Past Summit: Dallas 2009 - Monday Daily Reports

8:45 a.m.

Talent retention needs ruled as the number one factor influencing AWS prior to the economic downturn, but as new survey data presented at the Dallas Global Summit Opening General showed, it's now more about responding to intensified cost cutting pressures.

Katherine Randolph, Director of Unified Communications for Microsoft Corporation, framed the shift from effectivenss to efficiency around two key elements of corporate real estate (CRE) management:
• Optimizing space
• Portfolio reduction

CoreNet Global is partnering with Microsoft on a series of surveys around the world to assess AWS adoption rates and best practices. Now, the focus is being placed more on quantifying the level of cost-cutting associated with more efficient workplace practices. These include, but are not limited to, densification, space utilization and unassigned space.

The latest data are based on responses from more than 300 CRE executives globally in conjunction with the Dallas Global Summit. Previous, related surveys probed the views of Global Summit attendees in Macau, Asia (March 2009), and Orlando FL (November 2008).

The new data demonstrated that, like leasing strategies, AWS have become an important economic hedge in the management of large, multinational real estate portfolios.

One immediate, perhaps temporary, outcome is that benefits ususally associated with so-called effective outcomes like productivity and talent have become secondary to cost management and the response to other immediate economic pressures.

But as Randolph pointed out, "AWS can deliver both (effectiveness and efficiency benefits). It's a 'virtuous circle' of cost management now converging with talent or productivity enhancements."

What's driving the latest trend, in the sense of the economic climate? Three key operating expense areas are at the heart of the issue currently, Randolph outlined:
• Big pressure on travel cuts or freezes
• More pronounced salary freezes, or cuts in some cases
• Widespread hiring freezes and staff reductions or layoffs

One recent result is that companies responding to the survey have already saved 20% on travel costs by stressing virtual collaboration instead of travel. It's also a sign of an increasingly dispersed workforce globally, regardless of the economy.

It has resulted in a very substantial 30% decrease in space, along with lower telefony costs because of more advanced and lower-cost technologies that promote teamwork even when people aren't located together. Still, the cost of technology for companies just now embarking on AWS versus others that started them before, is considered a major issue, according to Randolph.

AWS are becoming more ubiquitous in another sense, Randolph emphasized: open or flexible space now represents about 43% of the total corporate office footprint, as the survey indicated. By 2014, 60% of corporate office floorplans will be open.

These are among the reasons why CRE departments have realized that effective internal partnerships with IT are more important than ever.

"Technology's influence on AWS is a big factor," she continued, "especially if mobility support was already there to begin with."

As for working with HR, CRE executives are making some inroads but internal partnerships with HR on AWS issues like change management or internal client relations is still a work in progress.

Whether it's technology or human resources, the new survey results also reflect CRE's growing leadership role inside the corporate environment on AWS needs. In fact, there was a 15% increase over the November 2008 results from Orlando (60%) showing that CRE has assumed the leadership role for AWS inside major corporations.

As the previous two related surveys also showed, the AWS adoption rate is going global. While it was already fairly advanced in North America and Europe, it's gaining traction in Asia and Australia too. Global AWS roll-outs are becoming more common, with 43% of respondents opting for a global framework that allows for local customization over totally regional latitude or totally globalized standardization.

How impactful can AWS be for big companies? Randolph closed out her presentation recalling that Sprint, one of Microsoft's AWS clients, has so far netted $90-million in savings through its long-running 'AnyTime, AnyWhere' initiative.

10:30 a.m. – 12:00 p.m.

The idea of alternative workplace strategies (AWS), or related practices like mobility and telecommuting, seemed anathema to major financial institutions even a few short years ago. But as today's Dallas Global Summit panel proved, you don't have to be a technology company or telecom to make this type of flexibility work for the enterprise - or its employees, for that matter.

Much like Bank of America or Capital One, CitiGroup plunged head-long into AWS before the current recession set in. Whereas the former two launched their workplace transformations a bit earlier than CitiGroup, the latter also viewed AWS as a way to increase effectiveness in areas like competitive advantage or employee satisfaction. Following the introduction of AWS in December 2007, however, Citi was well positioned to capitalize on the cost savings aspects that have become more pronounced in recent months with the recession. (See related Dallas Daily Report on our latest Microsoft-AWS survey findings.)

In partnership with Deloitte, Citi first intended to shed 45,000 seats by 2011, but as the panel members pointed out, the downturn has accelerated the program implementation, reinforcing the importance of rapid deployment of mobility strategies in times of increased economic pressure.

So far, Citi has realized about five-million square feet of space savings, according to Edward L. Ciffone, SVP for CitiGroup. "You have to create a business case for AWS," he emphasized.

Another big factor is to listen to employees (Citi has more than 100,000 people on its payroll worldwide.) "The voice of the employee," Ciffone advised, "is crucial ... we (in workplace) have to think outside the box to provide the right solutions for our people." It starts with the ability to understand employees' needs and how to best support them, he added.

Michelle Greenstreet of CitiGroup's HR department joined Ciffone's AWS team on a dedicated basis to help ensure the program's early success. She echoed the point about the "bottom-up" influence that workers often have on outcomes. "Top-down support is important," Greenstreet observed, "but it's more of a grass-roots impact that makes it really work." The internal partnership with HR is noteworthy, because in many other enterprise settings, HR usually lags behind corporate real estate in leading AWS issues like change management.

The considerable cost savings realized so far have "come from corporate real estate, not from the IT or HR side," insisted GaganDeep Singh, SLCR, Deloitte Consulting Senior Manager. "Mobility savings are higher than even space design savings," he added as a reference to the strength that AWS practices convey over AWS environments.

The panel outlined "a confluence of different factors," as panel moderator Keith Perske, President of Group5 Consulting, explained it.

Today, that convergence is formalized inside CitiGroup's HR database through the introduction of four new "worker types" around which the entire workplace and work practices philosophy is shaped. Citi classifies today's workers in one of these four ways:
• Traveler
• Teamer
• Independent
• Resident

There's a corresponding high-level space solution assigned to each type of worker that contributes to savings and enables cost estimates, plus allowing for the program to work on the global level. Of the many financial industry AWS cases now available, Citi's possibly carries the broadest geography because it's likely one of the more globalized banks today.

The bottom line, as highlighted by Greenstreet: "Condensing real estate in our very high-cost locations ... that's what we hope to achieve."