Finance people being what they are, it was not perhaps surprising that a CFO at a recent roundtable discussion using Cisco’s Telepresence facilities was calculating how much money was saved by connecting business leaders in five Asian cities via Telepresence, rather than holding a live face-to-face meeting.
After all, business-class tickets for nine CXOs flying to Singapore from Australia, Hong Kong and India could cost upwards of US$20,000 – and then you have to pay for hotels, meals, entertainment and other things. The cost of renting Cisco Telepresence rooms in Bangalore, Delhi, Hong Kong, Singapore and Sydney was considerably cheaper.
The meeting was held in April, when Shanghai was in the grip of worries over an avian flu epidemic and a new and fatal coronavirus, apparently capable of spreading from person to person, was emerging in Saudi Arabia.
The fact that business leaders can communicate electronically as if the other person is in the same room demonstrated that business-as-usual is possible without physical travel in case of an epidemic.
One thing that everyone in the roundtable agreed on was that the Asian workplace is changing as never before. The drivers are the advent of high-quality Telepresence technologies such as those developed by Cisco and, more so, enterprise-grade smartphones, tablets and other portable devices.
These make possible the expansion of the next-generation workplace’s real estate to the home, business centres, coffee houses, airport lounges and other locations – and to cyberspace.
“Our clients tell us that this is probably the biggest shift in workforce optimisation they’ve seen in 50 years,” said Carl Wiese, Cisco’s Vice President of Global Collaboration Sales. “By 2020, [experts] think a third of employees will not work at the office. They will be telecommuting, working at customer-partner sites, in a pure mobile environment and so on.”
That has implications on the way companies do business, not to say on the CFO and the finance function. The transition will not be inexpensive, and the board and other stakeholders will expect a good return on investment.
Cost is a tension point, said Jeffrey Obermayer, CFO at Hong Kong-based Johnson Electric Group, a global leader in motion subsystems. He anticipates his board asking: “I’m going to get my money out of this, right? Or else I’m going to hang you.”
Still, like everyone at the roundtable, Obermayer said his company recognises that the next-generation workplace is changing and Johnson Electric must change with it. We are “perhaps just a little further down the path,” the CFO said. The company uses video-conferencing to enable distributed teams in 20 countries work more effectively together.
“But virtual teams and virtual tools that [allow you to] distribute the work and become 24/7 – we do that more in a clumsy manner, not yet in a highly efficient manner,” he conceded. Telepresence is used more for interviewing and other types of one-on-one interaction, rather than collaborative working and customer-facing activities.
In Sydney, Eric Kwong, Director – Head of End User Services, Asia Pacific at Deutsche Bank’s Australian subsidiary, said that the bank is probably “two or three years down a very long journey.”
The twin towers in Frankfurt and the Hong Kong offices are being fitted out as a ‘DB New Workplace’ – pairing technology and corporate real estate to create a cohesive workplace environment that facilitates hot-desking, working from home and other forms of mobility.
Applied Materials, a global leader in providing manufacturing solutions for the semiconductor, flat panel display and solar photovoltaic industries, is perhaps ahead of everyone else. It implemented the ‘Applied Anywhere’ workplace environment some three years ago. “I think we are fairly mature in this process,” said Nagaraj Bhat, the company’s Senior Director – Global Infrastructure Services.
The future is now
Bhat’s description of what Applied Materials is doing gives a likely picture of what the next-generation workplace might look like. “We have more than 15% of the population in IT on ‘Applied Anywhere,’ which means they don’t get any assigned office,” he explained. “We have set up ‘hotel cubes,’ which are shared workspaces that people can use when they come to the office.”
In the office, Telepresence equipment connects people within and outside the country. “We’ve had about 800 Telepresence calls in the last three months among the 13 locations that we have, which is a pretty significant usage of the capability,” said Bhat. There is a lot of flexibility in Applied Anywhere. Some work one or two days in the office while others pretty much spend their entire week working from home.
Some people in transaction-oriented jobs work from home using their laptops. They are assigned shared workspaces when they come to the office, usually once a week or every two weeks. Someone else may be assigned to a customer location and so might be reporting to the office one or two days a week. They get a hot desk. “It all boils down to the way you segregate your workforce, who can be offered this versus who cannot be,” said Bhat.
Technology solutions make Applied Anywhere possible. In addition to video, the company has centralised the Computer-Aided Design (CAD) infrastructure so CAD engineers can work on their projects outside the office. “They’re able to show the CAD drawings to their counterparts in the US and go work through that,” said Bhat. “In the past, they had only option, which is they needed to stay late in the office.”
Talent and collaboration
Many of the participants drew a direct line from adopting remote working and flexible schedules as part of the next-generation office to better work-life balance and on to effective talent management.
“The whole basis is to have an engagement policy that allows us to attract and retain better people,” said NiQ Lai, CFO and Head of Talent Engagement at Hong Kong Broadband Network, Hong Kong’s largest fibre provider of broadband services with 1.4 million subscribers.
“If we can find executives who prefer our flexi-hours, no-meeting Fridays, early-off on weekends and so on, who are willing to work for less than what they would normally get paid in an investment bank, that’s how we arbitrage talent.”
HKBN looks at workplace innovation through the lens of talent management, not from what technology makes possible. As an example, Lai’s secretary wants to drop off her daughter to school in the morning, so the company designed a schedule where she comes to work at 9:30 am and leaves the office at 6:30 pm.
She can also opt to spend the first hour answering calls at home – HKBN’s integrated PABX system links to her iPhone. Other employees can choose to work from home because “shared cloud computing systems allow secure access to office files,” Lai added.
