Space Management Comes of Age

By Stephen M. Campbell

The real revolution in information technologies has been our unconscious extension of their underlying principles to the physical world.

Events in the Middle East dominate the news, a new administration is in the White House and the computing solution you bought last year is already obsolete. Could it be 1993? No, a quick check of those unused Y2K provisions confirms it's 2001, and the state of computing is still one of confusion. If you are having trouble recalling why, after thousands of dollars invested in current systems, the crux of your situation hasn't changed, you are not alone.

Early in the 1990's I completed the design and implementation of a space management system for the Johns Hopkins University School of Medicine. Since that time much has changed. The internal architecture of information technology within the University has shifted from a proprietary corporate wide-area network to shared utilization of the World-Wide Web. As these internal changes have been mirrored, and in most cases caused by, the information technology revolution occurring in the external marketplace. It might be interesting as well as instructive to review what has happened.

In 2001, the notion of the operating system solely governing communication among computing systems is sweetly naive. At the personal computer level, operating systems such as Microsoft Windows 2000 and Apple System X have indeed expanded the technical bag of tricks to improve processing and memory management. But as Bill Gates maintained amid the federal government's allegations of unfair business practice, the critical, inseparable element of today's operating system is its link to the Web.

It's the Internet, Stupid!

In recorded history, no technology has ever been adopted as quickly or as widely as the Web. Over 500 million people are now connected to the Web. The Web represents a ubiquitous global network of desktop computers, data centers and network devices. The most important element of an operating system within a desktop computer is now the Web browser, which acts as a universal client for network applications. The browser links to the Web using standard communication protocols like TCP/IP. The desktop computer reaches the Web through one or more servers. Servers, computers dedicated to Web communications, typically run completely different operating systems such as Unix or Microsoft NT. In turn they may be specialized to deliver Web applications (e.g. using a ColdFusion programming environment) or static sites (e.g. using HTTP ).

Aided by the participation of your local cable company, the growth of the fiber-optic cable infrastructure that forms the backbone of the Web has been phenomenal. With the growing availability of cable modems, broadband access to the desktop is fast becoming a reality at your home, not just your workplace. The data warehouse, a windowless building that houses a football field of humming Web servers, has become a growth sector of the construction industry. And the unrelenting Moore's Law (i.e. computers double in processing power and halve in cost every twelve months) continues to drive the cost of computing and communications components ever downward, further spurring industry growth.

Nothing Personal, Just Business

As the computing world redefined the 'paradigm' (i.e. a 90's buzzword for model) of its existence, the business world took note. Thanks to management consultant Michael Hammer and others, the business world began to reinvent the conduct of its work. Under the manifesto of 'reengineering', business began to redefine business activities, and in turn change the structure of the organization. In the place of a stand-alone functional unit like 'Purchasing', previously unaffiliated units were linked to carry out a business process called 'Order Fulfillment'. Like the stand-alone computer systems that preceded them, business units linked to perform concurrent and asynchronous processes through the formation of cross-functional and virtual teams.

Computing systems set both the ideological and physical framework for this business transformation. The expanded network infrastructure enables cheap, rapid communications to anyone, at anytime. The deceptively simple application known as 'e-mail' has forever changed our expectation of employee response time from days to minutes. Ever-shorter business cycles extend the computing industry concept of 'Moore's Law' to the ever-increasing demands of the investment community. The daily analyst report has supplanted the quarterly earnings report as the driver of a company's stock valuation. As the dot-coms now realize, the number of business cycles before a new business venture can demonstrate profitability is shrinking faster than the patience of investors.

Physical Graffiti

Once acceptance of a different way to conduct business became widespread, the nature of the physical workplace was soon to change. 'E-commerce', a term that didn't exist in 1993, recently enabled a peasant with a Web-enabled personal computer in rural southern China to create a global business. Using a web site to both advertise and receive orders, he organized local villagers to make canvas shoes that are shipped via FedEx to markets within the United States and Finland. In this case, where is the workplace - each villager's home, the peasant's web site, or the FedEx distribution channel?

In another trend, large downtown corporate office towers that traditionally house all of a corporation's business units are losing tenants to mid-rise suburban office parks ringing the city. With the availability of network communications, business units no longer need to be physically adjacent to one another, and instead can be dispersed to areas with reduced real estate costs. Once again, life imitates computing technology. The decoupling of the place of work from the process by which work is conducted is the core computing principle of distributed processing.

