Telecommuting at IBM Indiana - Case Study Example

? CONSULTANT’S REPORT TELECOMMUTING AT IBM INDIANA (The Case Study) Submitted Submitted By: Submitted On: INTRODUCTION Often referred to as the Big Blue, the IBM Company is renowned for its Services to Computing, Information Technology and consultations. Established in the year 1911, IBM has since then proven to be the best of its kind in providing services that no other counterpart could. The very famous MAINFRAME computer became the benchmark of the company. IBM has been famous for their work in their field of computing for years now. It was in the 19702 that the company enjoyed about 70% of the computer market share. The reputation that the company name was tagged with gave the company trusted reputation. Half of the company’s business volume was spread out worldwide. It was in the mid-1980s, however, that the company started to have problems. The profits of the company had started to plunge down. Analysts concluded that the reasons behind the downfall were not many but were strong enough to shaken an established company. They were: the bureaucratic and slow moving setup of the company, maintenance of old business strategies and reluctance to replace them with newer ones, incorrect assessment of business risks. As said by Ducker (1993), it is a business sin to sacrifice tomorrow’s opportunity on the altar of yesterday. This was precisely the reason why IBM got off-track its road to success. Though IBM did try to cope up with the growing trends of the market by introducing a PC in the market almost overnight after Apple introduced the first PC in the mid-1970s but they could actually never get out of the MAINFRAME mask that they had put on themselves. Then the time came when IBM was being administered by JOHN AKERS who was a career IBMer in the ear 1985. Since the downfall of the company had already begun several steps were being taken by the administered in order to downsize the company. A summary of the downsizing of the company can be viewed in the attached table. Table 1: The IBM Timeline from 1970 to 1994. YEARS PROGRESS AT IBM. 1970s IBM owns about 70% of the computer market share. 1980s IBM continues to grow but at a slower rate. 1985 Profit margins begin to slip. 1985 – 1993 Downsizing resulted in employee number moving from 405,000 to 300,000. 1987 – 1992 Stocks dropped from $176 to $ 49. 1991-1992 Unprecedented losses. 1994 Employee number decreases to 225,000. The administered however resigned in the year when despite all his efforts the company continued to lose stocks and suffered major losses in year 1992.Louis V. Gerstner then replaced the former head of the company. Further downsizing of employees was then consented upon by the management of the company. THE PROPOSAL The establishment of the company’s office in the state of Indiana was an evident example of the problem the company was facing overall. The Indiana office reduced its number of employees to about 30% in the year 1992. The General Manager Operation s for the State of Indiana was foreseeing another cut in the number of employees. This step was extremely unaffordable as any further cut in the number of employees could have resulted in the deletion of key essential employees of the company that were required to run it. This could have put the company into further trouble. An alternative idea was proposed by the then operations manager of IBM Indiana Office in the year 1993. He proposed that instead of reducing the number of personnel working at the organization furthermore the employees should be equipped with technological devices to assist them. This would in turn enable the employees to be able to work from home. The terminology commonly coined for such a task is Telecommuting. TELECOMMUTING While all the other offices of the IBM were trying their hands at downsizing the people at Indiana were eager to try something new. The first person to take up this change was none other than the executive Vice President of the Indiana Operations himself. It was decided that employees who spent more than half of their working day outside meeting their clients did not need dedicated office like the other employees who only did office work while staying within the office premises. It was proposed that for the former type of employees a general space would be made available that would house the generalized needs for them and would thus serve as a collective resource. The emptying of dedicated offices, on a larger scale, would in turn enable the entire set up to be shifted into smaller arenas. This would result in an overall reduction in maintenance cost which was often very large as it incorporated not only furniture costs but also included the costs of all the computer hardware that was setup into each office. Implementing Telecommuting The first few things needed for implementation included separate workstations for each one of the employees who had agreed to go with telecommuting. Each employee was provided with a separate workstation, a set of tow phone lines, complete software installations in the computer, cellular phone and a pager. Moreover, whatever office furniture could be transferred from their offices into their homes was done successfully. The telecommuting drive was accepted very heartily by the employees and before the year 1994 concluded above 20,000 IBM workers were telecommuting. It was then decided that this model of telecommuting would be followed by all the offices within the country. The cost cutting that resulted only after the first two years of telecommuting mounted up to about $ 45 million. Major share of these savings came because the Real Estate costs were cut in half. Workers thought of this mode of working as extremely feasible. This can be judged from the fact that even after the attainment of financial stability most of the employees of the company did not revert back to their company offices but rather preferred to stay at home and work. TELECOMMUTING AND EMPLOYEES Telecommuting proved to be mostly beneficial for the employees of the company. However, there were a few drawbacks associated with it as well. Benefits Employees who opted for telecommuting enjoyed a number of benefits. These were: Commuting Time Eliminated. No More following of Office Dress Code. Time could be given to home while still being at work. This specially benefitted those men who would barely give time to their kids. With telecommuting they were able to have meals with their kids. The baseline of telecommuting was the convenience that employees could dial into the office network from their homes anytime they wanted to. Connectivity with the office network just like it would be while being at the office personally was the actual key to the success of telecommuting. It was possible to check office e-mails, scroll through and update event planners, share and receive files, send printing jobs to office printers and al this only possible via the remote access to the office network. Fast and reliable connectivity was provided to the telecommuters in order to ensure the speed of their productivity. Thus, initially, ‘ISDN’ and then ADSL lines were used to fulfill the needs of connectivity. CONCERNS AND RECOMMENDATIONS Technological advancements are going on at a very rapid rate. Newer models of computing devices emerge very soon after their earlier version’s emergence. Since these changes are being reflected at both hardware and software levels, the maintenance and upgrading of the systems within the company’s network are a constant cost that the company would have to bear. Letting the employee make use of the office equipment at home brings out a new possibility. The family members of the employee may also use the office equipment for their own personal tasks. The depreciation and maintenance costs of the equipment may thus rise as a result. Profits of the company may get affected by the ever changing demands and requests of the customers. Since the customer’s will is usually unexpected, thus it may affect the company as a whole. Recommendations for the Company are that: Long Term Risk Evaluation The company has adopted a relatively platform of telecommuting. It is advised that Long Term Risk Assessment be executed by the managers of the company in order to chalk out future strategies and maintain cash inflow. This Risk Assessment should be accompanied by feasibility analysis and should be executed at regular intervals. It is preferable that third party vendors should be contacted for the proposed risk assessment. Moreover, the outcome of the risk assessment exercise and its recommendations should be followed strictly. Comprehensive Feasibility analysis study should be conducted about the telecommuting process. It would assess the feasibility of the process in four different paradigms. Namely the Economic, Operational, Technical and the Time Paradigm. The analytical report presented by the feasibility analysis exercise would tell whether the proposed changes being made in the company setup would prove to be fruitful or not. REFERENCES: New World Encyclopedia. Chart showing IBM’s revenue and net income history. Retrieved from http://www.newworldencyclopedia.org/entry/IBM Drucker, Peter F., (2005). The Five Deadly Business Sins. The Wall Street Journal Online. Retrieved from http://www.bmacewen.com/blog/pdf/WSJ.2005.11.29.DruckerFiveDeadlySins.pdf. O’Callaghan, T., (2010). Telecommuting, flex-time decrease work-life conflict. TIME Healthland: A healthy balance of mind, body and spirit. Retrieved from http://healthland.time.com/2010/06/03/telecommuting-flex-time-decrease-work-life-conflict/ Read More