This afternoon, I would like to concentrate on the information that Walter has just discussed, and particularly on the economic basis for telework and telecommuting. I will spend a little time on explaining what the difference between those is. Let me spend a little bit of time taking you back in history and repeating what you probably heard in twelve different ways already during these presentations, and I would like to give you a little numerical view as to what is happening in the world. This particular slide shows the evolution of the work force in the United States and it figures roughly comparable to those in various countries of Europe. The only differences tend to be, that there might be slight shifts in time. But this seems to be a natural evolution for the way work is performed around the world.

The point of this is, that 200 years or so ago, most so called 'employed' people in the world were farmers, roughly 97 % of the population, and in fact farming constituted to what Alvin Toffler has called 'the first revolution of mankind'. It began to be replaced in the late 18th and early 19th centuries by what was then known as the industrial revolution, where we discovered that large machines could produce the output of large numbers of workers but at lower prices and one of the major consequences of that was in fact the development of increasingly large cities around the world. Because in order to tend those machines, we had to have the workers move in from their farms out in the countryside to the machines. They had to become centred around the machines because of the limits of the transportation system - they couldn't ride a hay wagon in from fifty kilometres away from the city to come to work everyday. The city became bigger and in fact its size was largely dependent on the quality of the transportation and getting people back and forth within the city to get to work at the factories.
Well, the industrial revolution continues this way for many many years and in fact the US peaked in about 1954, I think it was August 4th, and it was sunny that afternoon. But after that it got rainier for industry and the industrial part of employment began to be replaced by something that also was a consequence of the industrial revolution - at the second wave of mankind, of civilization, and that is information workers.
In order to get these goods out to people around the world, and in fact to let them know that the goods were available and to organize raw materials coming into the factories, you had to have people whose jobs were dealing primarily with information. Information became more and more complicated as organizations became more complex. This whole sector of the economy that is now known as the information economy became the dominant one at that August day in 1954.

Now, in the US three out of five workers have their economic gains primarily as a result of their creating information. The point of Global Village '95 is precisely the consequence of this fundamental economic chance in what happens. Less than 20 % of the workers in the world are engaged in producing food, clothing and housing for the most of us, the other 80 % are engaged in doing something else to make us more comfortable or communicate better and so on.
Part of this consequence is basically the advent of microelectronics. There is a little known empirical law, called Moore´s law, named after Gordon Moore, who is the president of the INTEL Corporation. Basically, he says that about every two years the number of circuit elements that you can stuff onto the latest state of the art microchip doubles, and the cost doesn't increase that much, it goes up a some, because it is more complicated, but not nearly at that rate.

The matter of fact is, that the cost of manipulating information decreases by about 28 % a year, and it has been doing that since the early 1960s and will continue to do that some time into the 21st century as this curve starts to slow down a little around 2005. You can look in the future to have the cost of processing information decrease by a factor of ten about every seven years, a factor of hundred about every fourteen years, a thousand about every twenty-one years. That has enormous consequences on everything.
Unfortunately, aside from all these nice technological details, we seem to be still mentally stuck in the information or rather the industrial revolution, as is abundantly shown by both the slides Walter showed earlier in traffic congestion. This is again the costs of automobile congestion in the United States. We estimate that, all other things being equal, the cost of people sitting in their cars going to and from work will be about 90 Billion Dollars in the United States in 1995. The reason why they are sitting in their cars is because they think that they have to go to the information factory in order to gain useful employment. That clearly is the central focus of what we are looking at today.

