We live in a world dominated by “smart” networked devices — not just smartphones, but also smart coffee pots, thermostats, fitness wrist bands and even smart running shoes. This new world — the Internet of Things (IoT), as it has become known — is beginning to permeate the workplace.

In parallel, companies are shifting to a cloud computing model in which data resources and IT services are hosted, managed and delivered remotely, on an on-demand basis to reduce the resources needed to run and maintain their own technology infrastructure.

These trends, the IoT and the advent of cloud, are giving rise to what we at Colliers International call the Internet of the Workplace (IoW) — an integrated enterprise architecture that connects employees and enables them to collaborate and perform regardless of location. The IoW is paving the way for new, more flexible and innovative structures, allowing companies to adopt remote working systems and assemble virtual teams in pursuit of greater efficiency and productivity.

But it is also likely to prove disruptive for enterprises themselves and the commercial real estate industry by upending longstanding business models and forcing landlords and occupiers to adapt to new demands.

WHAT IS THE CLOUD?

Many people consider the cloud to be just marketing spiel for putting all your data in someone else’s data centre. This is only partly accurate. In simple terms, cloud computing is the delivery of on-demand computing services from applications such as Microsoft Office 365 or WebEx to online data storage such as SharePoint or Dropbox to pure processing power, typically over the internet and on a pay-as-you-go basis.

So, rather than owning their own computing infrastructure or data centers, companies can rent access to anything they need from a cloud service provider and only pay for what they use.

WHAT ARE THE ENABLERS OF THE IOW?

Disruptive technology is a term that is thrown around a lot these days. We hear about driverless cars, artificial intelligence and even meatless meat! In the workplace, we are seeing a new generation of tools that are changing the way employees are connecting with one another by enhancing their dialogue and simplifying their communication methods. We are already seeing how these tools are changing the way employees conduct their day-to-day activities. These tools are the cloud, collaborative software and smart and connected devices.

Applying the IoW gives enterprises the ability to “cloud the workforce”, adopting de-centralized structures that mirror the cloud computing environment, which are based around multiple remote teams that can be rapidly combined or scaled as needed, rather than utilizing a large central office.

BENEFITS

Ask anyone what the first rule of real estate is and you’re likely to hear, “location, location, location.” This happens to also be one of the defining characteristics of the new ways of working. Regardless of your industry, in order to compete in this new hyper-connected world we live in — whether it is to compete in attracting top talent or in business itself — companies are being forced to offer more flexible, even location-agnostic ways of working. As the IoW-enabled workplace and clouded workforce approach gains pace, alternative leasing options such as flex and core — a combination of a long-term lease for core operations and flexible leases to accommodate headcount changes associated with shifting operational demands — are becoming the norm. 90% of Colliers’ occupier clients in the Asia Pacific region are considering flexible workspace, a trend highlighted by a doubling of the average lease term for flexible space to 24 months from 12 months five years ago.

From a real estate perspective, migrating to the cloud reduces the need for physical space as employees can, in theory, access the company network anywhere, allowing them to exchange ideas and make decisions regardless of location. If done correctly, this will undoubtedly allow companies to reduce their footprint and bring about cost savings through greater space efficiency.

CHALLENGES

Building an IoW promises many potential advantages, but it is not necessarily a strategy that enterprises should adopt wholesale as there is no ‘one-size-fits-all’ IoW blueprint. Several models should be considered and chosen from, or blended, based on the needs, priorities and commercial context of each organization, as well as the demands of employees and customers.

In the old IT world, once a firm or a consumer had decided on an operating system or database, it was difficult and costly to switch to another. In the cloud, this “lock-in” is even worse. Cloud providers go to great lengths to make it easy to upload data. They accumulate huge amounts of complex information, which cannot easily be moved to an alternative provider. Similarly, firms create a world of interconnected services, software and devices, which is convenient but only as long as you don’t venture outside their universe. Just ask anyone who is on the Apple ecosystem to switch from their iPhone to an android and watch them break into a sweat thinking about it — people oftentimes have numerous connected devices and disrupting even one will cause a major headache.

For IT teams, security is probably the most significant concern with cloud adoption. We frequently hear about data breaches and hacks impacting the customers of major corporations. These will become more challenging to avoid as companies introduce Bring Your Own Device (BYOD) policies. Sometimes, even a simple oversight — like an executive leaving a smartphone unattended for a few minutes at a coffee shop — can potentially expose the enterprise to major threats.

As a real estate professional, however, I personally think that the biggest challenge in cloud adoption has to do with people. It’s not always easy to accept when we’re told that we must adapt to new processes and leave the old, familiar systems behind. Some cloud technologies have therefore often been met with resistance.

CONCLUSION

As the IoW hits its stride, the future of commercial real estate will be determined by how the industry comes to terms with, and makes the most of, the challenges and opportunities presented by this movement, which technological and demographic trends make all but inevitable. But cloud is not an all or nothing proposal. There is no singular right or wrong way to implement it,— but we must embrace change, look at how this technology can be used and encourage a more innovative and collaborative workplace.

The above is a summary of my report, “Flex, Core, and the Cloud: A Blueprint for The Future Asia Pacific Workplace.” You can download the full version from our microsite here.

Rob is Associate Director of the Asia Pacific Corporate Solutions business. Based in Hong Kong he specializes in representing corporate occupiers and assisting them to navigate difficult and complex real estate assignments across the region.