Space Oddity

Given the changes in business process and information technology, the role of space to support business activities in 2001 is quite different from how it was perceived in 1993. In the waning days of the 20th century, space within a corporately owned building was commonly viewed through the green text of an accounting computer monitor as a depreciable asset. To an 'old-industry' firm, assets are 'good' in that they reside on the right side of the balance sheet and add to the net worth of the company. The depreciation of these building assets is also 'good' in enabling a tax deduction to offset corporate profits. This became a primary justification for computer-based inventory applications that could more accurately track space to support accounting processes.

While the tax laws have not changed appreciably, the manner in which corporations view space has. As the measurement of microprocessor speeds ramped-up from mega- to giga-hertz, shorter business cycles have increased the rate of change in corporate space requirements. Responding quickly within a fluid business environment means a corporation must be nimble in its ability to rapidly change the size, type and location of its space holdings. Corporate mergers and layoffs led many firms to reduce the number of buildings owned. Leased facilities provide a means to minimize support space, which is now viewed as a 'bad' overhead cost. A leased building also serves as a flexible way to meet fluctuating space requirements. By utilizing a space inventory application to charge-back leasing costs to its functional units, a corporation can also discourage the growth of departmental empires that result in higher overall operating costs.

The type of space needed in the new business environment has also changed.

In traditional industries like insurance, sterile corridors leading to rows of isolated cubicles have given way to open 'neighborhoods' that encourage group identity and interaction. The formation of project teams to develop business solutions places a premium on flexible meeting areas that can be easily reconfigured. The concept of the 'universal plan' is one attempt to allow reassignment of staff by providing fully addressable phone, data and physical support at any point on a floor plate.

In non-traditional industries like software development, flexibility is only the starting point. The quality of the workplace as defined by its bold interior design, special amenities (e.g. game-rooms) and unique location is a key factor in the recruitment of scarce technology workers. In Baltimore, the 'digital harbor' initiative seeks to leverage the availability of former industrial buildings to house technology firms. The high ceilings, human scale and architectural character of these waterfront locations are a draw for young firms with a bohemian corporate culture.

Some companies further extend the trend toward maintaining a low space inventory to virtually requiring no space at all. Oracle provides computer consulting services through their associates working from home. Office space is maintained only for a core group of officers and at suburban conference sites to facilitate meetings with clients. E-tailers like Amazon.com eschew brick storefronts for an on-line web site presence. Product warehouse and customer support sites comprise the bulk of their physical space holdings. But as the recent collapse of E-toys and other virtual retailers demonstrate, despite minimal space costs a successful business must bring to market a useful product.

Even when the product is as intangible as 'knowledge', firms still need physical space.

Academic research centers like Johns Hopkins University need laboratory space to conduct the experiments that result in scientific advancements. Such space generates revenue through the recovery of the facilities and administrative costs associated with federal research grants. The headquarters of Human Genome Sciences, a private biotechnology firm, contains banks of robotic equipment that are used to dissect the code of DNA. With few employees, HGS must have highly specialized space in order to carry out its mission. The paradox of these examples is that the more virtual the product, the more costly is the space for necessarily specialized production facilities. Accordingly, the need to account for the quantity, quality and utilization of this space becomes ever more critical and complex.

The diversity of the business need to manage space holdings has spawned a range of computing applications.

Reflecting the decentralized nature of business today, most incorporate the Web as a channel to both maintain and report from a central database. Many provide the ability to port data to an associated corporate application such as a financial accounting program. Others offer a modular architecture with individual components that address a specific space management function. These functions include the procurement, planning, delivery and administration of corporate space.

Buy the Farm

If you've been in the market for a new home recently, you may have run across a new twist on the real estate listing service. On-line services such as Long & Foster's Virtual Tour allow a prospective buyer to browse available offerings without leaving the comfort of home. Going beyond earlier cryptic descriptions of "2 br w/ bath", these services use color photographs, video and "virtual bubbles" (i.e. iPIX 360-degree images), which allow the buyer to conduct self-directed tours of target properties. This type of real estate procurement service saves wear and tear on the agent's car and the buyer's peace of mind by avoiding countless hours in the search for the perfect house.

Regional commercial real estate firms are similarly using the Web to expand their services to serve national corporate clients. Fledgling web-based property listings have begun to break down the barriers of closely held information within the highly competitive commercial real estate industry.

Once suitable properties are located, space management systems can aid the prospective corporate tenant in their evaluation. Applications like Bentley's ActiveAsset Planner can provide insight into how alternative leased facilities compare - net to gross ratios, rentable vs. usable square footage and lineal feet of window perimeter for starters. Link this information to a spreadsheet of projected rent and operational cost data for each building, and you have a financial model that can sway even the stodgiest Chief Financial Officer to take on the local leasing agents.

