Masters of the virtual world

Financially strapped NW200 vendors find cost-cutting nirvana with large-scale telework deployments.

Nearly one-fifth of the employed adult U.S. workforce, or 24.1 million people, worked from home at least one day a month in 2004, according to a recent survey by business researcher The Dieringer Research Group. That's an increase of 2.6% over 2003.

Clearly, teleworking isn't just for loners in fuzzy slippers anymore. As enabling technologies such as the Internet, wireless, VoIP and broadband to the home proliferate, so does the number of employees who choose to work virtually. In fact, prominent top executives at Network World 200 companies say they rarely spend much time in a corporate facility. Instead, they work from wherever they are - whether at home, the airport, a customer site or an overseas field office.

Work is what you do, not where you are, they say. Virtual work programs cut costs (especially in office real estate), improve the bottom line, help attract and retain topflight staff, enhance productivity and improve overall competitiveness, they add.

AT&T (No. 10), Sun (No. 20) and Nortel (absent from this year's list because of delayed financial reporting) are virtual-work pioneers. Practicing what they preach, they use such deployments to cut costs in the face of tough financial times. Their virtual work programs range from the sci-fi to the traditional.

Sun: Working anytime, anywhere - on anything

When Sun CIO Bill Vass sets out from the company's headquarters in Menlo Park, Calif., to visit other Sun sites across the country, he packs his entire desktop into his wallet.

This is because he uses an ultra-thin client computer, called a Sun Ray , that runs off of his corporate badge, which is about the size and shape of a credit card.

Sun Rays are diskless, operating-system-less laptop-like devices that can be used with any type of monitor, keyboard or mouse. When a user inserts his corporate ID badge into the Sun Ray, the device communicates to Sun Ray servers at headquarters. Those servers manage all the data and applications, including VoIP soft phones, and simply deliver the GUI to the remote user. The badge contains a small Java chip that handles authentication and encryption.

"At work, I insert my badge into any Sun Ray around, and within 3 seconds, my desktop pops up," Vass says. "When I'm finished at work, I can remove my badge, go home and insert it in my home Sun Ray. Within 3 seconds, my desktop, which is encrypted with the certificate on my badge, pops up exactly as I left it at work, even with my cursor still blinking on the presentation or the e-mail I was working on."

The result is a mobile workforce that is far more secure, and easier to support and administer than traditional laptop-wielders. The Sun Rays cost just $200 apiece and require the same amount of technical support as a typical TV, meaning zero, Vass says.

"We save $15 million a year in administrative costs alone," Vass says, adding that the Sun Rays, which use only 11 watts of power, also save the company $2.8 million in power costs. The company garners another $6.5 million a year by not having to refresh its desktops. "Plus, it's a tremendous leap in security," he says. Remote workers can't become infected with worms or viruses and pass them onto the corporate network, because the Sun Rays have no operating system to infiltrate, he says.

As many as 17,000 of Sun's 33,000 employees work virtually in some capacity, and because any employee can work on any Sun Ray, cubicles at headquarters and other sites are virtual, as well, divvied up on a first-come, first-served basis. "It's a lot like parking - if you get in early, you get your favorite space. If not, you get what's left," Vass says. (Even Sun President Jonathan Schwartz has no permanent office space.)

The setup lets Sun designate 1.5 people per office, a move that saves $68.9 million a year in real estate costs, Vass says.

Also, as part of this telework program, internally called iWork, Sun offers "edge services." Any employee can log on to Sun's intranet portal via any device - be it a Windows PC, Macintosh, Palm Pilot, Symbian phone, Linux desktop or Solaris desktop. All the employee needs is a user name and password. The portal senses the client device and delivers enough features and functions so the employee can get most work done, Vass says.

"For example, I had parent-teacher conferences at my kids' school recently, and while I was waiting for a teacher, I walked over to a Mac that was in the waiting room and logged in and started working, doing e-mail, looking at a presentation and checking my expense report," Vass says. "With edge services, I could have done all that on my cell phone. But I'd rather use the bigger screen on the Mac, and it was there. It really lets you work anywhere and use anything."

This all results in increased productivity, as surveyed teleworkers report that they are productive for three hours more per day and give back 60% of their commute time to the company. And Sun's iWorkers are happy with the trade-off. In fact, "73% of worldwide iWorkers said they were very satisfied and really liked their jobs working in this environment, and 80% of U.S. workers said they were very satisfied," Vass says. "That compares with 25% of the American public."

Nortel: Flexible mobility

At Nortel, the key to successful virtual work lies in one word: flexibility.

"We're a global company, so we looked at telework as a way to operate more flexibly with respect to time zones, while allowing our employees a level of flexibility in their work and personal lives," says Nortel CIO Albert Hitchcock, speaking on a conference call from his home office in London.

Albert Hitchcock

Today, Nortel reaps huge benefits from its decade-old virtual work program. Annually, the company saves $22 million in real estate costs and $18 million in phone charges for teleworkers who use VoIP. The program also chalks up a 15% improvement in productivity annually, primarily because of increased flexibility.

"We're able to recruit people into roles where we may not have a geographical presence, enabling us to get the best people. And employees who work virtually tend to be more flexible in terms of taking evening conference calls and things like that," Hitchcock says. "In return, their managers are more than happy to give them the flexibility to pick up their kids from school in the middle of the day."