Lai tends to downplay technology, but for some in the group, it is important in attracting and retaining young talent. “We’re trying to tap the emerging Gen Y workforce right now, which is basically the Internet generation,” said Deutsche Bank’s Kwong.
“How we can make our workplace attractive to that Gen Y generation so we are seen as an employer of choice?” The answer includes access to business systems via iPhone and iPad, remote working and flexible environments.
The question of ROI
But isn’t building infrastructure around the next-generation office costly?
Cisco’s Wiese pointed out that there are various financing options for companies setting out on the journey to the next-generation workplace. What Cisco is finding out over the last 36 months or so, he reported, is that people want to move capex to opex.
“There are lots of ways to buy technology,” he said. “If you want to buy capex once and be done, that’s great. If you want to finance or buy pay-as-you-grow, there are multiple ways to get that done. There’s a lot of flexibility from this perspective.”
But ROI is not the end-all and be-all. At Cisco, said Wiese, “we believe that if we increase the number of interactions we have with clients, we increase the number of transactions. That’s what we’re going for at the end of the day, how to increase transactions, which means revenues for us.”
When Cisco’s own people had fully engaged with using the technology, “we reduced the sales cycle by about 15%,” Wiese said. “It was absolutely accelerating transactions.”
Remote working and mobility bring obvious ROI as well in terms of reducing office space, which is particularly significant in high-rent cities like New York, Hong Kong and Tokyo. At Deutsche Bank, said Kwong, the greater workplace flexibility and introduction of mobility solutions will reduce “the oversubscription of desks by around 20%-30%,” which will contribute to savings on rent and associated costs.
The lessons learned from the roundtable discussion are useful guideposts for Asian companies regardless of where they are in the journey towards the transformed workplace. Among them:
Roll things out judiciously. “I would take the middle path,” said Johnson Electric’s Obermayer. The company is not buying the technology ‘toys’ for everyone at this point because it doesn’t want to be spending on things that will not be used to the fullest. The priority is the distributed engineering teams that are working on common projects in about a dozen engineering sites around the world.
Through video-conferencing, remote working and other technology tools, the aim is to get engineers in India hand off projects to co-workers in Switzerland, who then hand it off to engineers in Michigan, who hand it back to the engineers in China. It is important to move deliberately not only because the toys might not be played with, but also because keeping track of all the tools can become overly complicated. “You have to be careful not to create a giant warranty and recall problem when you’re all done,” counsels Obermayer.
Involve the relevant stakeholders. In Applied Materials, the Applied Anywhere programme was driven primarily by the Facilities group. “They were the real beneficiaries of corporate real estate shrinkage and the associated cost benefits,” Bhat explained. “They then partnered with IT to come up with the solution. And then you needed HR’s blessing, because you want to make sure there is proper performance management and work package management.”
The same dynamic is at work in Deutsche Bank. “The key to the DB New Workplace is that is a joint partnership among Human Resources, Facilities and Technology, where we all contributed our particular specialisation to come up with a solution that meets the requirements of the staff and some goals from a real-estate perspective as well as from a technology perspective,” said Kwong.
Monitor and measure work performance and productivity. “Often, people think that they need to trust their employees, and that is good,” observed Bhat. “But we must also have this trust verified. There must be a way to manage remote employees from a performance management standpoint as well as work-package standpoint.”
The question of work performance recently came to the fore when Yahoo! told employees working remotely to return to the office because “speed and quality are often sacrificed when we work from home.” Roy Halliday, Chief Executive, Hong Kong, at Standard Life, recounted how the insurance company tried out remote working in the UK, and found that some people were not, in fact, working. The conclusion was that people cannot be trusted to work from home.
“I thought that was wrong,” Halliday said. “If we’re employing people we can’t trust, we shouldn’t be employing them. It’s not technology and working from home that’s the issue.”
The proper approach is to manage people’s output, said Henk ten Bos, CIO of Ageas, another insurance firm. “One of the things you need to do, in my opinion, is evaluate people using the quality of the output, not the amount of time that they spend at the office.”
Recognise the importance of culture in workplace transformation. “This is no longer a technology issue,” said Cisco’s Wiese. “We can deliver technology fairly easily. This is really more of a culture issue, in terms of people accepting having to work in a dispersed and dynamic environment.” Some older employees may be resistant to change, even as younger colleagues demand new ways of working.
Leading by example is important in this regard. “There will always be a generational gap,” said Halliday. “I think the key thing is that senior management recognises that they don’t understand [how to get to the next-generation workplace] and so they put in place people with appropriate skill sets to address it. It’s the ones that don’t even recognise that fact that is the issue.”
Finally, don’t get so dazzled by technology that you forget the human element. At Hong Kong Broadband, said Lai, “we actually have a technology shutdown. We have a policy of no emails over the weekends and holidays. Hopefully that makes us more productive Monday to Friday because we have a full weekend to recover.”
And while reduced travel budgets make face-to-face interaction less frequent, companies should not forget that physical contact is still necessary to form relationships, build up team spirit and foster collaboration and innovation. “You can’t beat that,” said Deutsche Bank’s Kwong, who likes going to the bar with colleagues. “You can’t have virtual beer.”
About the Author
Cesar Bacani is Editor-in-Chief of CFO Innovation. This article is based on a forthcoming white paper that documents the insights of 14 business leaders in a roundtable discussion sponsored by Cisco and presented by CFO Innovation Asia, Enterprise Innovation and Networks Asia.