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Presented byAnkur Oj

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Introduction Trend in ICT application Effects of ICT on Office Space Allocation &

Work Practices Survey Sample & Data Collection Mailed Questionnaire Results

Logit Model and Other Statistical Tests Case studies by interview Conclusion

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ICT has frequently been thought to be thedriving force behind todays economy.

It is generally felt that there is a directrelationship between investment in ICT and

productivity improvements, which include better customer service greater product variety shorter response time enhanced product quality; and better customization of products and services.

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Information & CommunicationTechnology (ICT) is used to refer toinfrastructure and product developmentthat facilitate the collecting, storing andanalysis of information that may betransmitted electronically

It includes equipment like telephones,communication lines used to enhancecommunication between employers andemployees, businesses and customers,and business and business acrossphysical boundaries

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Government has been actively encouraging firmsto upgrade their connectivity and productivity viaits agencies like IDA, EDB, PSB

Schemes offered include: Local Enterprise Computerisation Programme

(LECP) by IDA (assist SME to achieve highercompetitiveness through effective use of IT)

Jumpstart Programme by PSB (assisting SME to

adopt E-commerce) IDAs Information & Communication TechnologyICT usage survey 1999indicates a high ICTadoption rates among businesses in Singapore

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Computer and information technologies are expected to bringabout the third wave of revolution to the production and

social interactions in the new economy How would these new ways of production and customer-

manufacturer relationships impact on the demand for officespace?

Would this IT revolution lead to a major structural change inthe office space demand?

How would the location choice, spatial configuration andfunctional connectivity of the physical office space be changedto meet the demand of the IT-driven businesses?

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In Singapore, IT-ready office space commands amarket premium over obsolete and IT-unfriendlyoffice buildings

A trend of facelift to existing office buildings wheredevelopers or owners spend million of dollars toprovide broadband connection and raise floorfacility to entice tenants in IT related business

Singapore Land Tower located in the prime RafflesPlace business district is one the building that iscurrently undergoing million dollars upgrading toimprove its facility and functionality

Hot-desking, home-office and tele-working is

another emerging trend in the office market, These will significantly transform the way work is

carried out and lead to a reduction in demand forphysical office space in the long run

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How would active integration of ICT into thework place help companies to reduce thephysical space requirement?

Arent the companies space decisionsdependent on the prevailing market rents?

There are no easy answers at this stage to thequestions.

However, the market driven and ICT inducedoffice space demand shifts can be conceptuallyexplained ceteris paribus using the familiardemand function as shown in Figure 1.

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Quantity of space

Market

Rent

AggregateDemand

Curves

D

D

D

D

Original

Market Clearing

Condition

QQ

R

R

b

a

a = demand shift caused by rental increase

b = structural shift in demand curve brought aboutby the ICT revolution Source: Dr Sing Tien Foo

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Revolutionarylevels

Evolutionary

levels

Range of potential benefits

Degre

eofbu

sines s

transforma ti

on

High

HighLow

Low

Level 5: Business scope redefinitionLevel 5: Business scope redefinition

Level 3: Business process redesignLevel 3: Business process redesign

Level 4: Business network redesignLevel 4: Business network redesign

Level 2: Internal integrationLevel 2: Internal integration

Level 1: Localized exploitationLevel 1: Localized exploitation

5 Levels of ICT-Induced Firm Operation5 Levels of ICT-Induced Firm Operation

EvolutionEvolution

Source: Venkatraman, 1991

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ICT impacts on office space demand would take placein three broad areas: business function and configuration, staffing structure and location choice.

More information and transaction via the virtualspace rather than the physical space (e.g. internetbanking, electronic stock brokerage, NET transaction)

Flatter organization structure. Ratio of clerical staff to administrative and executive

staff is likely to reduce Productivity of the staff increases as a result of office

automation. Span of control of managerial staff ICT-induced decentralization of office space for

companies that operate largely over the virtual

space.

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Mailed Questionnaire Survey pilot phase In 4th quarter 1999 URA statistics, 41.64% of the total of

5.88 million square meters of office space wereconcentrated in downtown core.

Sample of tenants is restricted to CBD areas 500 tenants in offices within CBD areas ar randomly

selected

Response rate was poor at 9% (46 responses)

Distribution of respondents profile (Figure 1)

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28%

26%

28%

11%7%

Real Estate, Finance & Insurance

Business, Retail, Trading & Advertising

Media, telecommunication & IT

Trasport, Industrial Biz, & Legal

Others

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73%

9%

7%11%

Below 50005001- 1000010001 - 15000above 15000

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34.815.2

19.6

21.72.2

73.94.3

58.715.2

50

41.34.3

19.613

4.352.2

2.237

065.2

1330.4

067.4

0 20 40 60 80

1

2

3

4

5

67

8

9

10

11

12

Not Important

Very Important

Desktop

Laptop

Printer

Mobile Phone

Fax Machine

Voice Mail

Video Conferencing

Intranet/LAN

Internet/Server

Email

Electronic Data Sharing

Customized/Task Oriented

Software

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32.6 32.6 34.8

54.3 32.6 13

78.3 19.6 2.2

10.9 6.5 82.6

67.4 19.6 13

71.7 19.6 8.7

65.2 26.1 8.7

67.4 13 19.6

0% 20% 40% 60% 80% 100%

1

2

3

4

5

6

7

8

No Change Reduce Increase

Quality of Space

Cost of Operation

Number of Meetings

Importance ofMeeting Place

Workers Productivity

Need to Meet-up

Employees time inOffice

Overall Space Reqd

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Shorten Data processtime (82.9%)

