Presentation on theme: "Presentation to Association for Project Management (APM)"— Presentation transcript:
1 Presentation to Association for Project Management (APM) Impact of Information & Communication Technology (ICT) on Office Demand in Singapore CBDDr Sing Tien FooCentre for Real Estate StudiesDepartment of Real Estate, NUS9 April 2002
2 Outline of Presentation IntroductionTrend in ICT applicationEffects of ICT on Office Space Allocation & Work PracticesSurvey Sample & Data CollectionMailed Questionnaire ResultsLogit Model and Other Statistical TestsCase studies by interviewConclusion
3 IntroductionICT has frequently been thought to be the driving force behind today’s economy.It is generally felt that there is a direct relationship between investment in ICT and productivity improvements, which includebetter customer servicegreater product varietyshorter response timeenhanced product quality; andbetter customization of products and services.
4 What is ICT?Information & Communication Technology (ICT) is used to refer to infrastructure and product development that facilitate the collecting, storing and analysis of information that may be transmitted electronicallyIt includes equipment like telephones, communication lines used to enhance communication between employers and employees, businesses and customers, and business and business across physical boundaries
5 Growing ICT Adoption Rate in Singapore Government has been actively encouraging firms to upgrade their connectivity and productivity via its agencies like IDA, EDB, PSBSchemes offered include:Local Enterprise Computerisation Programme (LECP) by IDA (assist SME to achieve higher competitiveness through effective use of IT)Jumpstart Programme by PSB (assisting SME to adopt E-commerce)IDA’s “Information & Communication Technology ICT usage survey 1999”indicates a high ICT adoption rates among businesses in Singapore
6 What are the Implications of ICT for Office Operation and Space Usage? Computer and information technologies are expected to bring about “the third wave” of revolution to the production and social interactions in the new economyHow would these new ways of production and customer-manufacturer relationships impact on the demand for office space?Would this IT revolution lead to a major structural change in the office space demand?How would the location choice, spatial configuration and functional connectivity of the physical office space be changed to meet the demand of the IT-driven businesses?
7 ICT Trends & Investment in Singapore Office Buildings In Singapore, IT-ready office space commands a market premium over obsolete and IT-unfriendly office buildingsA trend of facelift to existing office buildings where developers or owners spend million of dollars to provide broadband connection and raise floor facility to entice tenants in IT related businessSingapore Land Tower located in the prime Raffles Place business district is one the building that is currently undergoing million dollars upgrading to improve its facility and functionalityHot-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 for physical office space in the long run
8 Relationships of ICT-readiness on Offices Space Use? How would active integration of ICT into the work place help companies to reduce the physical space requirement?Aren’t the companies’ space decisions dependent on the prevailing market rents?There are no easy answers at this stage to the questions.However, the market driven and ICT induced office space demand shifts can be conceptually explained ceteris paribus using the familiar demand function as shown in Figure 1.
9 Office Space Demand Quantity of space Market Rent Aggregate Demand CurvesDD’OriginalMarket ClearingConditionQQ’RR’baa = demand shift caused by rental increaseb = structural shift in demand curve brought about by the ICT revolutionSource: Dr Sing Tien Foo
10 5 Levels of ICT-Induced Firm Operation Evolution Range of potential benefitsDegree of business transformationHighLowLevel 5: Business scope redefinitionLevel 3: Business process redesignLevel 4: Business network redesignLevel 2: Internal integrationLevel 1: Localized exploitationRevolutionary levelsEvolutionary levelsSource: Venkatraman, 1991
11 Impact of ICT on Office Space Demand ICT impacts on office space demand would take place in three broad areas:business function and configuration,staffing structure andlocation choice.More information and transaction via the virtual space rather than the physical space (e.g. internet banking, electronic stock brokerage, NET transaction)Flatter organization structure.Ratio of clerical staff to administrative and executive staff is likely to reduceProductivity of the staff increases as a result of office automation.Span of control of managerial staffICT-induced decentralization of office space for companies that operate largely over the virtual space.
