Creating a business case for Activity Based Working

Transcription

1 Creating a business case for Activity Based Working By Trevor Clarke, Lead Analyst Asia Pacific Flexible work styles like Activity Based Working (ABW) offer organisations more than just real estate savings and good will among employees. The concept of time, place and technology independence for employees at the heart of ABW also brings benefits in talent management, customer engagement, productivity and environmental sustainability. In fact, ABW is a holistic platform that takes its lead from the harmonization and optimisation of real estate utilisation, talent management, organizational culture, and technology considerations what TRA refers to as the Four Workplace Forces. But what is ABW? The work style is not hot desking, hoteling, co-working or any other currently being pursued. While some organisations have and will adopt a mixture of these approaches, ABW should be viewed as a unique work style in its own right. One that re-focuses the organisation s employees on the activities they need to undertake to achieve goals in a potentially more productive, collaborative, flexible and trust-based manner. At its heart is organisation-wide collaboration and team-enablement. ABW aims to provide a platform for these objectives by removing set seating in the office and the hierarchy this entails by offering a much greater variety of spaces (potentially including teleworking) where employees can work depending on the task at hand and outcome desired. Since the start of 2013, TRA s Intelligent Workspaces research has involved quantitative surveys and more than 100 independent analyst deep dive interviews with CxOs of organisations across ANZ, ASEAN and Japan. We have the most comprehensive and mature data and insights on the current and future direction of the world of work in the Asia Pacific region. TRA analysts have also been engaged in an advisory capacity in numerous ABW projects. Through this research we have developed the following market model which shows what we believe to be the current state of adoption of ABW across the Asia Pacific region at the start of It also outlines what we believe to be the market adoption stages and what this means in terms of the value ABW generates for organisations (not comparative to any other work style or technology):

2 As the chart indicates, the reality is there is no one market in the Asia Pacific region that is even close to mainstream adoption of flexible working (despite IT industry rhetoric), especially when it comes to ABW. There are some very high levels of growth in particular cities, such as Sydney in Australia, but overall penetration of the work style is still embryonic. This means there is considerable scope for organisations to capture competitive advantage in addition to direct benefits. There are, of course many ways the ABW market in Asia Pacific could evolve and unfold. Adoption rates could happen faster or slower, emerging technologies of building design innovations could disrupt current thinking on best practices, and employees could simply reject the model. However, TRA believes that while this may affect the timescale over which each period extends, the characteristics of each period would remain valid and the evidence supports our view that adoption rates will increase steadily. At this stage TRA is confident that the Australian and New Zealand markets are entering an early adoption period where organisations will ramp up adoption in order to obtain the stated competitive advantage and broader benefits ABW promises. Singapore and Hong Kong are also about to head into the Early Adoption period, while Japan and China lag, although exhibiting pockets of ABW interest. (Note please see associated TRA research for evidence of this). Each adoption period is explained as such: The Exploration Period: This period of market development is characterized by a low level of adoption with few large-scale examples. Costs for technology and implementation are typically high, skills and best practices can be hard come by while office building costs maintain a premium due to their unique status. Acceptance of ABW by employees is harder to achieve due to higher levels of unfamiliarity. Although the work style is considered niche, those that have adopted it successfully obtain strong brand awareness and equity, thought leadership status, early productivity and innovation benefits. The Early Adoption Period: In this period of market development, the initial high costs for office buildings and technology begin to drop as more supply and experience in the market emerges. Greater awareness of ABW amongst decision makers and the employee base make adoption and acceptance easier and faster as the lessons of explorers are shared and examined. Best practices begin to emerge and productivity and innovation are optimised. However, as the adoption rates are still relatively low, competitive advantage is high, especially with talent management. The Mainstream Period: This period of market development is characterized by all of the same direct positive benefits outlined and experienced in the Early Adoption period. These are also boosted by continual improvements in pricing (to the point of commoditization). However, as the adoption rates are rising quickly the competitive advantage of adopting ABW starts to diminish and will continue to do so as more and more peers take a similar path. As this period progresses ABW becomes an expected part of organisations, losing its wow factor and status as a point of differentiation. The Laggard Period: In this period, although individual organisations that start to adopt ABW will still experience benefits, competitive advantage will be limited. TRA has also identified a Need For Reinvention Point. It is at this time just prior to the mainstream period - that organisations already doing ABW should be looking to once again reinvent or re-invest heavily in their workforce strategy if they wish to retain a competitive advantage. This should occur above and beyond the month-to-month, or quarter-to-quarter evolution or improvements being made in the environment. Further we identified a Damage from Inaction Point. Although benefits can still be obtained, those that haven t adopted the ABW approach will likely start to experience: difficulty in attracting and retaining top employees; brand damage from not meeting employee and market expectations; lower than average productivity and innovation rates; and financial premiums related to real estate occupancy. It is within this market context combined with organisation and industry-specific drivers and influences that CxOs and IT leaders should be evaluating their own potential adoption of ABW.