So around twenty-five years ago, I started to get interested in this concept. At that time I was what is known as a 'rocket scientist'. We had just finished sending some people off to the moon, because we couldn't figure out anywhere else to send them and somebody, an urban planner, said to me: "Well, if you can send people to the moon, why can't you do something about the traffic ?"
Well, that is a noble idea. It is one of these things, where you have to go and reconsider the fundamentals again, as I have just shown you, and I said, "why indeed, if three out of five of us are employed in moving information around, don't we rethink the problem, rethink this industrial revolution mind set and look at some alternatives." We came up to term that we will discuss on more, telework and telecommuting, and there are other 'teles' here as well, telemarketing, distance education, are all related to this same particular concept.
We concentrated on telecommuting for about fifteen or the less twenty-five years for one very fundamental reason, as Walter said earlier: you know as Walter said earlier, about 60 % of automobile travel is not the commute to work. The other end of that is, that about 40 % of automobile travel is people commuting to work. So we looked at this rather simple concept: Why don't we just move the work around instead of the workers?
Teleworking obviously involves many other possibilities besides that, teleconferencing and these other things. The thing is, that once the people are at work - wherever that is - there are other substitutions for travel that are equally likely given the proper technology, but we did concentrate on this in order to get peoples' attention. In particular there are basically two kinds of both, telework and telecommuting. One is the classical one that reporters like to talk about, and that is people working at home. The other is that somebody has a telework center, and there are basically three different varieties of those in sort of decreasing size as we go down that list.
Satellite offices being medium to large size facilities like the Com-Center, satellite offices owned and operated by a single legal entity, a corporation or government agency, local offices, multiple clients, and the neighborhood offices are, as the name indicates, in the neighborhood - something where you would easily walk to work with. We recently set up some neighborhood offices that are essentially storefront operations in the immediate neighborhood of where the workers live.
Well, that's all very interesting. There are some wonderful theoretical possibilities. But what we really have been concentrating on for a couple of decades now is: Is it real? Does it happen? And in particular: If it happens, it has got to obey these five economic rules:
The first is, that telework has to provide a positive economic benefit to the employer. If an employer isn't making money on this somehow, it is not going to happen. In general, the employer is more interested in making a profit, or at least breaking even by the years than making his employees ecstatic about their new work conditions.
Secondly, that is not enough. In order to make telework actually work, there have to be other incentives that the employer understands in order for it to happen and in particular we find that the most virulent barrier to the spread of telework is between people's ears. The basic assumption of the industrial revolution is that in order to work you have to go to work, in order to manage people I have to have them around me so that I can see them and if I can't see them how do I know what they are doing.
Rule three highlights the sort of the fundamental educational problem of the expansion of telework around the world. This has to be overcome.

Rule four basically says, well, there are other pressures that may induce organizations to adapt as even aside from their concern about the management issues. In Southern California we have found reasonable effectiveness in these particular respect from environmental, in particular air quality regulations. As you have noticed, the Los Angeles area has the worst air quality in the United States, and one of the ways of combating this is to make a regulation available from medium to large size organizations. That says, if you have a facility with at least one hundred workers in it, we have a very simple formula for you: You take the number of workers in your facility and you divide by the number of vehicles required to get them to work, and that number has to be at least 1,5. Typically since Southern California is an automobile based economy it is about 1,08. What it means is that somehow the organization has to get lots of people out of their cars, because the other part of this regulation comes into affect, and that is: If you don't do it, you can get fined up to 25.000 Dollars per day of non compliance. Well, after two ore three months of 25.000 Dollars a day you start to notice it on the company? It is a positive inducement for people to think more clearly about their options.

Finally, the information technology trends we have talked about are really beginning to get through to the people, because the fear of not being able to work effectively unless everybody is gathered around is diminishing as managers are seeing that people are using personal computers more and more, and they network with each other, either with local area networks or by other communications media, that it is possible indeed to work effectively.
Let's look at Vienna. Here is sort of a map of Vienna that was taken from a brochure that Wolf Werdigier was kind enough to bring along to me, and we have just put in little green dots for the possible locations of telework centers. Now I am not going to talk at all about those telework centers specifically, but just to indicate that here is some distribution but I would like to spend a little time and showing you why. I will start out with a description of the Los Angeles region.

