Abstract
The dramatic, accelerating decline in the cost of communication and increasing transportation cost will lead to the substitution of communication for travel. This paper illustrates the application of a low-cost technique for estimating likely savings. We utilized our approach to predict the savings from substituting communication for travel at the U.S. distributor for a major international corporation. Nineteen employees monitored their travel for three weeks, identifying trips which could have been avoided if various communication alternatives had been available. Based upon this data, we estimated savings of 3.6 hours and $298.07 per employee per week.
Communication cost is falling at an accelerating rate while the cost of travel is rising. At a minimum, this will lead to marginal substitution of communication for travel. This paper begins with a discussion of the substitution of communication for travel. We then describe a study of travel in an organization, and present analysis of the results.
We have seen a dramatic reduction in the cost of communication during the last twenty years, as the transmission capacity of fiber has increased ten-fold every four years since the mid 1970s [3]. Improved technology and the substitution of optical for electronic components, for example in optical amplification and optical frequency-division multiplexing, assure accelerating progress for many years.
There has also been accelerating investment in communication infrastructure. Between 1994 and 1995, the world added over 45 million new telephone lines, a 7% growth rate, telecommunication equipment trade rose by $10 billion (21%), and telecommunication service revenues rose by $90 billion (17.6%) [4]. Growth rates are highest in poor nations, though the absolute numbers are much smaller. Earlier in this century, we built roads; now we are building telecommunication links.
These infrastructure investments encourage investment in complementary information processing technology by businesses and other organizations, and there is some evidence that this is resulting in increased productivity [1].
While communication cost is falling and infrastructure is expanding, transportation cost is rising. Increased competition and improved engineering have reduced some travel costs in recent years, but others have risen. In the long run, depletion of non- renewable fuels and political pressure to internalize environmental costs will result in higher cost of travel.
Economic theory and common sense tell us that if the relative costs of two supplementary factors of production change, there will be a marginal shift from utilization of one to the other. The extent of the shift will be determined by the relative cost changes and marginal productivity of the factors. This is the most conservative scenario. Some technical innovation, for example the deployment of clocks and watches, telegraphy, or electric light, has resulted in more dramatic, non-linear shifts. While we suspect that digital communication technology will in fact result in non-linear changes, this paper is concerned only with a conservative, linear estimate of its effect.
This study was designed to estimate the impact of the travel- transportation shift in a single organization, using a very simple, low-cost methodology. The method was kept simple by design. While extensive studies may yield accurate and precise information, there is a place for simple studies. We have taken this minimalist approach to LAN [6] and expert system shell [7] benchmarking with some success. If the results of a simple study correlate well with a more complex study, the simpler study will be a more economical decision making aid. (For a comparison of [6] with a more complex benchmark, see [2]). Even if the results do not correlate perfectly, the simple study may provide sufficient information for a decision which is satisfactory as opposed to optimal.
The study was made at the headquarters of the U. S. distributor for a major international corporation. There were 19 participants, including executives, managers, and operating personnel.
During a three-week period, they recorded information on travel which took them out of the headquarters building. The general methodology was to observe actual behavior, in the spirit of the pioneering work of Mintzberg [5]. Since Mintzberg was making fine-grained observations, and shaping his study as he gathered observations, he used trained observers who "shadowed" the subjects. Shadowing was not needed in our case because we focused on only one aspect of behavior, travel, and trips were relatively infrequent and easily identified. The subjects recorded their trips in a fixed-format diary.
The subjects were given a list of hypothetical communication alternatives (see Table 1), and were instructed in the nature of each of these using readings, video tapes of systems, and discussion. They were told to assume that they and everyone they worked with (internally or externally) had access to the alternative communication technologies, and that the technologies were secure and easy to use. For each trip they made, they were asked to decide if they could have avoided travel by using one of the communication alternatives. For each trip that could have been avoided using communication, they were asked:
The results are shown in Tables 2-5. Table 2 shows an estimated savings of 206 hours and $16,990.00 from this group during a three-week period. Eight subjects reported that all of their travel would be necessary regardless of available communication technology. This results in an estimated savings of 3.6 hours and $298.07 per person per week if we consider all 19 employees, and 6.2 hours and $514.85 if we consider only the 11 who would have substituted communication for transportation.
Table 3 lists the titles of people who made no trips which could have been substituted with communication during the three weeks. Some of these did not travel at all, and others, notably the president traveled, but felt the travel would have been necessary regardless of communication alternatives. Personality as well as position is a factor here.
Table 4 shows the communication modes that would be used by the subjects. The majority of the choices involve synchronous communications, but it should be recalled that this study focuses on communication substituted for travel, and presumably asynchronous communication would be widely used in other cases.
Table 5 shows that the majority of the time and cost savings would be from the desktop rather than using portable computers with wireless communication. This does not imply that wireless communication is unimportant to this company, just that most communication in substitution for travel would be done from the office, not from other remote locations.
