Virtual Office Disadvantages of Virtual

Virtual Office Disadvantages Disadvantages of Virtual Offices Traditional Business Background Disadvantages of Virtual Office A & M. services is an alternative dispute resolution agency formed to provide arbitration and mediation services to businesses and individuals. It presently has six full-time employees who have been trained in alternative dispute resolution procedures and one half-time person who is responsible for scheduling and providing bookkeeping services. At the present time the business does not operate out of a physical location.

Instead, everyone is connected to a central server that maintains all the records of the company including clients' names and addresses and contact numbers; records of all prior and ongoing procedures; and financial records. Due to some logistical problems that we are presently experiencing in regard to our lack of a physical storefront we are contemplating either renting or purchasing office space. The remainder of this report will detail the specific problems that we have encountered relative to our operating as a virtual office.

What began as an attempt to minimize overhead costs has resulted in our experiencing problems that we hope may be resolved through the adopting of a more traditional business structure and abandoning the concept of a total virtual office. Our present plans are to adopt a hybrid style virtual office that incorporates the benefits of said structure while avoiding some of the inherent disadvantages.

Although the future of the virtual office is bright and will likely eliminate many of the problems that presently exist, we believe that the success of our business depends on our abandoning the concept as a total solution. A return to such structure in the future is a distinct possibility but the short-term solution is, as already noted, a hybrid form.

Outline Introduction Traditional business structure Technological response Telephone, desk, file machines, copiers Efficient, time tested Expense of operation Rent, security, utilities Commute time, equipment Technological improvements Computers, cell phones, email, laptops Disadvantages of Virtual Office Social isolation Friends, family Poor morale Security : Protection of information Technological improvements Lack of Collaboration Can lead to innovation Lack of company unity Prestige of Physical Plant Clients and customers Discipline / Distraction Supervision Lack of focus Technological Breakdowns Internet difficulties Security Conclusion Technological change and improvement have inspired the growth of home-based businesses and the increased use of home offices for corporate employees.

There are many who envision that employees' working at home instead of congregating every day in an office is the way of the future. These same individuals see such system as being a large cost saver; the source of increased morale; and elimination of unnecessary buildings and equipment. Yet, as good as the concept may sound it is not without problems.

Traditional Business Structure Most business persons when they are considering the format under which they plan to operate their business still look at a building, a telephone system, desks, offices and lunch rooms. Such an image has been the American norm for several decades and escaping from that mindset is not easy. The traditional office developed as a result of the technology that existed as the American system of business matured and it worked successfully for many years.

The system operated efficiently and profitably but as technology has improved bringing with it new equipment and devices even traditionalists are beginning to question whether there is a better way to conduct business. Before the advent of the computer, cell phone, fax machine, and email the need for a physical location where a business could centralize its operation was an essential element. Businesses needed to have all their employees near at hand and their information easily accessible. There were no databases kept on computers or servers.

Information was kept in paper files and folders and needed to be stored in file cabinets. This required a physical location and building. Cell phones did not exist. Employees were tethered to a land line and this required wiring and somewhere to keep the telephone. Meetings are an important part of any business operation and before computer software programs such GoToMeeting.com, Skype or Powerpoint these meetings needed to be held somewhere and an office building with rooms large enough for conference tables served this purpose.

The latter years of the twentieth century witnessed phenomenal changes in the business world brought on by technological improvements that altered the playing field. Beginning with the introduction of the personal computer and later the cell phone business personnel were gradually freed from the confines of their office and information that was formally stored in file cabinets was available without leaving one's desk. This was only the beginning. Soon laptops entered the market and cell phones became smaller and more powerful.

Suddenly the desk, building and office were far less necessary. As the twentieth century ended and twentieth-first century began a new concept became popular in the business world. This new concept, sometimes referred to as the virtual office, took on various forms and variations (Panchuk, 2010). Some viewed it as renting an office address and occasionally visiting said office while others viewed as a totally paperless office that had no permanent location. As time has gone on, the virtual office has developed into a hybrid of many different styles.

Maintaining a virtual office involves the full utilization of the available technology. This technology includes access to internet technology, facilities like Voice over Internet Protocol (VoIP) and video chat. For most virtual office practitioners their laptop is their office and all the information that they need to perform their work is contained on their computer or is available through their computer. For these individuals there is no need for a physical office as their cell phone keeps them connected to whomever they may need to reach.

