A Bombshell Dropped by the AIA Survey on Technology: I recently got my hands on an advance copy of a new survey coming from the American Institute of...
The Future of Office Management for Architectural Firms
Architectural firms may seem on the cutting edge of design and technology, but they are curiously backward when it comes to applying advanced technologies.
For an industry that often appears to be on the cutting edge of design and technology, architectural firms are curiously backward when it comes to applying advanced technologies and new approaches to solving problems within their own firms.
This has never been more evident than in Q2-2020. Suddenly, every firm around the globe was faced with the need to move all employees to a work-from-home environment. Firms that had on-premise servers and were managing their office with desktop software products like Quickbooks and Microsoft Excel suddenly discovered the enormous flaws in the structure underlying their firm.
The costs associated with moving to a remote workforce are still piling up. First, there were IT consultant fees in addition to hardware and software costs related to creating a Virtual Private Network (VPN), installing software on home computers, and getting everything to connect. Secondly, these costs were compounded by lost revenue related to downtime and low or no productivity while systems were being created to accommodate the remote workforce.
The good news is that studies show that firms can save enormously by maintaining a remote workforce. These savings include increases to productivity (i.e. no commuting), reductions related to office space (rent, utilities, insurance), reduction in absenteeism, and improved continuity of operations. One such study shows almost $700 billion/year saved by having a remote or distributed workforce.
Architects were fairly quick to implement Computer-Aided Design tools (CAD). It took about a decade for nearly every firm to move from the traditional practice of hand drawing projects to software. By the end of the 1990s, if your firm wasn’t using some type of CAD program, you are probably no longer in business. CAD morphed into BIM and the adoption rate actually decelerated. Unfortunately, it really takes a major disruptive event to get architects to change their behaviors.
PROBLEMS WITH THE OFFICE PARADIGM
Since COVID-19, firms have been forced to recognize that the old definition of the “workspace” has changed. Technology platforms have risen to the challenge and proved that business can (and will) continue in spite of physical restrictions. We have before us a virtual golden fleece. We have hit the inflection point, and all resistance is futile.
For those of you who spend considerable money each month on rent, you can’t help but wonder. Prior to COVID-19, the main question you may have had was about the cost-per-square-foot. Today you’re wondering, “Do we need all (or any of) that space?”
It’s already been made clear that you can produce effectively with a remote workforce. To make matters worse (or better), Global Workplace Analytics has shown that the typical employer can save $11,000/year for each employee that works remotely half the time! When looking at your bottom line, it’s not easy to ignore the value of a remote workforce.
Where the office was once a requirement for accessing copiers, physical files, computers, printers, and the local area network (LAN); today, cloud computing has removed many of our assumptions about a physical office. We need to rethink its purpose.
It is clear to this writer, that the office of the future no longer needs to be anchored to a physical location. Physical, human interaction can’t be denied, but there is no reason you have to invest so much money into a dedicated space when staff desire increased flexibility about where they work. Employees will most likely be demanding personal choice, and employers will need to concede.
Many firms have looked upon their office space as a marketing tool for both clients and prospective employees. It’s a showroom, and as architects, what could be more important than the built environment? This is what our clients come to us for and what future talent responds to. So how are we to consider our future office?
According to a recent article from the Harvard Business Review, WeWork is clearly positioned to help businesses deal with this paradigm shift. Regardless of your feelings about the long-term prognosis for WeWork, what is clear is that the shared work environment has amazing opportunities that have yet to be realized. The WeWork of the last decade is nothing like the WeWork (and its competitors) of the coming decade. You’re about to see fantastic changes in commercial real estate.
YIELD TO THE INFLECTION
The knock-on effects of COVID-19 have converged with technology in a variety of ways. For the past few years, we have been watching mega-changes in technology that can’t be dismissed. For example, take the electric car. There’s a reason Forbes got all excited when Tesla became the most valuable car company in the world. Those who have so much invested in old technologies (internal combustion engines), had been dismissing Tesla for years while counting the days until it imploded. However, smart tech eventually wins the battle.
There are a growing number of companies that have finally yielded and are not only building for the future of the electric vehicle, but are also working on making them autonomous. Both of these technologies will have an enormous impact on our economy, our cities, and our culture.