Reduce Number ofClerical Staff (58.5%)

Reduction in storage

space for document(56.1%) Increase Span of

control of MiddleManagement (51.2%)

No

11%

Yes

89%

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No

43%

Yes

57%

9

17

Does company

encourage work away?

No

Yes

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0%

10%

20%

30%

40%

50%

60%

Amini

strati

ve

Marke

ting

Mana

gement

Other

s

Reasons againstworking awaypractice Lesser control (34.3%

Lack of trust (11.4%)

Nature of job site(80.0%)

Resistance fromemployees (2.8%)

Nature of

works that

will suitworking

away

practice

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0% 20% 40% 60% 80%

Respondent'sOffice

Customer's office

On-site

0% 20% 40% 60% 80% 100%

Email

Telephone

By mailIn Person

Means of Establishing Contacts with Customers

Usual Meeting Place

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70%39%

63%

22%

20%30%

46%

0% 20% 40% 60% 80%

Rent

Building size

Employee size

IT-readiness of building

Prestige of building

Nature of business

Location of building

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Factors affecting perceived space change infuture

Variable Coefficient Standard error Wald statistics Significance level

SECTOR-.259 .265 .956 .328

OFFSIZE -1.737 1.959 .786 .375

ICT.EXP 1.478 1.159 1.625 .202

MAINTNCE 1.638 1.078 2.308 .129

WEBPAGE -1.841 1.736 1.124 .289

NO.EMPLY .910 1.301 .489 .484

C.EMPLOY -1.518 1.756 .747 .387AT.WKAWY 5.997 3.050 3.867 .049

RENT.DRP 3.843 2.449 2.462 .117

PDTY.OFF -1.532 2.094 .535 .465

Constant -2.871 4.297 .447 .504

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Factors affecting actual office space changes

Variable Coefficient Standard error. Wald statistics Significance level

SECTOR .040 .131 .091 .763

OFFSIZE -.765 1.527 .251 .617

ICT.EXP -2.020 1.913 1.115 .291

MAINTNCE 1.584 1.102 2.065 .151

WEBPAGE -3.930 1.958 4.027 .045

NO.EMPLY -.495 1.093 .205 .650

C.EMPLOY 2.547 1.750 2.118 .146

AT.WKAWY 1.368 1.737 .621 .431

RENT.DRP 2.456 1.532 2.570 .109

PDTY.OFF -1.803 1.821 .981 .322

Constant -.011 3.440 .000 .997

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Business type Productivity Staff Strength Location Choice

Insurance Yes Less clerical Hot-desking in future

Non-profit traininginstitution

Marginal No impact No impact

Legal service Definitely Less clerical, MoreIT staff

Near courts, near clients

Dot.com Central theme Related staff Near client, no hot-desking

Property Consultants Yes Less clerical No hot-desking, face to faceimportant

Property Consultants Definitely Less clerical, MoreIT staff

Cant hot-desk, face to faceimportant

ManagementConsultants

Definitely Less clerical, moreconsultants

Near CBD, Office hoteling

Medical Suppliers Yes Less clerical, IT

outsourced

Outside CBD, face to face

important

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70 staff in Singapore office ICT increases efficiency & productivity of employee

and reduces manual and clerical-type tasks Minimizing operation cost in long-run Moved from Shaw Building to Centennial Towers space increased from 10,000 sf to 20,000 sf Reasons: expansion of business and prestige of the

Mariana Bay office location Wireless applications will have impact on work

practices, as staff are frequently not working fromtheir dests

Tele-conferencing & hot-desking is important

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The firm provides consulting services relatedmainly to business management and technology

500 staff in Singapore office Located in the Gateway Building 25% increase in space over the last 3-year due to

business expansion Adoption of office space conserving concepts like

office hoteling and hot-desking 80% of staff are professional consultants, and they

are apt to office hoteling worked mostly at theclients place

ICT expenditure 3% total operating expenses ICT increases productivity & revenue It reduces clerical staff, but increases IT personnel

to maintain the system

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Growing trends in ICT application in office Improved productivity via automation of selected operations

Impact of ICT on demand is not significant Small proportion of respondent experienced a reduction in

employee size with an increase ICT investment Physical meeting place and office space are still important Most respondents do not encourage employees to work

away away from office The logit models suggest that probability of office space

reduction is related to the increase adoption of new workpreactices

Availability of webpage may also be a factor affecting thedownsizing of office space

We will continue to see changes in the office space use andemerging of new office practices eg. Service office,telecenter, hot-desking etc.

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The end