Such individuals are free at almost any moment to pick up their computer, their cell phone and associated appliances and they are ready to work anywhere (Burns, 1996). This system of working can work as well for a small business as it can for the largest of corporations (U.S. Chamber of Commerce, 2006). For the small business owner the virtual office allows his business to appear as big as a General Motors. For the big business owner it affords him the chance to cut costs.

For the virtual office worker it means no commuting time and the comfort of working in his own home. The virtual office concept does not work for everyone. Manufacturing firms still need to have a facility to produce their products but their sales force, management, and marketing staff no longer have to be present in their physical offices in order to be productive. Professionals such as architects, lawyers, accountants are a natural for this style of business.

Service businesses such a plumbers, carpenters, and appliance repairmen can effectively operate without a storefront. The most obvious advantage of a virtual office is eliminating the cost of maintaining a physical plant. Such a facility involves the expense of rent or mortgage, insurance, utilities, and maintenance. Without these costs a business has an excellent opportunity to cut its operating costs and frees his money for other purposes.

For the start-up business not having these costs lowers significantly the capital needed to begin operations and allows said business owner the opportunity to concentrate his efforts on other concerns. Not being tied to a physical location also allows a business the opportunity to attract employees from different areas as commute time is no longer a consideration. Plus, the employees are free to work comfortably in their own homes where they are exposed to less stress.

Environmentally, less commute time, fewer vehicles on the road, and less need for dedicated office space means a reduction in the carbon footprint of each worker. Disadvantages of Virtual Office As wonderful as all these advantages seem there are disadvantages that must be examined. First, there is the loss of social interaction with fellow employees. The traditional workplace is highly social. It is the source of many friendships and a forum for expressing ideas and concerns.

During a typical work week many employees spend more time with their fellow workers than they do with their family and friends. Going from a busy office full of fellow employees to a quiet virtual office may be psychologically difficult for many workers. The effect has been debated back and forth for years but there are studies that indicate that the more engaged workers are with each other the more successful the business itself will be.

In a business that has limited interaction between its employees such as one highly dependent on employees there is little or no interaction between the employees and a feeling of isolation can develop and a disconnect with the organization. Virtual offices also create some legitimate security concerns for the business. When employees are located in one building access to valuable and classified information is limited and can be controlled.

When employees are spread all over the area and their only access to company information is through their laptops, PDA, or cell phones the opportunity for abuse is enhanced. Security measures are available to minimize this effect, in fact an entire industry has emerged to address these needs, but control will never be the same as when the employees are under one roof and subject to scrutinizing eyes and ears and computers and cell phones are free from potential hackers.

To put virtual office security into perspective think about all the security measures that are taken in traditional offices to ensure the safety of a business' equipment and information (Lombardi, 1994). Closed circuit surveillance systems are installed, alarm systems, security guards are utilized to protect the physical plant while extensive firewalls, networking passwords, and layered access systems are used to protect the business information (Rodriguez, 1996). A distributed workforce can cause problems relative to collaboration.

Many work projects require the coordination of different skills and with the workforce being distributed this may be difficult. Specialization of knowledge-based work, falling communication costs, and globalization have increased the need for more collaboration in most businesses and the move toward virtual offices acerbates this need. Through the use of sophisticated video conferencing equipment, wireless communication devices, specialized collaboration software, and coordination of servers some of the problems related to collaboration can be eliminated but the advantages of face-to-face contact will still be lost.

Businesses that operate out of an office have a body of employees who can easily communicate one-on-one or in informal groups. Often times, these chance meetings lead to the exchange or initiation of new ideas that may benefit the business. A group think type of mentality can be beneficial to the success of a business and a large measure of this is lost when the business operation is divided into many individual units where the only contact is through the use of the internet, email or cell phone (Whyte, 1989).

The lack of a physical presence in the form of a building can have a chilling effect on the prestige level of the business (Liparulo, 1998). Customers and clients still place a premium on their business contacts having a building in which to meet their attorney, accountant or insurance salesman and being asked to meet in a neutral site or their own home may make them uncomfortable.

Some virtual office practitioners choose to avoid this problem by utilizing temporary office services that provide meeting facilities but these services have not met with universal approval. Having employees under one roof and under the watchful eyes of supervisory personnel affords the business owner the satisfaction of knowing that time is not beings spent wastefully. Human nature can lead workers to waste time occasionally but an experienced and wise supervisor can avoid such idleness causing the business problems (Johnson, 2001).

Utilizing a virtual office may mean having employees who are not answerable to anyone. For many employees this is not a problem but for a great many others the lack of proper supervision may lead to work not being done in a timely manner, work not being done according to standards, and, in the worst case scenario, work not getting done at all (Gillis, 2003).