When going south can be a positive move.
We live in a time where many corporate executives are determined to cost-cut themselves to greatness. The result is that most of us work in an environment where everyone knows the cost of everything and the value of nothing. It seems that in most companies a good accountant is more highly prized than an effective salesperson. Yet why is it that we talk about offshoring the IT department to India but that no one ever posits relocating the accounts department to Tasmania?
KPMG does a regular survey that highlights the cost differences in doing business in various cities around the world. After labour the next biggest location-sensitive expenditure in the non-manufacturing sector is lease costs, which vary between 4 and 14 percent. We have spent over a decade downsizing, rightsizing, restructuring and offshoring to bring labour costs down. How much labour fat is there left for business to trim? Why hasn't business started to pay attention to its leasing costs? Recent research from Savills Australia reveals that a Class A office building in the Sydney CBD costs an average of $525 per square metre. On the fringe of the Adelaide CBD the normal rates are $150 per square metre. That's a regular 250 percent saving in the operating budget.
I believe that mobile technologies have made such relocations feasible and desirable. In IDC's 1996 Forecast for Management, 36 percent of respondents reported their organizations deployed telecommuting. In 2005 that figure was over 80 percent. Similarly in 1996 18 percent had implemented videoconferencing and 57 percent had equipped field staff with mobile PCs. Today those figures are 57 percent and 83 percent respectively.
Moreover, the increasing roll-out of broadband communications across Australia provides organizations with even more powerful arguments for a distributed workforce. As of March this year 639 Telstra exchanges across Australia supported ADSL broadband. This provides an avenue for people across Australia to get fast access to central business systems. In addition, it facilitates voice over IP so users can have a telephone number that is location independent. Furthermore, videoconferencing over the Internet is progressively reaching satisfactory performance levels to support spontaneous cyber meetings.
Why should office-based workers like accountants be occupying real estate costing $525 a square metre in Sydney when they could be happily ensconced in Tasmania for a fraction of that price?
CIOs have spent the best part of the last 10 years under the financial microscope, focusing on governance, SLAs, KPIs and project milestones. We have outsourced and offshored. The IT department has done its part in corporate cost containment. Surely it is time for a rethink on how we can better harness the capabilities of technology. What's more I bet a lot of the people currently enduring long commutes and exorbitant house prices might even welcome a fresh start in a place as small and beautiful as Tasmania.
Peter Hind is a freelance consultant and commentator with nearly 25 years experience in the IT industry. He is co-author of The IT Manager's Survival Guide and ran the InTEP IS executive gatherings in Australia for over 10 years.
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