What will happen to all those gas stations? What will happen to all those parking lots and garages? There have been countless studies looking at the impact on parking when autonomous driving vehicles and ride-sharing become ubiquitous. Let’s not get into that now, but suffice it to say, these will have an undeniable impact on real estate. By the way, this is good news for architects since you will need to lead the adaptive re-use of a significant percentage of our cities and towns.
If you stop and think through what is happening, you can’t deny that a kid born today may never need to have a driver’s license. It’s quite possible that they would never know what it’s like to spend thousands of dollars to own a hunk of steel that is used 5% of the time and loses its value the moment they invest in it. That same kid won’t know what it’s like to put gasoline into that hunk of steel. They won’t know what it means to have it inspected, repaired, insured annually.
Either you recognize the inevitable, or you can keep your head buried in the sand and hope to retire before you simply become irrelevant.
HOW TO BECOME A FIRM OF THE FUTURE: START FROM FIRST PRINCIPLES
Take a moment to think about what you would do if you were about to start a new firm today. To begin the exercise, start from first principles and avoid carrying a single assumption that we’ve all become accustomed to after decades of business evolution.
We all know that startups are real threats. They take advantage of the problems inherent in existing businesses, which have sunk costs, internal processes, and cultures that are highly resistant to change. This is why industry leaders rarely innovate. It takes a nimble startup to freely challenge everything since they have nothing at risk.
If you are one of the lucky ones, facing the possibility of opening an architectural firm in 2020 or 2021, you are truly blessed.
IN THE BEGINNING
Back in the mid-1990s, after landing our first client, our next order of business was finding a physical location and committing to our single biggest expense (besides our non-existent salary). A physical office today: not needed. Insurance on that physical office: not needed. Tenant improvements to that physical office: not needed. Expensive furniture: not needed. Time and money spent commuting to that office: not needed. On-and-on.
And that is just the start of all the extraordinary changes to our business playing field from the way it was when I started out. In fact, how you win a client has even changed. There are online design competitions and web portals that help promote your skills. If you’re an existing firm, you are already married to your processes and systems. Most of you won’t have the courage or luxury to start from first principles.
Sometimes you can renovate. Other times you have to tear down and build new. Maybe you build fresh on an existing foundation, but the final product will look nothing like the original. If you don’t understand what I’m saying—this is a metaphor designed for architects.
So many of the traditional, major capital expenses have disappeared. Today, the best software packages are all cloud-based subscriptions. The benefits are extraordinary. Not only do you pay small amounts (typically monthly), but you are guaranteed to always have the most current version and never have to worry about spending money every year or two for upgrades.
With the plethora of mobile and web apps, there’s nothing a firm can’t do: Marketing, Project Management, Accounting, Human Resources, Client Relationship Management, etc. A website in 1995 could cost $50,000. Today, you can get a far more robust website for 1/1000th of the cost. You also have access to Instagram, Facebook, Houzz, Pinterest, and other platforms for marketing at a nominal cost. There are few barriers for someone to start a firm today.
Depending on where you live, hiring qualified employees can be either impossible or expensive. Today, we are no longer limited to talent in our own backyard. Perhaps those big, established firms are comfortable paying top-dollar, but you can find people similarly talented around the world who are a delight to work with and very often cost a fraction of the amount. With a distributed business model, you have this luxury without conceding anything.
With deference to Thomas Friedman, the world of business is flat. It used to be that your brochure was an expensive, printed document that had to be mailed out. Your firm had a mailing address and phone number as primary contact points.
Today, so many firms simply have a website and no defined location. Telling visitors that you are located in (for example) Cleveland is of no value and often works against you if the potential client is in Madrid. Every business can be instantly global. You can even have local phone numbers around the world for a fraction of what your old-fashioned landline cost. Who uses a phone anyway?
Being global used to be the exclusive domain of large firms. Today, it costs nothing to have a presence around the world and you can reach out to clients with hardly any expense.
THE ARCHITECTURE FIRM OF TOMORROW
As your humble correspondent from the front lines of technology, I would like to suggest that the firm of tomorrow is nothing like the firm of 2020. I don’t know exactly when tomorrow will come, but here is what I imagine.
A DISTRIBUTED WORKFORCE
The firm will have a 100% distributed workforce. This doesn’t mean that your firm won’t have a physical location if needed, but it will be more like a swimming pool, tennis court, or golf course. There are lots of people who have swimming pools (at least where I live in Los Angeles), but they are typically mediocre. If you really want to swim in a state-of-the-art pool, you go to a club or university with other people who are equally interested in swimming at that caliber. I once had a client with a 27-hole, private golf course. Frankly, it wasn’t as great as some public courses I’ve played on, and must have had enormous overhead.
