early, battling fatigue while trying to consult with each other. He worked out a plan for handing work from one time zone to the next. Under his plan, code written by a developer in London was tested in the United States, then debugged in Tokyo by the time the developer in London came back to work the next day.

To prevent worker burnout in a 'round-the-clock office, Yeack's current team is required to follow up extensive travel by working at home to help restore balance between work and personal life. Even so, Yeack notes, "most people work too
many hours."

Yet some experts say telecommuting can help employees balance their work lives and their personal lives. An IBM survey of 20,000 employees who work from virtual offices got what Jeff Hill, an IBM human relations researcher, calls "extreme- ly positive comments," such as: "I'm eating with my family for the first time in 15 years."

IBM's virtual-office program got started during the company's 1993 financial crisis, when it broke with past policies and began layoffs. John Frank, then an operations manager in IBM's Indianapolis office, recalls that his division proposed having workers telecommute to save jobs. "We thought there were only so many people you can ask to leave the business," Frank says. "We proposed an alternative plan that would trade real estate and infrastructure costs for people."

Printers Pay
Frank's telecommuting and shared-office pilot project, involving 400 of the 500 IBM employees in Indiana, saved $3 million a year, of which nearly one-third came from IS cost reductions. For example, half the network printers were eliminated; even after IBM bought printers for the home offices, printer-related savings came to $400,000.

In early 1994, IBM launched a Midwest telecommuting plan for 2,400 employees, followed later that year by a national task force. In early 1995, Frank was named business leader for a new consulting unit on work-force mobility, part of IBM's entrepreneurial program. IBM now has just one office for every four Indiana employees. Next, it's working on increasing that ratio to one office for every eight employees, an objective Frank believes is possible since nearly 80% of the employees telecommute more than 60% of the time.

While 80% of the employees in IBM's virtual-office plan say they're satisfied, Frank knows from personal experience just how hard it can be to adjust to working outside the office. Frank, who's single and lives alone, relied on the office not only as a place to work, but also to socialize. After he began working from home, Frank needed six months to overcome his feelings of isolation, an amount of time experts say is typical.

Making the complete transition from working in an office to working at home and on the road involves an 18-month process filled with both highs and lows, says Frank. In the first few months, productivity typically skyrockets. That's usually followed, at about the 12-month mark, by a decline in productivity-no one's sure why. But from 18 months on, productivity reaches a steady point of about 15% higher than before, a level that most workers can maintain indefinitely.

There are other gains, too. Accounting firm Price Waterhouse LLP believes that by moving 525 Dallas employees to a smaller "hoteling" location in late 1994, it created an office environment that's proven far more attractive than wh at other tax, audit, and consulting firms can offer college graduates. "The college recruits are very excited," says Robin Garner, director of administration at the company's Dallas office.

Here's how hoteling works at Price Waterhouse: Workers reserve a cubicle and phone at the company's home office for up to two weeks by calling a "concierge," a clerk who uses Lotus Notes and a CAD (computer-aided design) program, to reserve cubicles in areas set aside for peer groups and consulting-practice areas. Workers keep their personal belongings and files in plastic containers stored in filing cabinets.

Checking In
Price Waterhouse offices in five more cities are moving to smaller locations as leases expire. This year, 21 of 98 U.S. offices will adopt hoteling. "We're moving to hoteling as the standard," says Marc Lutchen, Price Waterhouse's chief information officer. Even the firm's leadership is going virtual, he adds, by equipping itself with IBM portabl e computers, docking stations, and PictureTel desktop videoconferencing systems.

Technology challenges remain, Lutchen notes. Updating virtual-office software, for example, is a severe problem with notebooks constantly on the move. Price Waterhouse eases that problem by leasing notebooks for two years rather than buying them. But the firm anxiously awaits the arrival of remote upgrades fro vendors.

Also, too much dependence on corporate networks can cut productivity. That's why IBM has barred employees who need more than six hours a day of network time from telecommuting.

Another technical issue: Getting online still takes too much time. Wrestling remotely with corporate networks, the Internet, and the World Wide Web is a major hassle, even for telecom giant AT&T. Lee Tsnakis, an AT&T director for alternative workplace solutions, says he has a home office "you can launch missiles from," yet he's waiting for the next innovation that will dramatically shorten his on line time. "There have to be new models for the distribution of information to people who are frequently disconnected," he says.

Tsnakis accesses 10 databases. Getting into each one requires logging into separate systems and navigating to find what he wants. Each day, he says, that can add up to more than 30 minutes of wasted time.

AT&T hopes intelligent agents and adaptive technologies can reduce that half-hour loss to no more than five minutes. Under the plan, agents would dial into a central server, fill out an electronic request form, then fetch whatever the user wants and download it in a batch to an electronic in-box for later retrieval.

But the biggest change wrought by the virtual office will more likely be cultural than technological. As Craig Mathias, principal of the FarPoint Group, a systems integrator in Ashland, Mass., says, "Work will be a thing you do, not a place you go to."

That day may come sooner than we think.

See r elated story "The Road Warrior's Arsenal "

Photos by Greg Whittaker, photo illustration by Jesse James DeQuillo/Studio MD

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