3 The data to date The following data points are drawn from TRA s research along with publically available material. For more information about how these findings were established please refer to the source for each (there is a list of TRA reports at the end of this report). We offer them here as context to considering your own business case. Of course, there are many more sources available and we encourage you to investigate both commercial and academic research to help inform your strategy. TRA ABW Research Findings The TOP 5 ABW Business Outcomes are related to: Talent management, corporate social responsibility (CSR), customer engagement, risk management and productivity. ABW contribution to these goals rated good or very good. The Top Rated ABW Outcome Overall is: Environment (sub-category of CSR) Top 3 ABW Drivers: Real Estate Cost Reduction; Future requirements for flexibility on headcount growth/contraction; As a showcase for the organisation. The Top Business Opportunity from ABW: Internal collaboration and cross-selling. Top Challenge with ABW is changing employee mindsets and culture ABW Benefits Optimised in 1 to 3 Years but only with synergy between Four Workplace Forces: Physical Spaces, People and Culture, Technology, and Processes and Practices. Although just under a quarter (24%) of research participants believed they would optimise the benefits of adopting ABW within 12 months, all who held this view were in a pilot phase or had a limited deployment. The emerging consensus is that ABW benefits would be optimised after 12 months but within three years. The Top 3 Technologies in an ABW project: Notebook Computers; WiFi; and phone number mobility (IP Telephony). ABW Adoption to hit early adoption phase in 2013 period of highest returns and competitive advantage. 60% of ABW adopters are already planning to expand their projects to other locations. Most organisations that have adopted ABW to date allocated a one-off budget to the project to fund the office fit-out, relocation, new technologies, change management and education. However, in terms of standard yearly expenditure little impact was reported as a result of ABW by most although there were individual exceptions. Although on the IT side the mix of technologies changes less so for services the overall level of spending remains stable after adopting ABW.

4 Other research Bankwest s research on employee perceptions of the ABW environment found that: 74% feel more positively about working for Bankwest 91% enjoy freedom to choose their workspace 84% prefer the new way of working The CBA s ABW post-implementation review found: 98% would not go back to old way of working 67% of colleagues believed they are more effective, none felt less effective An academic survey of Macquarie Bank s ABW employees found a 15% net increase in perceived productivity for employees Goodman s staff survey after moving into an ABW environment found: 1 in 3 employees strongly agreed the workplace was inspiring 83% preferred the new workspace model to the old one Microsoft s internal ABW deployment found: A 20% improvement in formal collaboration and a 7% improvement in team effectiveness A 21% improvement in impressions on customers A 10% improvement in individual effectiveness Japan firm, Midas, experienced a 10% improvement in time to complete projects as a result of better employee communication in an ABW environment. The U.S. Department of Energy found: Architectural projects can achieve up to 50% in energy savings, but can also increase user productivity by up to 20%. A survey conducted by the International Facility Management Association (IFMA) and published in 1997 determined that, on average, 44% of building occupants (i.e. employees) move within a given year. Woods Bagot found salaries account on average for 84% of annual operating expenses. Energy and building maintenance costs comparatively little each accounting for about 1% of annual operating expenses. Aecom found that workers spend about 35% of their time at their desks. Buildings are typically occupied 60% of the time and for the remaining 40% of the time buildings are empty. It also found that the average time for knowledge workers to get a response from colleagues is 4.7 hrs, from managers it is 8.8hrs. An average worker worker loses 66 minutes each day due to inefficiencies, hassles and distractions.