Plan your Move

Once a company has settled upon a particular building it wishes to occupy, the company's upper management may ask: what is the most efficient and productive placement of personnel and support facilities within the physical plant? This brings up a quite different array of space management tasks. A database of the company's personnel keyed by space standard and department can serve as input to the system. Workstation standards may be applied to each floor plan in an effort to optimize a "universal plan" that can weather organizational change with a minimum of physical change.

This can be done in a graphical mode via traditional schematic space planning, or it can be done statistically using the dimensional characteristics of each floor as a constraint. Gaming techniques may be employed to see the effects of different departmental adjacencies within the building boundary. Again the concept of a spreadsheet linked to the graphical data becomes the preferred interface. Parametric programming techniques allow the business executive to modify workstation size and mix interactively and receive immediate feedback in the form of efficiency statistics while viewing the resulting workstation layout within the floor plan. With the organization's workforce carefully arranged like the counterweights of a Calder mobile, one might assume that the space management function is complete - but the fun is only beginning.

Deliver the Goods

With a workable space plan for a leased site in hand, the business Owner now turns to the design and construction professionals who can deliver the renovated space. The Owner seeks team-based collaboration to effect the swift and efficient delivery of his building renovation project. In assembling a project team the Owner seeks the "best-of-breed" professionals to participate in a given project. Given the multiplicity of design disciplines, it's not surprising that design consultants are geographically dispersed.

Increasingly the Web provides the communications link between these far-flung firms. The text of specifications, meeting minutes and requests-for-information can now pass between the Owner, Contractor and Designer via email over the Internet throughout the course of a building project. File attachments carry the numbers, graphics and schedules important to each team member. As this conduit of communication becomes more prevalent a need for structuring the information emerges. This can take the form of generic group management software such as Lotus Notes. More complex projects may employ a web site with security features to enable online approval of shop drawings and applications for payment.

The web site resides on a dedicated server with the storage capacity to serve as a central repository for all information related to the project. Underlying this ability is a document management application to scan, store and catalogue paper-based material from those participants who have not yet entered the digital age. The forms-based structure of the site enforces a consistent format of the data. In many ways, this kind of full-service project web site within the construction industry is the analog of a check-processing clearinghouse within the banking industry. Both enable business transactions among industry participants and convert paper documents to commonly accepted digital records.

Manage to Smile

With the renovation complete and the leased space occupied, the business Owner can now forget about space management, right? Not so fast. Now the corporate budget analyst wants to know how much to charge each business unit for the space it occupies. Area take-offs are now employed to yield the charge-back of leasing and operational costs. This is calculated for both the direct area used by each department and a prorated share of common space. The preferred output is a columnar report listing space and costs for each location or functional group. A graphic depiction of occupancy shaded by department is also helpful in convincing all concerned of the validity of the numbers.

In the case of certain institutions such as a research university, the use of space is also a generator of revenue. A component of a federal research grant reimburses the institution for a portion of the facilities and administrative cost of providing and maintaining its facility. The justification of usage is not only the functional activity occurring within the space (i.e. sponsored research) but the percentage of time spent by each researcher upon grant activity. The space management system in this case is called upon to draw from other databases within the institution as a source for determining functional room classification. This includes specifics about each grant award, time management information recorded for each researcher and grant expenses contained in payroll and accounting databases. Other businesses which treat space as a revenue generator include retail and hotel environments, each with unique needs for linkage to point-of-sale and reservation systems, respectively.

Management consulting firms like Accenture, whose associates spend the majority of their time at a client's site, may employ an officing concept known as 'hoteling'. Under this concept, the size of a leased central office space is less than needed to accommodate the total number of Accenture's employees. Associates who periodically need to use the central facility call the company to place a reservation for office space over a limited period of time, just like booking a hotel room. A Web-enabled software application like Archibus F/M Web Central can assign a workstation on a floor plan, allocate the address of phone and data ports and allow for reservation of shared resources such as conference facilities.

Integrated space management software firms seek differentiation of their product through an alphabet soup of acronyms including CAFM, ERP and CIRM. Whatever the moniker, the business community has a continuing need for computer-assisted management of its holdings throughout the cycle of procurement, planning, delivery and administration of corporate space. Web-based computing continues to provide both the infrastructure and the conceptual framework for how a business views its space. In leveraging the capability of the Web, space management applications will offer increasing customization to meet specific business needs. And in 2001, improving your business is what it's all about!

About the author: Stephen M. Campbell is Associate Vice President, Facilities Services, at Cornell University.

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©  Copyright 2007, The Construction Sciences Research Foundation, Inc.  Updated January 12, 2007.