AN OFFICE ON-DEMAND
I could see a reinvention of the Merchandise Mart (in Chicago), and other similar facilities. Let’s think of it like WeWork for architects and designers. I can go to any city in the future and meet my client at a meeting facility in the “mart.” My reserved room(s) will be temporarily branded with my company—since everything is digital and branding is easy, free, and has no carbon footprint. I’ll have at my fingertips every material sample, electrical, plumbing, and mechanical fixture available. These products will always be current. Since I only need that room for four hours, that’s all I pay for. No long-term commitment or expense needed. The facilities will have everything and more than most firms could ever imagine having.
In the future, I will never need to fill out a timecard. That’s right; you read that correctly. While it will still be advantageous to know what people are doing throughout the day, our technology is more than capable of figuring this out. We already have tools that can do this for us. BQE CORE’s mobile app, with Visit Tracking and Mileage Tracking, can match up your location with a project and capture the time and mileage to and from that location. The technology is doing the work behind the scenes. There are also software tools available today that can see the applications you are working on, the documents you have open, and the time these are actively in use. To construct the amount of time an employee spent working on each project is not only far more accurate through technology, but it can happen in real-time.
AUTOMATIC INVOICING AND PAYMENTS
Invoicing clients is one of those horrible processes every firm endures. Generally, it takes a ridiculous amount of time for people to stop, gather information (often fictional), and fabricate an invoice for a client. That is followed by a period of weeks where they cross their fingers, hoping it will be paid on time. In the United States, it’s still normal for clients to mail a check as payment. These are some of the most inefficient and senseless processes. Technology exists today that can automate invoicing as well as payments. These cumbersome processes, which we all consider to be essential and unchangeable, will change. Instant invoicing and payments are in our future. While BQE CORE has automated invoicing, the time will come where even that will be unnecessary.
The days of waiting 30 days for a check to arrive in the mail and then waiting three more days before the bank decides to complete processing it are over—if you only decided to accept that change. There are people who will hang onto their smelly, expensive, internal-combustion engine cars until someone peels it out of their cold, dead hands. But it’s really quite simple to unload that 20th-century relic and move into a beautiful, electric vehicle with auto-pilot and an amazing array of other enhancements that your old car could never provide.
Many firms use software tools like BQE CORE to schedule their projects and manage the workload of their staff. These tools are great for understanding staff utilization, forecasting revenue, and seeing who might be available to work on potential upcoming projects. However, there is no denying that even the best of these tools requires a lot of human interaction.
The fact that you plan on people doing work during particular dates doesn’t mean they do it. Perhaps another client called the morning they planned to work on some other project. That client has an urgent request. So the five hours they planned to do work on a different project didn't get done. Isn’t it ridiculous that some human has to go into some software and modify records to address this?
The future will automatically take care of fixing project schedules. How? Well, it can do it in the same way that airports manage gates. How many times have you been walking to your gate when you notice it was moved to a different gate. That didn’t happen because some human decided to annoy you. Sophisticated technology knew that the plane that was in your original gate hadn’t departed yet. It’s still waiting for a piece of equipment to be replaced, and it will take another 23 minutes before it can push back. Meanwhile, your flight just arrived and needs to be moved to a different gate so everything can stay on schedule.
That’s where technology steps in and takes over processes that humans are accustomed to doing. However, just like everything else I’ve been talking about, we either need to wait for those who “own” these processes to retire (or die), or have a major disruption in our businesses to adopt change. Most people don’t like finding out the critical work they have been responsible for is now capable of being done by a machine—and done better.
CHANGE IS HAPPENING
I’ve been told that this is just too long for a blog post. Perhaps I’ll make it into a manifesto soon and really talk about how I envision the future. If you made it this far, you’ll understand my general premise. Technology is advancing at an exponential rate. Our inability to keep pace with it is the problem.
Over the last few months, we have seen scores of businesses close permanently, file for bankruptcy, or undergo some other form of reorganization due to the fallout of COVID-19. What’s exciting to think about is how those who pick up the remnants of these once formidable companies will be able to reinvent them since they won’t have the weight of sunk costs holding them back.
If you have the stomach for it, you really ought to reconsider everything about your own business: the physical, the structural, and the people. Change is happening!