IN TOKYO METROPOLITAN AREA

THE TRANSFORMATION OF LOCATION AND OFFICE FORM OF A FOREIGN-BASE JAPANESE IT COMPANY

IN TOKYO METROPOLITAN AREA

Hiroyuki TSUBOMOTO

Abstract : This research examined the case with the office construction of the enterprise that advanced the business reform corresponding to informationization and the internationalization. After 1990s, a foreign-base Japanese IT company advanced the office decentralization of the metropolitan area based on the cost reduction. It was considered that the location in the center of the metropolis was important in the latter half of 1990s, and the center office was constructed as non-teritorial office that has not install desks allocated employee one by one. The introduction of wide software was indispensable for the new office with hardware.

Key words: Informationization, Foreign based IT company, Locational reorganization, Free address office, Tokyo metropolitan area

1. Importance of consideration of office form

The development of IT: information technology is estimated to give a significant impact on the geographical location and thus the development of sub-urban offices is forecasted, base on the context of decreased significance on the face-to-face contact in business.

Aritome and Ishikawa (2003) who introduced the launch of satellite office by information communication company in western suburb of Tokyo, is an example that worked on a new office style.

However, their study does not consider the key characteristics of the management side. And the appearance of new office style does not simply mean the adaptation and utilization of new IT. The conventional studies lack the comprehensive understanding of the pilot process for new style offices.

The diversified approach would be the key to study on the offices.

Based on the background, this study focuses on the company which deal with IT, which holds the

key to balance the office function and the necessity for face-to-face contact.

2. The spatial reorganization of a foreign-base Japanese IT company

Hewlett-Packard Japan (HPJ), the Japanese entity of Hewlett-Packard, suffered from the increasing amount of locational cost in the early 1990s, and was instructed by their headquarter to cut down on their management budget by 25%. In order to maintain the labor cost, HPJ decided to cut down on their locational cost, and looked for the suitable place for relocating their office. In 1991, the “Metropolitan Master Plan (Shutoken Master Plan)”, the plan to segment the offices depending on the distance from the center of Tokyo, was developed (Fig.1).

HPJ segmented Tokyo metropolitan area into 3 rings, depending on the distance from the center of Tokyo to use as a benchmark for office reorganization. The first ring with the diameter of 5-10 km was limited to financial companies and sales offices for distribution industries who conduct services directly to customers, and such functions were concentrated to their rented offices in Shinjuku. Other sales offices were reformed for other purposes such as showrooms, and the office space in center of Tokyo was cut down. The sales staffs on the manufacturing side relocated their offices to the second

First ring office：②，Second ring：① and ⑤，Third ring：③ and ④ The arrows show the move of the function between each office.

③ ① ②

④

⑤

①：Takaido head office

②：Tokyo branch office (Shinjuku office）

③：Fuchu office

④：Hachioji office

⑤：Mizonokuchi office（Japan Labo）

Other offices

：Downsized offices after the reorganization

：Closed offices after the reorganization

Fig .1 Reorganization plan in Tokyo Metropolitan area of Hewllett-Packard Japan office in the 1990s.

Source: Hearing from HPJ

ring of 10-20 km. Their head office in Shimo-Takaido, Suginami Ward (their own building) and the R

& D office composed of own office and rental office located in Kanagawa Science Park, Tama Ward, Kawasaki City were placed as hub locations in the second ring. And to the third ring of 20-40 km, where their Hachioji office in their own building was located, high-level decision-making function and Back-office functions were relocated. In order to accommodate the new functions in their Hachioji building, their Fuchu rental office was opened in front of Fuchu Station of Keio railway line. The series of relocation was conducted to cut down the extra cost on land. Thanks to the effort, the cost for facility in their whole budget was successfully shrunk from 14% in 1990 to 10% in 1996.

Ashizawa (1993) cites the example of HPJ as the good reorganization model of large-scale company that effectively utilized the office locations. However, HPJ, at that time, was more focused on server businesses rather than main-frame business. Due to the background, their offices were relocated to the outer rings in the area where factories and R & D facilities as their main customers are located.

As we can see, the early 1990s has witnessed active relocations toward the suburban area. The situation, however, showed a big change in latter half of the 1990s. In financial and distribution industries, ITs such as CRM: Customer Relationship Management were introduced during the period.

In order to cope better on the situation, HPJ decided to accumulate the sales function in the center of the city, and opened the sales office in the newly built building close to Ichigaya Station in Kudan-Minami, Chiyoda Ward. Five hundred sales staffs and six hundred sales support staffs were allocated in their Ichigaya Office. The accumulation to Ichigaya office was followed by their other functions. All the customers are located in larger Tokyo, 60-70% of which are located within 23 wards. On the other hand, some sections obtain the sales force for nationwide areas. For that reason, Ichigaya is suitably located.

The office is close from major cross sections and JR train/ Metro stations. HPJ accumulated their sales and support sections to Tokyo, along with unification of local offices located in other regional cities nationwide. Ichigaya office was selected as the point of accumulation due to its convenience from JR train as well as other key subway lines and the Keio Train Line, which is connected to the Toei-Shinjuku Line. The office is also evaluated in that it is located in 30 minutes distant from their Fuchu and Hachioji offices.

3. Control of locational cost and construction of the new office form

The back-to-the center trend for the business activity by HPJ always comes with the higher rent for its land per square meter. At the same time, the transition to the new office location, a sort of investment itself, forces the company to cut down the cost to move the office as much as possible.