Fully 65% of Nortel's workforce works virtually in some capacity, and 8% are full-time teleworkers. The company equips all its employees with a wireless laptop configured with the Nortel Contivity VPN client . This provides IPSec authentication, encryption and protected application access for both voice and data to the corporate network. Each laptop also is configured with Nortel's Multimedia Communications Server VoIP software for voice and video calls, find-me, instant messaging, videoconferencing and a variety of collaboration tools. With the laptop, employees can connect to Nortel's internal network via dial-up, broadband, 3G wireless or Wi-Fi - from anywhere in the world.

"It's common now for employees to work at a hotel, on a customer premises or in a Starbucks café," Hitchcock says. "Essentially, they can work as if they're sitting at a desk in a Nortel facility, so it really makes no difference where they are."

In the future, Nortel is looking for the program to reap even greater savings in real estate costs.

"On average, 40% of our offices are unoccupied, largely because of this telework technology and the flexibility we're giving our employees," Hitchcock says. So he says Nortel plans to revamp offices so that they revolve around shared spaces and conference rooms, with private cubicles assigned in a hoteling fashion.

"When they get together, teleworkers are looking to collaborate in shared spaces. So why have all these empty cubicles? We're working closely with our real estate organization to further consolidate space," he says.

Nortel also plans to continue using wireless technologies to achieve its virtual goals. Already a big Wi-Fi proponent, Nortel has installed more than 1,000 wireless LAN access points within its corporate buildings so employees can work anywhere on a Nortel site without losing network connectivity. Now it's investing in WiMAX 802.16 and Code Division Multiple Access Release A , both of which are designed to provide broadband-level wireless access.

"In the very near future, we'll have a constantly connected broadband world, and clearly, we want to take advantage of that from an overall employee mobility and productivity standpoint," Hitchcock says.

AT&T: The virtual office

Productivity gains are the sweetest result of AT&T's 12-year-old virtual work program, says Joseph Roitz, who works full time as telework director for the company from his home office near Little Rock, Ark. On average, he says, AT&T telecommuters report one more productive hour per day than their non-teleworking counterparts - to the tune of $150 million in increased productivity per year.

"Our teleworkers say they are interrupted less frequently, they're better able to manage their time and they're better able to concentrate. So not only do they have more hours in a day, but we also get more done per hour," says Roitz, adding that he expects the telework program to continue under SBC, although he says planning for that hasn't begun because the sale won't close for another year or two.

Virtual work at AT&T is the norm, not the exception, Roitz says. As many as 90% of the company's managers work virtually in some capacity, with 30% of that total working full time from a virtual office, 40% splitting their time between work and home, and another 20% telecommuting only once or twice per year.

Roitz himself has worked from a virtual office for almost nine years. He was working in AT&T's Atlanta office when his wife was offered a lucrative position in Dallas. Rather than quitting his position at AT&T to make the move, Roitz became a full-time virtual worker.

"It was a real win-win for my boss and for me. He didn't have to bring in somebody new . . . and I was able to continue what I was doing from a different location," he says.

AT&T provides a virtual worker with home-office equipment, including a wireless laptop configured with its CallVantage VoIP software, printer, wireless router and cable modem. Users can connect to the corporate network via a VPN connection from all over the globe.

"But we don't provision a home office until someone has given up dedicated real estate in an AT&T building. We don't want to pay for duplicate infrastructure," Roitz says.

That telework policy helps AT&T save upwards of $30 million in real estate costs annually, he adds.

AT&T also stipulates that virtual work is no substitute for childcare. "You can't do two full-time jobs, so that's one of our rules. You need childcare in place first," he says.

But beyond that, each virtual worker's time is his own. And importantly, he says AT&T managers are adept at managing remotely and evaluating employees purely on results, not face time. "We find that the manager who can't manage remotely is not going to make it in the global-knowledge economy," Roitz says.

Many of AT&T's virtual workers see the program as a career-enhancer. "In the office, you're surrounded every day by the same people and that becomes your universe. But teleworkers have a much broader horizon - they can work just as easily with someone across the globe as in the same city," Roitz says. "It actually makes them more visible."



Program: Internally called iWork (not to be confused with Apple’s iWork trademark)

Primary equipment: Sun Ray thin clients

Percentage of employees who participate: Nearly 50% of Sun’s 33,000 employees worldwide.

Annual savings: $15 million in administrative costs, $2.8 million in power costs, $6.5 million on desktop updates and $68.9 million in reduced real estate expenditures.

Productivity gains: Teleworkers on average work three more hours per day and give back 60% of their commute time to Sun.


Program: Comprehensive mobility

Primary equipment: Laptops equipped with VoIP software

Percentage of employees who participate: 65% take regular advantage;

8% telework full time.

Annual savings: $18 million in phone costs via VoIP; $22 million in real estate costs.

Productivity gains: Average teleworker productivity is 15% higher.


Program: The virtual office

Primary equipment: Laptop or traditional desktop PC with VoIP software

Percentage of employees who participate: 90% of managers, with 30% full-time, 40% between one and five days per week, and 20% once or twice per year.

Annual savings: $30 million in reduced real estate costs.

Productivity gains: $150 million annually in extra hours of productive work from teleworkers.

Copyright © 2005 IDG Communications, Inc.

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