12 Research Design – Survey Sampling & Data Analysis Mailed Questionnaire Survey – pilot phaseIn 4th quarter 1999 URA statistics, 41.64% of the total of 5.88 million square meters of office space were concentrated in downtown core.Sample of tenants is restricted to CBD areas500 tenants in offices within CBD areas ar randomly selectedResponse rate was poor at 9% (46 responses)Distribution of respondents profile (Figure 1)
15 Importance of ICT Products? DesktopLaptopPrinterMobile PhoneFax MachineVoice MailVideo ConferencingIntranet/LANInternet/ServerElectronic Data SharingCustomized/Task Oriented Software
16 Impact of ICT on Office Operation? Quality of SpaceOverall Space Req’dEmployee’s time in OfficeNeed to Meet-upWorkers ProductivityImportance of Meeting PlaceNumber of MeetingsCost of Operation
17 How ICT Help to Improve Productivity? Shorten Data process time (82.9%)Reduce Number of Clerical Staff (58.5%)Reduction in storage space for document (56.1%)Increase Span of control of Middle Management (51.2%)
18 Does ICT Facilitate Working Away? Does company encourage work away?NoYes
19 ICT on working practices Reasons against working away practiceLesser control (34.3%Lack of trust (11.4%)Nature of job site (80.0%)Resistance from employees (2.8%)Nature of works that will suit “working away” practice
20 Customer Services & ICT Usual Meeting PlaceMeans of Establishing Contacts with Customers
22 Logit Model 1 Factors affecting perceived space change in future VariableCoefficientStandard errorWald statisticsSignificance levelSECTOR-.259.265.956.328OFFSIZE-1.7371.959.786.375ICT.EXP1.4781.1591.625.202MAINTNCE1.6381.0782.308.129WEBPAGE-1.8411.7361.124.289NO.EMPLY.9101.301.489.484C.EMPLOY-1.5181.756.747.387AT.WKAWY5.9973.0503.867.049RENT.DRP3.8432.4492.462.117PDTY.OFF-1.5322.094.535.465Constant-2.8714.297.447.504
23 Logit Model 2 Factors affecting actual office space changes Variable CoefficientStandard error.Wald statisticsSignificance levelSECTOR.040.131.091.763OFFSIZE-.7651.527.251.617ICT.EXP-2.0201.9131.115.291MAINTNCE1.5841.1022.065.151WEBPAGE-3.9301.9584.027.045NO.EMPLY-.4951.093.205.650C.EMPLOY2.5471.7502.118.146AT.WKAWY1.3681.737.621.431RENT.DRP2.4561.5322.570.109PDTY.OFF-1.8031.821.981.322Constant-.0113.440.000.997
24 Case Interviews – A Quick Glance Business typeProductivityStaff StrengthLocation ChoiceInsuranceYesLess clericalHot-desking in futureNon-profit training institutionMarginalNo impactLegal serviceDefinitelyLess clerical, More IT staffNear courts, near clientsDot.comCentral themeRelated staffNear client, no hot-deskingProperty ConsultantsNo hot-desking, face to face importantCant hot-desk, face to face importantManagement ConsultantsLess clerical, more consultantsNear CBD, Office hotelingMedical SuppliersLess clerical, IT outsourcedOutside CBD, face to face important
25 Case Study 1 – Allianz Insurance Management Asia Pacific 70 staff in Singapore officeICT increases efficiency & productivity of employee and reduces manual and clerical-type tasksMinimizing operation cost in long-runMoved from Shaw Building to Centennial Towers – space increased from 10,000 sf to 20,000 sfReasons: expansion of business and prestige of the Mariana Bay office locationWireless applications will have impact on work practices, as staff are frequently not working from their destsTele-conferencing & hot-desking is important
26 Case Study 2 – Accenture Consultants – Business services The firm provides consulting services related mainly to business management and technology500 staff in Singapore officeLocated in the Gateway Building25% increase in space over the last 3-year due to business expansionAdoption 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 the clients placeICT expenditure – 3% total operating expensesICT increases productivity & revenueIt reduces clerical staff, but increases IT personnel to maintain the system
27 Conclusion Growing trends in ICT application in office Improved productivity via automation of selected operationsImpact of ICT on demand is not significantSmall proportion of respondent experienced a reduction in employee size with an increase ICT investmentPhysical meeting place and office space are still importantMost respondents do not encourage employees to “work away” away from officeThe logit models suggest that probability of office space reduction is related to the increase adoption of new work preacticesAvailability of webpage may also be a factor affecting the downsizing of office spaceWe will continue to see changes in the office space use and emerging of new office practices eg. Service office, telecenter, hot-desking etc.
28 Thank you Questions & Comments The author wishes to thank Mr Don Toh for his research assistance.