When we are looking at setting up telework situations for organizations, you know, an obvious question is: where do your workers live? I mean, if we are talking about reducing the amount of time they spend commuting to work, obviously they are going from wherever they live to some other place, and we would like to know how far that is. This is a map of most of Southern California, of most of the populated part of it. The more intense, the more red the colour is, the higher the density is of people that are moving information around. As you can see, there is sort of a ring of these around the central city which is right about in here. And, as we discover that through our tests of employees in the area, that the average commute time spent by city employees is about 53 minutes, that is about 106 minutes round trip per day.
Now just to make sure you are still awake, I would like to give you yourself a little test. You would probably pass this all with no problems in Vienna, but not necessarily everywhere else. Estimate the average time in minutes that it takes you to get to or from work every day, divide by two. The result is the number of days that you spend per year commuting to and from work. Is that an encouraging number? If it is higher than ten raise your hand. Is that all, you are in great shape! I am cheating here a little. I should point out that those are working days, sixteen hour days, because I am assuming that eight hours a day you spend sleeping or something and that you are not doing the sleeping while you are driving to work.

Here is a similar map for Vienna, and this, too, shows the number of information workers. This shows the travel time of workers in Vienna. I should point out that they are very closely related. Some years ago we did a study of the relationship between commute-distance and level in hierarchy of organizations, and discovered that the people at the lowest level in the organization live the closest to work and the people at the highest level, the executives, live the farthest away. The information workers tend to be in the middle, and also, as they more tend and more to be the younger workers, they can not find housing in the central city and have to move farther and farther out, but they are still coming in to the center to work. So you see this daily convergence, at least pressure for convergence downtown, and the same pressure for dispersion out again.

For some time, we have been testing what goes on here and there are some interesting implications for Vienna, again just looking at the potential of telework. One of the problems in Vienna is that not many people like to swim across the Danube as the bridges are filled, they tend to want to wait and get across the bridge in some vehicle rather, which has a natural limit to the amount of transportation. people can engage in going to and from central Vienna in the north and north-east sides. So there is a limit to development place right there.
If the north side of the Danube is to be developed, what are you going to do? You are going to have to think about moving the work around, because there is no way to move the workers without very expensive construction projects, and, as Walter mentioned earlier, the cost of building mass transit is increasing at probably 10 to 15 % a year, whereas the cost of sending the information around instead is decreasing at the rate of about 30 % a year. That is a very simple relationship to understand, if you can get over this thing.
Furthermore, if you eliminate this 40 % of automobile use, you have market effects on the environment. Our data on automobile use by families who have teleworkers is that if a teleworker would otherwise use an automobile to get to work, that person does not use it, nor does he or she use it for anything else during that work period. So the automobile use in effect just goes away and it is a direct energy saving. It is direct reduction in air pollution and so forth, and we also find that the quality of life goes up considerably. This is not theory, this is testing of thousands of teleworkers in the United States.

I would like to illustrate this by just giving you some numbers for the city government of the city of Los Angeles. This is a government that has about 45.000 employees. We began to plan a project for them in 1989. You have to go through a planning phase which has to get approved by the city council. We began to select and train people in 1990 and then watched the process of their telecommuting activities for two years. I should point out that Walter Siembab was the project manager for the city during most of that latter part of this program. We had twenty different departments. One thing that we learned right up front was that city governments and every other government has departments each of which act fairly autonomously. At least in the United States, everyone is basically like a separate company of its own. So you have to go through this training and education and development process basically for each one of these departments. We had about 450 telecommuters involved in this and we came up with a number of interesting results, again based on counting what happened during these projects.
Productivity increased on average about 12 % and I should mention this is as measured by the supervisors of the telecommuters, not by the telecommuters themselves, so this is a more conservative estimate than you would get otherwise. Quality of work life was substantially changed as compared with a control group we used of non telecommuters that had essentially the same jobs and backgrounds. Energy saving was about 40100 kilowatt-hours per telecommuter. The economic benefits, the critical bottom line was the net economic benefits range from about 6.000 to 12.000 Dollars per year per telecommuter. In effect the employer now has a return on investment of 6.000 to 12.000 Dollars every year for those people who are telecommuting and this by the way I should point out: The employees don't disappear. These are people who were telecommuting one to two days a week. The other time they are in an office some place, sometimes in a telework center, sometimes in downtown Los Angeles. So the city had its investment in this whole training and set of process at about month eleven of the program, which is much more of a return of investment than many corporations get involved in.
It took about a year and possibly an earthquake for the final decision process to happen, but last February 17th, almost exactly one month after the last large earthquake in Los Angeles the city council decided to make telecommuting available to about 16.000 of its employees. So they were convinced.

