Corporate Cloud: How Use of Office Space Really Is About to Change

Technology is already revolutionizing workers’ relationship to the office, and commercial real estate is going to need to balance the demands of IT and emerging technologies with the benefits of face-to-face interaction.

If Don Draper were transported from his early 1960s office to an early 2010s office, there’s a lot he wouldn’t recognize—laptops, cubicles, women in positions of authority—and yet the basic idea of the office would still be familiar. At an office, people gather in one place at the same time, using common resources to achieve corporate goals.

But what if TV’s favorite ad man traveled a little further in time, to the early 2020s? Would the whole notion of “office” be so radically different by then that he would be completely lost? Probably so, since the next decade will see radical changes facilitated by fast-paced technological advances in information storage and retrieval—think cloud—and by a rising generation that is comfortable with a more dispersed, less geographically focused way of doing their work.

As the workplace changes, corporate property managers whose function and livelihood is to oversee the workplace will need to adapt, and moreover help shape the future of the office to the benefit of companies and their workers. Exactly how technological change will reshape the role of corporate property manager is not yet clear, but by 2020 if not sooner, the job will probably include more elements previously associated with IT and human resources and less of the current role as managers of physical space, though that function will never go away completely.

“Technology is already revolutionizing workers’ relationship to the office, and corporate property managers need to be on top of that change,” observed Dan Ulbricht, a director of Hoffman Estates, Ill.-based Leopardo Cos. and president-elect of the Chicago chapter of CoreNet Global. “The office as a place of business is still important, but the question for corporate property managers will be how to utilize space so that it serves the needs of a rising generation of employees who understand and interact with space differently.”

Twenty years ago, during the heady early days of the Internet, one of the predictions futurologists posited was “the end of the office as we know it”: People were going to work at home most of the time, equipped with desktops, dialup modems and the ability to send electronic messages instantly. No such paradigm shift happened, partly because the technology was not really up to it but also because the pull of human interaction is too strong. Now, more sophisticated computers and communications might theoretically mean the end of a need for an office, but not as many prognosticators are saying the end of the office is actually at hand.

Instead, they foresee the transformation of the office. Even in 2012, the office is still the primary repository of the tools that workers need to do their jobs—mainly the information stored locally on hard drives and networked office servers. That won’t be the case for very much longer, however, because the age of the cloud is dawning as a worldwide phenomenon. “We are fast approaching a total redefinition of ‘workplace,’ ” said Mark Reynolds, executive general manager of strategy and growth for Australia Lend Lease in Sydney. “It will be defined by productivity, not area. The move to cloud computing will have more profound implications for the use of commercial space than most in corporate real estate contemplate at present.”

Such a cloud-based transformation of the workplace will require a steady upgrade in mobile computing power, a trend that is well underway. Exactly which devices will come out on top is hard to anticipate, considering the pace of change in mobile information technologies. Still, whichever brand or brands win the battle over the next few years, one thing is certain: The devices will be small and astonishingly powerful by 2020.

To get a sense of how the cloud could reconfigure offices, posited Reynolds, imagine an office landscape in which no one has or needs a desktop computer or even a laptop. Each worker would, in essence, carry his or her desktop around in the form of a handheld device that would be able to access everything relevant to the worker’s job wirelessly from remote servers (the cloud). The company might operate the servers itself or rent server space, but from the employees’ point of view, that would hardly matter.

The transition is already occurring, though not quite everyone is on board yet. In the fall of 2011, the Toronto-based office furniture specialist Teknion Corp. released the results of a survey of U.S. companies about their plans for the workplace. According to the survey, 46 percent of the respondents were already employing cloud computing, though 88 percent of the companies doing so said they were unsure about its future application.

Still, once a company turns to the cloud, there is no going back. “We’re moving away from desktops and laptops and other local machines, from the 40,000 or so that we currently have to maintain,” Matt Manzella, director of strategy and innovation services with Allstate Insurance Co., said in November at an event sponsored by the Chicago chapter of CoreNet Global. “Not all our applications have been moved into the cloud, but within two years, they will be.”

Strategies for the New Workplace

What will the cloud mean for corporate real estate? Real estate professionals will need to be more closely attuned to IT initiatives and work closely with IT managers to make sure connectivity is delivered unimpeded throughout the company’s workspace. In a cloud-based workplace, ironclad access to the cloud will be an absolute necessity from any space that the company maintains—as essential as electric lights or running water.

More fundamentally, corporate real estate professionals will have to make less physical space do more for the company, reconfiguring the space in ways that are only now beginning to take shape, according to the desires of employees that are only now being expressed. The Teknion survey revealed that many companies plan to abandon the traditional model of providing every employee with a dedicated workplace. A number of strategies will be used to achieve that end: Sixty-two percent of the respondents said they would accomplish this by making workspaces denser, 54 percent said they would do so by reducing the company’s square footage, and 46 percent said they would have employees work remotely—from home, satellite or client sites.

Employees are already anticipating these changes. Upon surveying 2,600 workers and IT professionals in 13 countries, Cisco Systems Inc. reported in 2010 that 66 percent want greater workplace flexibility and 60 percent believe that they don’t need to be in the office to be productive. Two-thirds also wanted their companies to allow them to access corporate networks, applications and information anywhere. But it will take a few more years to iron out the bugs: Forty-five percent of the IT respondents said they are not prepared policy and technology-wise to support a more borderless, mobile workforce. Not surprisingly, security is the top concern.

One way to facilitate the adoption of leading- edge technologies among employees, it turns out, is to allow them freedom to use their own choice of technologies to do their work. “Today, we’re becoming a BYOT, or bring-your-own-technology, society and companies are working to support the devices their employees are selecting,” noted Kay Sargent, Teknion vice president of architecture, design and workplace strategies.

The Importance of Face-to-Face

Yet employees do not want to give up working in the office altogether, and for good reason. A 2011 study by the ODM Group found that 85 percent of respondents believe face-to-face meetings are more likely to result in breakthrough thinking, and 82 percent believe meetings bring out the best in people. Whatever the technological advances in cloud-based, handheld technology, it will no more replace the need for face time than the previous generation of at-home desktops and dial-in modems did.

How do you provide a workspace that facilitates worker mobility and human interaction? One answer is emerging from Australia in the form of the activity-based workplace. Under ABW, office space is not designed primarily to support individual workers doing individual tasks but to facilitate specific activities undertaken by those workers in singles or small groups, as needed. An ABW-designed office might include workstations, formal and informal meeting rooms, quiet rooms or cafe-like spaces.

“ABWs focus on two key aspects—mobility and flexibility—and encourage individuals to move around,” wrote Stephanie McDonald of the Australia Property Council. “It gives employees the freedom to choose which type of work setting suits their task best.”

McDonald added, however, that the companies that have adopted ABW so far, such as Macquarie Bank and commercial real estate specialist GPT Group in Sydney, have been careful to include a period of change management. GPT, for instance, conducted internal focus groups on the challenges and offered employees training sessions and workshops.

The Australian experiment in workplace reconfiguring is still confined to a few buildings, but it bears watching for useful lessons that can be applied elsewhere. One way or another, corporate property managers will need to oversee the downsizing of physical space and the upgrading of remaining space to allow employees to use the full panoply of technology, all while getting some face time with each other. It’s going to be a tricky balancing act.