A senioir VP and CIO explains how remote outposts can allow for good living and good business.
The village outpost can be good for living. Thanks to technology, it can be good for business, too
Our quality test center is outstanding in its field -- an abandoned sugar-cane field, to be exact. Laupahoehoe, a rural village in Hawaii that began life as a sugar-plantation camp at the end of the 19th century, is the last place you'd think of as a high-tech center. It's 25 miles from the nearest town (and that's not a very large one). Yet it's home to my company's first software quality test center, now 10 years old. VeriFone Inc. makes those little gray boxes that retailers use to authorize your card every time you pay for something with plastic. In our Laupahoehoe facility, a small group of engineers tests software created by our programmers throughout the world.
We're in Hawaii because there we can use time-zone differences to bring products to market faster. But why are we in a rural village? Because Laupahoehoe offers our employees a lifestyle they like. And because technology now makes it possible for us to be anywhere.
The time-zone advantage works this way: VeriFone programmers in, say, eastern time zones, near our customers, put software that needs to be tested on the company network when they leave in the evening; engineers in Hawaii pull it down and run the tests while their colleagues sleep. The next morning, the East Coast programmers have their test results.
It's a graveyard shift without the upset body clocks. And remote testing has proved to be more thorough because the test engineer can't yell down the hall for the programmer to clarify some issue. The product must stand on its own, as it does when it's shipped to a customer.
Laupahoehoe was VeriFone's first "village office," but it wasn't our last, because in it we discovered the business virtues of small-town life: shorter commutes, lower real estate prices, less crime. When we relocated our Silicon Valley development group to another village, this one in Auburn, Calif., the vast majority of employees elected to move with us. They wanted to take advantage of, among other things, the real estate prices, which are 30% cheaper.
Workers in the village offices typically have either a short walk to work or a five-minute drive. Many see their families during the day. Test engineers in Laupahoehoe can return to the office after dinner to check on an automated test in progress or to start a new test. Because they're so close to home, working late is not a hardship. And though the pace of life in small towns can be slow, most employees don't mind -- they get their big-city fix at trade shows.
The village office is also attractive to mothers because it saves them precious hours on the freeway and allows them to easily work part-time. For young adults who've grown up in the village, the office presents work opportunities that previously they'd have had to seek in an urban area. That in turn provides opportunities for us -- to develop very loyal employees. Overall, the village office means we have an easier time finding and retaining talented people.
Lifestyle makes the village office attractive; technology makes it possible. High-speed data-communication links allow staffers in village offices to communicate with colleagues anywhere in the world over a high-speed wide area network (WAN) using a variety of media. The VeriFone WAN is a series of data lines that link all the offices in the company. That means staffers in Laupahoehoe can transfer information to every other VeriFone employee, whether he or she is in Bangalore, India; San Francisco; Paris; Beijing; or the 30 other VeriFone offices throughout the world. Today the bandwidth delivers voice, data, and -- to some locations -- video. Tomorrow it may provide a video link to all offices or even permit applications sharing.
To supply this vital connection, VeriFone uses a variety of privately leased lines. The ones from moderate-size offices (6 to 40 employees) have a bandwidth of 9.6 kilobits; those from larger offices have a bandwidth of 56 or 64 kilobits. Through basic modem connections, the setup allows each of the company's 2,000 employees to access through the WAN more than 70 corporate applications, including E-mail, file sharing, and program swapping. The lines also carry digitized conversations, so we don't have to pay the telephone company for long-distance calls, and local area network (LAN) connections between offices; eventually, they will allow videoconferencing throughout the system. For small village offices (2 to 5 workers), the only necessary connections are a small private branch exchange (PBX), a LAN, and dial-out modems that use standard telephone lines.
So you see, you don't need a lot of fancy equipment to run a village office. What you do need is a good business reason. Do you have to attract and retain a special type of talent? Do you have to lower operating costs? Do you have to work on problems 24 hours a day to stay ahead of the competition? Do you have to be closer to your customers?
Awhile back we proposed to a group of hotels in Hawaii that they relocate their back-office activities to the side of the island where the workers live rather than force the workers to commute four hours each day. We felt the move would free up hotel square footage for a higher-value return and dramatically improve the workers' quality of life. A pilot program to test the approach is under way.
Still, running a remote village office does require some special effort. Staffers must understand the strengths and weaknesses of the various electronic communications tools. And for the office to operate at peak efficiency, they must remember why it was established. We settled in Laupahoehoe to use time-zone differences to get our product to market fast. The managers of the Laupahoehoe facility constantly confirm that we are doing just that.
In addition to the testing center, VeriFone has put research-and-development and programming functions in small offices, and we have other functions, including some paper-processing functions, that could be relocated to rural areas. Why do companies pay high urban real estate prices to house their legal, financial, and accounts payable/receivable departments? Because the village office wasn't viable just a few years ago.
Of course, if it's going to continue to be viable, town and county councils are going to have to seize the day and begin working with telecommunications providers to ensure sufficient, low-cost cable bandwidth in their area. Just as concrete highways were the lifeblood of towns after World War II, high-bandwidth data highways will be critical for their survival in the 21st century.* * *
What it takes to set up a village office
Small village office (2 to 5 people)
For each worker
Computer with modem
Dedicated standard telephone line
Printer/file sharing capability (such as Windows for Workgroups)
For the office
LAN* * *
Moderate-size or larger village office (more than 5 people)
For each worker
Computer with modem
For the office
Leased line to connect to WAN
LAN with server
Videoconferencing* * *
William R. Pape (will_p@verifonecom) is senior vice-president and chief information officer of VeriFone Inc., headquartered in Redwood City, Calif.