Just as an illustration of the final economic benefit: This is a graph of accumulative benefits in the green versus accumulative costs. The costs of telework are relatively minimal. There are the up front costs of setting up the program and training people, and the operating costs, which tend to be largely telecommunications costs, which are generally overblown as a barrier, saying, "I can't afford the phone bills". Well, we found that the increase in phone traffic amounted to a few Dollars per month per telecommuter.
So, why do it? Just to summarize, there are three points of view here. This is one of these rare occasions where everybody seems to gain a benefit from point of view of management, and this again is from surveys of the managers. The primary incentives are:

Productivity goes up. Turnover, that is the rate, at which employees leave the organization, decreases. The ability to attract people with necessary skills is enhanced, they save on office space, the sick-leave tends to go down, and as a result of that the profitability goes up. There is no question about that, if that is done properly, we have seen it happen time and again.
From the telecommuters point of view the fundamental reason is becoming a feeling of being in control of your live, now you can arrange your work live to fit the rest of your life, rather than the other way round. And from the community's point of view you have all these things that have been talked about at some length earlier. In order to make this all happen, here is just a very simple recipe, that we found. It works and it has worked repeatedly and it works for all forms of teleworking.
The most fundamental thing is, you have to have a good plan, you have to figure out, what your economic benefits are, what your goals are going to be, how to measure them, and particularly you have to spend some time thinking about what could go wrong and trying to find ways either to avoid that happening or fixing it in a hurry. You have to select your participants. We select people on a basis of supervisor teleworker pair, because the two of them will have to be able to work this mode or this isn't going to happen. If you have an organization that is hierarchical and insists on certain rules and procedures for everything, you may have trouble with telecommuting or teleworking.

Everyone has to be a volunteer. If they do not want to do this, they won't and they will make things worse. Human beings are incredibly ingenious in screwing up things that they don't want to do, so you can depend on it.
You have to select the sites and the technology. The sites, if you are using telework centers, are based on where the people live. Walter mentioned earlier that There are about a dozen telework centers in southern California area and many of them are subsidized by government programs, and if you remember that map I showed you earlier, where the information workers live, none of those subsidized centers are near where their clientele live. That is a masterpiece of inappropriate location, so it is very important, if you are going to have a telework center, to put it where the clients are.

People have to be trained. There does not appear to be any genetic code built into our bodies that makes us natural teleworkers, and particularly not natural telemanagers, so we have to stress the techniques of managing people who are not there adequately and in fact we have developed some intensive manuals for doing this that we hand out to the customers. They are now available to the general public as part of the book that we have published last year. Training is important. The point here is that most organizations have built into them some level of nervousness or anxiety about this telework and the only way to demonstrate to them that it is going to work for them is to try it and try it with a sufficiently large number of employees so that they feel that it is generalizeable to their entire staff and that it is an efficiently small number of employees so they don't feel they are going to go out of business if something goes wrong.

So as a consequence you keep adjusting this and changing your management techniques or whatever over a period of - we recommend at least a year or sometimes two years before you go to the final effort and expand things.
This works, we have seen it work and we have seen no reason why it can't work as well in Vienna as it has in the United States.