Space Saving
Issue 26 - Dec 06 / Jan 07

Escalating real estate costs across Asia are forcing companies
to look at alternative workplace solutions, especially when it
comes to space saving. Nina Wallace reports.

With soaring real estate costs present in many Asian cities today, utilising office space to its full potential has become of key importance. Many companies these
days are looking for workplace solutions that address this issue in particular; one that will help to reduce overall costs and improve profits, whilst at the same
time helping to improve the productivity of the business.

The CEO of one of the world’s largest information technology corporations, Hewlett Packard (HP), was particularly concerned about the high cost of real estate and its affect on the business, and sought to redeploy savings from real estate in order to support company growth. Speaking at the recent Workplace Solutions conference in Hong Kong, Jeremy Kwok, Real Estate Workplace Services Manager, Greater China, HP Asia Pacific, says that with 150,000 regular employees, the company currently spends US$1.3 bil on real estate alone.

Kwok says at present, HP’s office space is about 15 percent underutilised. Whilst many employees frequently work from multiple locations - both within
the office and away from the office - Kwok says these workers also have a dedicated workspace. He adds that only 40 percent of employees at HP
have a dedicated job nature and require a dedicated workspace. Therefore, says Kwok, in order for the company to remain competitive, it “must be consistent
with competitive costs for real estate and workplace services”.

a workplace for the future
In order to reduce HP’s significant real estate expenditure and improve competitiveness, Kwok says plans for its future workplace include fewer core sites, open seating with access to the space and tools needed to get the job done, work areas that provide for both privacy and team meetings, assigned workspace for non-mobile workers and a space utilisation upwards of 90 percent. He adds that HP also plans to create an “updated and comfortable working environment” that has a consistent look and feel worldwide. The new workplace will incorporate a global design standard for all offices and workstations.

The top executive must believe in the process and visibly support it.

To achieve the desired new workplace, HP’s site/country Real Estate Workplace Services (REWS) managers will partner with its business/function leaders in order to determine the business requirements, the specific changes that need to be made and associated timelines, as well as any other vital information. The local REWS teams will also work with local leaders to provide consistent and timely updates for managers and employees and HP’s company intranet will play an active role in spreading the message of change to all business units. Kwok says that this kind of change management is important, “as people typically resist a change in the status quo”. He adds that it is also important to align business strategies locally.



HP’s workplace changes will take place during 2010, says Kwok, with “timing based on natural real estate events, such as lease expirations”. A project management office will be established to oversee and co-ordinate a controlled roll-out of changes across the company and local leaders will receive advance notice when a change is scheduled to occur.

In order to determine whether or not your workspace is currently working for you, you need to establish baselines for; the actual use of space by employees, employee mobility and cultural acceptances; the cost of current plans; and employee satisfaction with the workspace.

Changes to company workspace at HP will vary from very small moves, such as, for example, vacating a floor in a building, to site consolidations and closures. Kwok says that HP’s worldwide sites will be consolidated into close to just 25 sites and that its 85 datacentres, located in 29 countries, are to be consolidated into just six datacentres in three US locations. Kwok adds that workplace transformation and IT initiatives are very much interconnected and that both will provide “substantial” savings for the company, whilst at the same time upgrading HP’s working environment and contributing to company growth. He says the consolidation of its datacentres alone will allow HP to reduce IT expenditure by approximately US$1 bil over the coming years.

from a technological standpoint
Speaking at the same conference, John H. Vivadelli, Founder and CEO of AgilQuest Corporation, also addressed the issue of workplace solutions within a
technology context. He says through the delivering of software and management services that; manage flexible workplace operations; measure asset use; and
allow managers to make informed workplace decisions that increase its customers’ “agility and profitability”, his company’s mission is “to make your workplace as flexible as your workforce”.

There are numerous measurable benefits associated with being
able to choose workspaces, ensuring space is available
and automatically switching telephones to workspaces.