These results give us an estimate of the savings which could be expected if the means of communication listed in Table 1 were available. The technique is simple, and can be used for planning short or long-term telecommunication investment. A dollar value could have been estimated for the time saved, but the subjects were reluctant to disclose their rates of pay. A more detailed analysis would consider the value of their time, including overhead and support. intra-site "travel," for example to other's offices or to conference rooms could also be observed, but this is so frequent that the measurement would be obtrusive, requiring costly shadowing. Precision would be enhanced with a similar study running for a longer period with a wider sample of participants; however, the fact that the subjects were considering specific, real events in deciding what sort of communication, if any, could be substituted for travel, lends credibility to their reports.
1. Brynjolfsson, Erik and Hitt, Lorin, "Is Information Systems Spending Productive? New Evidence and New Results," CCS TR #143, Center for Coordination Science, Massachusetts Institute of Technology, Cambridge, MA, June, 1993.
2. Cronan, Timothy Paul, Douglas, David E., and Luster, Peggy L., "An Empirical Analysis of Benchmarks," Communications of the ACM, pp 109-110, Vol. 34, No. 12, December, 1991.
3. Desurvire, Emmanuel, "Lightwave Communications: The Fifth Generation," Scientific American, pp 114-121, January, 1992.
4. International Telecommunication Union, "1996/97 World Telecommunication Development Report," Geneva, 1997.
5. Mintzberg, H., "The Nature of Managerial Work," Harper and Row, New York, 1973.
6. Press, L., "Benchmarks for LAN Performance Evaluation," Communications of The Association for Computing Machinery, pp 1014-1017, Vol. 31, No. 8, August, 1988.
7. Press, L., "Expert System Benchmarks", pp 37-44, IEEE Expert, Spring, 1989.
Table 1. Communication alternatives
Asynchronous
em Email -- like your electronic mail with provision for text,
and attaching data files, for example, a spreadsheet, as
part of a message.
ev Email with the addition of voice messages (a combination of
your email and voice mail systems).
de Email with the addition written and drawn material (like
FAX).
ve Email with the addition of video messages and "documents".
ln Lotus Notes -- A system of easy-to-use electronic
discussions and databases on various topics.
Synchronous
tp Telephone with conference call capability.
vp Video phone -- a small-screen attached to each telephone.
cr Video conference room -- conference rooms at places of work
and business centers where you can conduct a video meeting
between any two points.
dc Desktop conference -- two or more computers can be linked
for a conference. Windows on the screen can show the faces
of the conferees, what they are writing, and the results of
program execution (for example a spreadsheet).
Table 2. Expected time and direct cost savings as a result of
the substitution of communication for travel
Title Comm Time Direct
Alt Saved Cost
director of marketing cr 9.0 $670.00
VP/general council cr 13.0 $1,619.00
cost analyst (finance) vp 5.0
dc 5.0
ln 4.0
de 1.0
advertising and dealer cr 21.0 $2,050.00
association manager vp 1.5
treasurer cr 0.5 $150.00
dc 2.5 $25.00
vp 38.0 $3,060.00
district parts and cr 1.5 $100.00
service manager dc 8.0 $300.00
ve 2.0 $100.00
vp 2.0 $100.00
tp 1.0 $100.00
programmer/analyst cr 4.5 $409.50
em 0.3 $15.00
vp 0.1 $2.50
dc 0.1 $1.25
ln 2.2 $103.75
senior human resources cr 1.5 $7.00
analyst vp 1.5 $7.00
tp 1.5 $7.00
tax administrator ln 2.0 $40.00
senior systems analyst dc 8.5 $1,450.00
ve 3.0 $290.00
cr 3.5 $460.00
vp 2.0 $210.00
de 0.5
ln 11.0 $920.00
em 1.0 $100.00
parts planning and price dc 48.0 $4,693.00
analysis manager
Totals 206.2 $16,990.00
Table 3. Titles of subjects who would not have substituted communication for travel during the sample period senior technical communication administrator president and CEO human resources manager employee relations and employment administrator warranty analyst operations support analyst (information systems) manager of distribution planning payroll specialist
Table 4. Estimated savings by type of technology
Communication Technology Time Direct
Saved Cost
synchronous
desktop video conferencing 72.1 $6,469.25
video conference room 54.5 $5,465.50
video phone 50.1 $3,379.50
conference calling 2.5 $107.00
total synchronous 179.2 $15,421.25
asynchronous
Notes-like conferencing 19.2 $1,063.75
video email 5 $390.00
email + text/data files 1.3 $115.00
email + draw (like FAX) 1.5
total asynchronous 27 $1,568.75
total 206.2 $16,990.00
percent synchronous 86.9% 90.8%
Table 5. Portable communication as a percent of desktop
Time Direct
Mode Saved Cost
Portable 17.5 $2,210.00
Overall 206.2 $16,990.00
Portable percent 8.5% 13.0%