5 What to factor into your ABW business case evaluation TRA offers the following items for consideration when formulating a business case for ABW. The items you consider will be dependent on your own individual circumstances and this list is intended as general guidance only. One point to note, however, is that ABW is not just for new office buildings it is feasible to establish an ABW office in existing offices with some (minor and/or major) changes to the four workplace forces: physical spaces; technology; processes and practices; people and culture. Costs to consider with ABW Cost Items to Consider Strategy development costs (internal labor, travel, peer ABW office tours, event participation and research costs) 3 rd party engagement with: An architect A building construction or renovation firm A workplace strategy consultant An interior designer A fit out specialist A change management consultancy ICT partners Undertaking an office utilisation study Undertaking staff and stakeholder surveys Office design and planning costs Furniture costs HR costs Logistics and moving costs Downtime costs from moving workplaces One-off ABW Project Costs Annual On-Going Costs Occupancy (e.g. leases) and/or building construction costs Legal costs Internal IT costs (e.g. labour costs) Audio visual costs Lighting costs Building management systems/automation costs New IT investments across: Connecting everything Mobilising everything

6 The paper trail - paper storage + archives, printing, document lifecycle improvements Software unified communications, social enterprise, SaaS, etc Services Total Costs

7 Benefits to Consider with ABW Benefit Items to Consider Reduction in workplace costs per employee compared to allocated seating approaches Reduction in workplace costs per square foot compared to allocated seating approaches Reduction in churn costs and improved speed to support teams Reduction in overall energy usage Improved ability to accommodate fluctuations in head count Improvement in staff satisfaction Improvement in ability to attract and retain staff Improvement in brand reputation Increased brand exposure Improvements in client engagement Improvement in employee speed to communicate Improvement in project completion times One-off ABW Project Benefits Annual On-Going Benefits Improvement in productivity Ability to host and cater to events internally (reducing external event costs) Reduction in employee distractions Improvement in employee and business unit collaboration Improvement in IT and business alignment Preparedness for future IT needs Improved workplace resale value Reduction in waste and water services costs Decrease in risk, liability and insurance rates Reduced paper-related costs Total Benefits

8 Recommendations For Technology and Service Buyers looking to adopt ABW or a flexible working strategy: Take stock and assess your current culture and performance trajectory: Conduct a utilisation study and undertake stakeholder interviews or surveys including front line employees. Ensure this is done independently to ensure data captured is valid and provides reliable insights. Consider employing a third party to help with this step, but make sure skills and knowledge transfer is built into any agreements so the organisation can continue to assess its workplace needs going forward without relying on 3 rd parties heavily. Define your vision for your ideal environment and culture through multi-party collaboration: Input from both front-line workers and the executive branch will help ensure the vision is representative. Tour current high performance workplaces to understand what is possible. Seek out the expertise of vendors and partners that have adopted themselves and have multiple reference customers. Explore a pilot program: You don t need a huge investment to trial a high performance workplace and many flexible work styles can be trialled using existing offices and technology. However, look at existing research on flexible working and the outcomes being achieved to safeguard against expectations that are inflated or set too low. Align all stakeholders internal and external to the vision and set out your project responsibilities and timeline. Consider the essentials such as security, cost, and compliance and ensure that these are not compromised. Ensure the project management does not result in siloed components pursuing their targets independently of the broader vision. The best results are always those that bring together the four elements. Evaluate enabling technologies: These will include virtualization, cloud computing, mobile devices, etc. Make sure IT providers have ABW experience themselves and offer you competitive advantage, not just ease of deployment or lower cost. Plan for how you will reinvent again to engage customers and employees. Work styles and spaces of today will change again will you have the capacity and agility to stay ahead? Refer to TRA s ABW checklist for CxOs and IT leaders. Make sure you have all bases covered small things matter when it comes to ensuring a successful ABW project.