Vivadelli states that there are three types of office workspaces; collaborative; assigned; and shared. He says “knowing the allocated, reserved and actual use
of all three types of workspaces provides the necessary data for managing and measuring the workplace”. As an example, he uses a case study involving a major
telephony manufacturer that has global operations, rapid growth in certain segments of the business, a profitability requirement, the need to attract and retain employees, as well as a process and metrics driven culture.

hoteling as an alternative
The problem at this particular company, says Vivadelli, was that increased technology, such as the use of laptops, mobile phones and broadband, had led to
increased mobility and productivity (or “working from anywhere”), as well as increased vacancy in the workplace of between 50 and 70 percent. He says the
solution was to implement an alternative workplace strategy that included hoteling (hotdesking), with the goal of balancing “employee flexibility” with “workplace
management”. However, he hastens to add that “first come, first served hotdesking only works when you have too much space” and that you need to have a system to manage this within the office.

The system that AgilQuest proposed was to integrate workplace management with VoIP (Voice over Internet Protocol), which allows employees to choose the
workplace they need and automatically transfer their voice communications to that desk. Vivadelli states that ideally this solution should improve management control, improve measurement and accounting of office space usage, create metrics based on actual use, improve lease invest/divest decisions and
last but not least increase employee satisfaction within the workplace.

By implementing real estate/workplace software, Vivadelli says multiple systems
are replaced with one product for shared space management and conference room management. He adds that implementing such a software system also provides for “actual use” data as opposed to “static” data, which is a much better way to measure the workplace. Vivadelli says that phone switching also ensures that the data obtained is much more accurate.

Vivadelli says there are numerous measurable benefits associated with being able to choose workspaces, ensuring space is available and automatically switching telephones to workspaces. These include better choice
for staff in terms of the workspace and greater ease, as staff are no longer required to carry a handset to the desk needed. Co-location also allows team members to work near each other, which in turn facilitates teamwork, as the AgilQuest system means that staff can easily locate other members of their team on a floor plan of the office. The fact that workspace can be easily located on a floor plan also provides for visitor support, as this is helpful for those working in
an unfamiliar office. AgilQuest’s real estate/workplace software also unlocks availability in the workspace, as the system “bumps” reservations for no-shows in the office. In terms of reporting, the system also provides transactional history, determines utilisation and calculates the cost of services.

The consolidation of its datacentres alone will allow HP to reduce IT expenditure by approximately US$1 bil over the coming years.

cost savings
There are significant cost savings to be had for those companies that implement real estate/workplace software. Vivadelli cites one its clients Bearing Point
- a provider of strategic consulting, application services, technology solutions and managed services - as a case study. Initially, Bearing Point had 20,000 workspaces for 20,000 people, with a 1:1 people to desk ratio. After introducing hoteling to the workplace, it managed to reduce the number of workspaces by 20 percent. With 4,000 less workspaces needed, it has a new people
to desk ratio of 1.3:1. By getting rid of the excess workstations at a cost of US$10,000 per workspace, the company was able to save US$40 mil per annum.

Vivadelli also cites another case study where, initially, there were 5,000 workspaces for 5,000 employees. All workstations were fully allocated, despite the fact that it needed to add another 500 new employees to the workspace. By implementing hoteling, the company was able to free up 20 percent of workspaces, which meant that 1,000 workspaces were now shared by 1,500 people. It therefore managed to avoid US$5 mil per annum for 500 extra workspaces at US$10,000 each.

However, in order for workplace changes such as the above to be implemented,
Vivadelli says “the top executive [in the company] must believe in the process and
visibly support it”. He says in order to determine whether or not your workspace is
currently working for you, you need to establish baselines for; the actual use of space by employees, employee mobility and cultural acceptances; the cost of current plans; and employee satisfaction with the workspace. He says that lack of commitment from the “top executive”, as well as failure to establish these baselines are some of the main pitfalls to avoid, along with an insufficient change management policy and a lack of post occupancy measurements and feedback.

Change management is important, “as people
typically resist a change in the status quo”.

in conclusion
In conclusion, there is much that can be done in terms of workplace solutions to reduce companies’ expenditure on corporate real estate. By reducing the amount corporations spend on real estate, not only can annual profits rise, but productivity can also be increased, as workplaces become better utilised and money that would have been spent on large office spaces in expensive locations can go towards improving other sectors of the business. RFP

NOMINATE NOW

Subscribe Now

Sign Up for Ezine

Past Issues