Telecommuting @IBM-IndianaCase Analysis IS 628 – Computer Based Information SystemsSpring 2015

BY ELFEGO CRUZ AND DANIEL BECERRA

History

Financial Situation: Expenses

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 $-

$2,000 $4,000 $6,000 $8,000

$10,000 $12,000 $14,000 $16,000 $18,000

IBM Historical Oper Inc & Its 2-Period Moving Average Trend Line

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

$(8,000)

$(6,000)

$(4,000)

$(2,000)

$-

$2,000

$4,000

$6,000

$8,000

IBM Historical NI & Its 2-Period Moving Av-erage Trend Line

• 1985-1993: John Akers, IBM’s CEO, downsized the company from 405,000 to around 300,000 employees worldwide.

• 1993: New CEO, Louis V. Gerstner, targeted IBM’s worldwide employment to be 225,000 by the end of 1994.

• 1992: Indiana reduced its head-count by about 30%

• 1993: Indiana was expected to reduce its head count by another 30%

Cost Saving Strategy

Cost Saving Strategy: Telecommuting

Employees who spend most of their time with customers and worked in their offices only 30-40 percentOf the time were to relocate their building-office to an in home office

Provide employees with the same working tools: hardware and software

Same desktop PCs from the building-office were moved to employee’ homes

Same software were moved within the desktop PCs

Same office furniture: desk, chair, and a two or four drawer filing cabinet

Employees could take a cash allowance for equipment but needed to use IBM softwares

Provide two telephone lines : one for data and one for voice

Pay for installation costs as well as monthly bills

Complications: Employees

Out Of300

Telecommuters150 75

Eager to Relocate Reluctant to Adopt50% 25%

20Mgrs Adopted At

After Wiley's Talk Introduction

1Mgr Transferred Out

37Converted to Supporters After

50% ImprovementsIn SupportTechnology

Good conversion rate overall

Resistance primarily came from Mgrs

prestige & Ego

Most Mgrs also converted after persuasion

Psychological dislikes from employees

Complications: Information Technology

Home Office Equipment

Communications Facilities

Shared Workspace at the IBM Locations

Reengineer Work

Support Process

Addressing Information Technology Complications: Mobile

Up-grading Printers: dot-matrix to Lexmark laser

Upgrading PCs to Thinkpad Laptops

Wireless Data Communication

Dial-in LANs

Alphanumeric pagers

Wireless Communication-special occasions

Employee Perspective: Advantages & Disadvantages of

TelecommutingAdvantages Included:

Flexibility—permitted time to spend with family and friends

Time Saved—commuting to and from work; parking

Efficiency—freed up time and office-related distractions

Discontent included:

Lack of social interaction—camaraderie

Lack of team cooperation

Difficult to obtain help-quickly

Lack of moral support

IBM Perspective: Advantages & Disadvantages of Telecommuting

Advantages:

Cost saving—reduction of real estate expenditures

Retention of its core competency—firm specific knowledge; human capital; employees

Disadvantages:

Limiting cooperation and potentially disrupting innovation

Decrease of corporate culture; emphasize individualism vs valued teamwork approach

Advantages to Society from Telecommuting

Economic perspective:

Freed-up resources to be allocated to their highest value; building office was vacated

Information System perspective:

Increase in productivity made possible by technology; mobile upgrades; positiveexternality to clients and society

General Manager, Michael W. Wiley’s Influence on Telecommuting

Modest Influence:

Frank made the key observation of paying for an empty building

Frank made financial estimates and reached out to Wiley

Wiley delegated responsibility to Frank; planning, scheduling, and implementation

Wiley’s main contribution was recognizing layoffs were to be used as a last resort

Helped put together an alternative plan to present to the Midwest area mgr

Expedited the implementation process by reducing Frank’s implementation time

Thank You

Q & A