Tech & Work

Why companies spend 3X on tech than they did a decade ago: Attract talent

Companies that want to attract and retain employees are looking for ways to seamlessly integrate tech into the office. Here's how they do it.

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Modern tech workplaces feature small work stations and with lots of technology integrated throughout. Pictured here is the San Francisco office of software development company ThoughtWorks, designed by Fennie Mehl.

Image: Fennie+Mehl/Jasper Sanidad

Companies are spending more than ever to integrate tech in the workplace. According to a recent report, the cost has risen to up to 25% of the total cost of construction, up from 7% ten years ago. The report, released by JLL, a financial and professional services firm that specializes in commercial real estate services and investment management examines the kind of changes companies are making to stay cutting-edge. Sophisticated conference rooms with interactive AV technology and smart TVs, and cloud-based solutions for employee mobility are driving the costs, the firm found.

"The digital workplace is a major trend in corporate real estate right now," said David Roberts, managing director at JLL. "It's complex, challenging, and costly." Most companies spend 15% to 20% of their construction budget on IT, Roberts said. While 25% of the budget is on the high end of the spectrum, it is not unusual, he added.

This may come as a surprise, since technology costs have generally gone down dramatically, said Dawn Meade, a member of the board of directors at AVNation and director of marketing at Net-AV. Ten years ago, a board room projector cost upwards of $50,000. Today, it might be less than $300, Meade said. But instead of needing tech in just one conference room, workers need it at every desk, she added.

"The price per tech installation has gone down significantly, but the volume has gone up so much that it's more entrenched in a company's budget," Meade said. The problem is that often, when companies build new facilities, tech is the last thing they consider, Meade said.

SEE: Infographic: BYOD is popular, but not widely supported by IT

Despite the increase in cost, a significant gap still exists between the intuitive tech that employees use in their personal lives, and the often-clumsy technologies used in the workplace, the JLL report found, due in part to a lack of architecture and IT/AV integration in the construction process.

Companies focusing on space utilization and the employee experience are ahead of the design curve, said Campbell Hyers, co-president of the Integrated Solutions Group at media and technology company Intersection. "With companies looking to make their real estate work harder for them, investing to understand how space is actually being used can increase utilization by hundreds of percentiles," Hyers said.

Workplace trends

The modern tech-enabled workplace features seamless technology connections from room to room, according to Doug Mehl, principal at San Francisco-based architecture and design firm Fennie+Mehl, which often designs for tech companies. Employees want to walk into a meeting space and automatically connect without a ton of wires hindering their speed, Mehl said. And as more and more people work remotely or across different office locations, the strong AV connections are essential for streamlining business flow, he added.

Physically speaking, "the office has become much more casual and less institutional than a few years ago," Mehl said. For example, the amount of square footage devoted to an individual's work station or office is much smaller. In many cases, for every workstation seat, there's a separate place in the office for employees to go, whether it's a conference room, collaboration area, or casual seating area.

Enclosed rooms that fit only a few people are also becoming more popular, said the firm's senior designer Jenna Ruth. "It's a place where you go if need to make a phone call or have a quick one-on-one," she added. "Having that space has become really important."

Break rooms are trending toward open, shared spaces, often with TVs, Ruth said. And meeting spaces are moving away from the traditional 12-to-16 person conference room, and more toward four-to-six person huddle rooms, said Jeff McDonald, vice president of sales for Anderson Audio Visual, who often works with Fennie+Mehl on technology office spaces. "Because people collaborate through WebEx and Google Hangouts, the requirement to have a large conference room is far less nowadays," McDonald said.

The key to designing a new office space is understanding how employees work together, McDonald said. "Knowing how people meet is the single biggest hurdle—you'd be surprised when meeting with people ready to spend money on a new buildout that they don't know and haven't tried to find out," MacDonald said.

The move to cloud-based communication and data storage solutions also has implications for office layouts, said Gene Richardson, COO of Experts Exchange.

"We're going into a mobile workforce period, where you start to decrease if not eliminate office space," Richardson said. "We're going to see more rentable office space as needed, almost how we're moving services like email and video conferencing to the cloud or software solution."