The first priority of HPJ’s new office location for sales and sales support staffs was to reduce the land cost. Secondly, they tried to reduce the cost per square meter needed for a worker.

Ichigaya office, with the floor size of 8,500 m

, houses 1,100 staffs. The square meter per worker is

7.7m

. Calculating the company-wide figure, HPJ’s floor space per worker reduced from 20 m

(1997)

to 16 m

(2001) due to the opening of its Ichigaya sales office. Twenty square meter is a standard size

Table 1 Three types of non-territorial office

for foreign capital companies located in Japan; it was considered as “not spacious” from the head office of HP in the United States. It was not an easy task to achieve the highly comfortable space while reducing the land cost at the same time, especially when their head office was requesting to even enlarge the office space. In the end, HPJ successfully convinced their headquarter and was able to reduce the facility budget by 7.9% in 2000 from 10% in 1996.

It is interesting that HPJ conducted to reduce the floor space considering the function and the regional circumstances. The space cut was not conducted uniformly, as can be seen in the gap between Ichigaya office and the other offices in Japan. The standard space depends on the size of desk, which was set in reference to other companies which conduct business in the same industry.

When dividing the total active floor space in Ichigaya sales headquarter by the workers, the figure comes out at 7.7 m

. Considering the office space per worker for their back-office sections in Fuchu (15 m

), Ichigaya staffs are offered half of the space. According to the trend, the space per a worker tends to be smaller as the office is close from the center of the city.

This low level figure was achieved thanks to the non-territorial office design, which is baced on the concept that each worker is not allotted with a fixed desk and the chair. There are mainly 3 types of non-territorial offices (Table 1).

HPJ introduced the “free-address” system for its high flexibility in the shared space. In the office project, the space reduction for the sales force was considered as the main pillar. This is because approximately only 60% of the staffs are at their desk on average. Based on the calculation, 1 desk for 3 sales staffs was prepared for the sales team with 500 staffs.

However, the office is not constantly vacant for the remaining 40% of the staffs. After 17:00, when the sales staffs return to their office after meeting with customers, the office is crowded and the seat is increasingly congested. In order to cope with the situation, they used the space which desks and chairs were arranged before as the conference rooms and meeting rooms, so that 80% of their staffs can take a seat in their office at a same time.

Six hundred sales-support staffs were originally appointed to work under the free-address system, as well, as 60% of them seemed to spend their work time at the desk. However, they are allotted with the fixed individual desks later on as the most of the operation needs to be conducted at the desk in the office. For this section, 80-90% of the desks are prepared to gear with the number of staffs.

Types Unit of desk sharing Reservation of desk

Hoteling individuals necessity

Free adress system individuals needless

Group adress system terms needless

Source: Becker and Steel (1995); Okishio et al. (1996)

4. Necessary conditions for new office form

Although the introduction of free-address system greatly contributes to the reduction of locational cost, the system adds environmental burden on workers. The abolishment of fixed desk system could lower the motivation to work and the productivity. Naturally, non-territorial office also requires an initial investment for the reform and office set-up, which needs to be recovered. The introduction of the office requires the enhanced productivity compared to the office system changes.

The back-to-the-urban center trend has a strong relationship with the way workers work at the office. In order for the workers to figure out the way they work, the introduction of non-territorial office requires vast amount of time for trial-and-error. HPJ failed to introduce the non-territorial office back in 1994. The pilot operation was resumed when the information technology was developed and the move for paper-less and information sharing has started to penetrate thanks to the enhanced convenience of mobile appliances. After then, the system was tried again in their smaller customer support offices, like in Kobe, to monitor the efficiency and the issues. After studying the pattern, the introduction to Ichigaya office was conducted by minimizing the required cost.

The return of the sales office to the urban center can be positioned as a series of trend for increased productivity as they can cut down the time cost for its convenient location. The implementation of non-territorial office was targeted to expand the availability to work with their customer, in addition to cutting down on the cost. For this reason, the office relocation in the urban center is positioned as a support tool to promote the effective face-to-face contact. This shows that the face-to-face contact of the employee should be offered by some support, along with the budget cut.

The realization of the free address system that enables the floor occupancy to its ultimate level requires a wide range of system maintenance including the hardware and work system. This company would need to establish the information system, improve the workflow and review the rule and regulations upon the work and the performance appraisals. When we look at the actual examples, these changes were brought to the companies not for the introduction of non-territorial offices, but to deliver the higher-level service to their customers. It would be appropriate to see that the efforts result in the realization of non-territorial office.

In 2002, HPJ amalgamated Japanese Compaq Computer, and moved the headquarters to Higashi-Shinagawa (Ten-Nouzu).

Acknowledgments

I got cooperation from Mr. Oda, H. in Work Place Research Center (the facility manager of

Hewlett-Packard Japan at time of interviews) for investigating. It records and I give a reward.

Reference

Ashizawa, N. 1993. Central management function of companies in post bubble economy. Study of Tokyo (Tokyo Kenkyu) 1: 47-61.

Aritome, J., and Ishikawa, Y. 2003. Telework and the location of dispersed offices in Tokyo metropolitan area. Geographical Review of Japan 76: 44-55.

Becker, F., and Steele, F. 1995. Workplace by design. Jossey-Bass Publishers, San Francisco.

Okishio, S., Yoshida, K., and Naka, R. 1996. Changed office. Tokyo: Maruzen.

（

: in Japanese,

: in Japanese with English abstract ）