9 Methodology Tech Research Asia has separately conducted 50+ interviews investigating ABW and other progressive workplace strategies with business and IT leaders since January 2013 in Australia and across the Asia Pacific region. Interviews lasted between 45 minutes and 1.5 hours. Written responses to interview questions were also received by in some instances. Participants had to be knowledgeable about the organisations ABW program and the technology used. Additionally, TRA ran a quantitative online survey that investigated the views of 260 individuals working in Australia regarding the use of technology in their role. Respondents were required to work in an organisation with more than 50 employees and have a position in sales, IT, or as an executive or knowledge worker. The survey was conducted online during the months of March and April, The survey research is complemented by additional primary research (quantitative surveys and qualitative interviews) conducted on behalf of clients investigating ABW and flexible working. Further, TRA s insights are informed by numerous interactions between TRA analysts and IT and business leaders in Australia and across the Asia Pacific region. These interactions have taken place as one-on-one advisory sessions, in-depth interviews, and through facilitated events. All findings that indicate a Top finding i.e. Top Business Opportunities from ABW were created through a weighting methodology. After respondents were asked to indicate in order their top choices, all Top One responses received 3 points, Top 2 received 2 points, and Top 3 received 1 point. Points were then totalled and percentages calculated out of the total possible points. Please contact TRA if you have additional questions on the methodology used in the creation of this document or would like to receive any of the research reports produced.

10 Creating a business case for Activity Based Working 10 Additional Resources Activity Based Working: The New World of Work. By TRA ASB Activity Based Working Case Study. By Trevor Clarke Japan: One of Them Activity Based Working Case Study. By Trevor Clarke Making the most of the flexible work movement. By TRA BlueWork: The American Express Workplace Strategy. By Trevor Clarke How to build a business case for flexible working and your ABW office. By Trevor Clarke The activity based working checklist for CxOs and IT leaders. By Trevor Clarke innovative ideas for your flexible working office. By Trevor Clarke Work 3.0: Strategies for a High Performance Workplace. By TRA Work 3.0: High Performance Customer Engagement. By TRA Bankwest Activity Based Working Case Study. By Trevor Clarke Aon Australia Virtual Desktop Infrastructure Case Study. By Trevor Clarke Fortescue Metals Group Virtual Desktop Infrastructure Case Study. By Trevor Clarke The Australian Future of Work CxO, IT and Sales Survey. By Trevor Clarke Mobility in 2015: Australia. By Trevor Clarke Activity Based Working: The Future of Work in Australia. By Trevor Clarke The Australian Government Mobility Survey. By Trevor Clarke and Tim Dillon The Impact of Activity Based Working on Office Printing and Future Opportunities, By Trevor Clarke COPYRIGHT AND QUOTATION POLICY The Tech Research Asia name and published materials are subject to trademark and copyright protection, regardless of source. The content contained within this document may not be reproduced without prior written approval from Tech Research Asia for any activities that involve audiences that are external to the organisation that has purchased this document. Use of this research and content for an organisation s internal purposes is acceptable given appropriate attribution to Tech Research Asia. For further information on acquiring rights to use Tech Research Asia research and content please contact us via our website or directly. We welcome any interest in using Tech Research Asia research, quotes and content for go-to-market collateral, internal and external presentations, press releases, business case or policy development and other requirements. DISCLAIMER You accept all risks and responsibility for losses, damages, costs and other consequences resulting directly or indirectly from using this research document and any information or material available from it. To the maximum permitted by law, Tech Research Asia excludes all liability to any person arising directly or indirectly from using this research and content and any information or material available from it. This report is provided for information purposes only. It is not a complete analysis of every material fact respecting any technology, company, industry, security or investment. Opinions expressed are subject to change without notice. Statements of fact have been obtained from sources considered reliable but no representation is made by Tech Research Asia or any of its affiliates as to their completeness or accuracy. This report may not be reproduced, distributed or published by any recipient for any purpose.