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Many modern workplaces, such as that for cloud-based storage provider Box, offer additional seating outside of a desk for employees.

Image: Fennie+Mehl/Chad Ziemendorf

Attracting talent

The digital workplace is ultimately meant to attract and retain talent, according to Roberts of JLL.

"The major trend in office design right now is around the employee experience," Roberts said. "Companies are trying to get more productivity out of their employees, and flexibility and work mobility are so necessary these days when they didn't used to be."

The office is changing in part due to the tech employees use outside of work, said JLL Head of Research Christian Beaudoin. "The average employee is used to being able to access all the information they want from a mobile device, and communicate through social media," Beaudoin said. "Workplaces until recently were far behind that curve, but are now catching up to that changing dynamic."

One in three millennials would prioritize device flexibility, social media freedom, and work mobility over salary in accepting a job offer, according to research from the University of North Carolina.

And a January 2016 report from Anthology asked 200 new passive job-seekers from companies including Google, Facebook, Amazon, and Apple, "What's important in your ideal office?" Fifty-six percent of respondents said the office should have sufficient quiet space for when you need to focus, and 31% said it should have nice furniture, lighting, and work areas. Some 19% said it should have a big kitchen with free snacks and drinks.

"It's becoming a necessity for companies trying to attract younger, tech-savvy employees," Beaudion said. "They would almost be turned off by a space that's just a bunch of marble and wood, when they're using more tech in their own apartment."

Companies are spending less money on expensive furniture finishes and cabinetry, and more on technology, JLL found. "If you take the cost of your flooring or cabinetry and double that, the employee experience does not get better," Beaudoin said. "If you take the cost of tech and double that, you see significant benefits in connectivity and productivity and the employee experience."

Tips for businesses

The JLL experts offer the following recommendations for creating a tech-enabled workplace:

  • Put the right technology in the right spaces. Ignore brands until you know the objective of every space in your office. Then select the best products for the tasks and the teams that will be using them.
  • Start from the bottom up. Think about your your employees actually work, using surveys and quantifiable data to determine real patterns. Build tech solutions around what they are already doing.
  • Create a comprehensive budget that includes cost allocations for pre-design research, visioning sessions and data analysis, change management communications, adoption training, and post-installation analysis and modification.
  • Integrate the technology needs into the design as early as possible. "You have to be fully integrated partners so the system is well designed throughout," Beaudoin said.

JLL gives the example of Zurich American Insurance Company, currently building a new North American headquarters in Schaumburg, IL to house 2,500 employees. The new headquarters will include 750,000 square feet of state-of-the-art commercial office space.

The project began its early planning with pilot groups and an IT test fit, to ensure all technology needs would be met in the new space. The space will feature a strong wireless access system throughout the property, interactive monitors in every conference room, and smart building integration, that includes mechanical, electrical, plumbing, and elevator systems that are all computer-operated and run on one network.

All of the experts interviewed for this story recommended hiring an IT and an AV consultant before embarking on a major building redesign to save costs later on. "If you're talking about AV, you need a good consultant who understands trends and where things are going, and is knowledgeable on systems," Mehl of Fennie+Mehl said. "There are so many ways to do things today. A good AV consultant or vendor can clarify a client's real needs, so they don't waste money getting things that aren't necessary."

Simplicity and ease of use for the tech-enabled workplace will yield better results over the long run, said Hyers of Intersection. "The easier your systems are to use, the better quality the data will be, and data is key to the future of work," Hyers said. "We're only a few years away from machine intelligence being a business leader's best friend in the workspace."

The 3 big takeaways for TechRepublic readers

  1. Tech costs in overall workplace construction have grown from 7% ten years ago to as much as 25% today, according to a recent report from JLL.
  2. While the cost of most tech installations has dropped, the volume in the workplace has increased, leading to the increased budgetary needs, experts said.
  3. The digital workplace is ultimately meant to attract and retain talent, and provide a strong employee experience.

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About Alison DeNisco

Alison DeNisco is a Staff Writer for TechRepublic. She covers CXO and the convergence of tech and the workplace.

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