The pandemic has rapidly changed our view of office work. Staff want to continue working partly from home which will accelerate the transition to flexible workplaces. This change is expected to benefit the market for smart office systems. Solutions for booking resources and analyzing office utilization will drive the market. Annual market growth for smart office solutions is expected to increase by over 30% in the upcoming years.
Even before the pandemic, some companies had implemented flexible workplaces and allowed home-working a few days a week. Sweden, Netherlands, United Kingdom and Australia were countries that were early in implementing these kinds of working arrangements.
The move to flexible workplaces was mainly driven by the idea that workplace areas should cater to specific nature of work tasks, eg. concentration or collaboration, as well as the desire to optimize the use of office space. According to several studies conducted pre-pandemic, only about 50% of all workspaces in an office were utilized.
Given that facility management costs are often the second largest expenditure for companies, many businesses saw the low occupancy as an opportunity to save money.
The pandemic has accelerated this trend. Companies have observed that employee productivity has been maintained despite the work-from-home arrangements, and that staff have experienced the benefits of no commuting time. A recent survey from McKinsey shows that employees globally want to continue working three or more days per week from home even after the pandemic (1).
Consequently, office utilization is expected to fall further to between 30-40% of maximum capacity, and permanent workplaces will no longer be economically or environmentally sustainable.
Companies are now starting to plan for the transition to flexible workplaces and the reduction of office space. Expiring leases are being renegotiated and downsized, while some leased areas are being sublet. The financial benefits for companies are immense. An office in the larger cities in Europe or North America, with around 1,000 desks, costs between €10-25 million annually.
Flexible offices and reduced areas pose new and complex challenges. Access to suitable workspaces must be provided to employees coming into the office, and the whole building space needs to be optimized. Individual work can be undertaken at home, while the office fulfills the need for collaboration, creativity, and socializing. This new working arrangement impacts the overall distribution in the office between workplaces, bookable rooms, social areas and collaboration zones.
Smart IT solutions are needed to deliver office space reduction while simultaneously guaranteeing an efficient workplace for employees.
Workspaces and office resources will require pre-booking, teams must be ensured collaboration spaces, and employees need to have planning tools to schedule office trips when their colleagues will also be in the office.
These types of IT application is called smart office solutions, which grew in significance during the last decade. Before the pandemic, it was predominantly room booking solutions, with room panels, and visitor reception systems that drove the market. In the coming years, Flowscape estimates that solutions for booking workspaces and parking spaces, as well as analytics solutions with IoT sensors, will drive the market.
Smart office solutions, which previously focused on large companies with over 200 employees, are now expected to be relevant for smaller offices as well.
Statistics from the USA show that there are now about 150 million people who have a job (2). Before the pandemic, about 5% of these worked remotely and according to several observers, this proportion will increase to over 20% after the pandemic (3, 4). The assessments are based on the fact that both employees and managers view continued flexible working schedules positively (5). This change will accelerate the market for smart office solutions, which support this hybrid approach. Flowscape's assessment is that today less than 5% of American companies use some type of workplace booking solution.
In line with the assessment that the proportion of people working remotely will increase to over 20%, it is reasonable to assume that 20% of companies in the coming years will also implement some type of digital planning tool with workplace booking. This share of the US smart office market would then increase from a few billion today to over 5 billion per year within 5 years, with annual growth of over 30%. Growth and market size in Europe are expected to be similar to the USA.
To be one of the winners, you must develop solutions that make everyday life easier for employees while helping companies to reduce space in the most optimal manner.
With only a 5% additional workspace reduction, companies would save €500-1250 per employee annually. A smart office solution today costs €40-100 per employee per year, therefore delivering a swift return on investment. The best solutions will use smart methods to book resources, and with AI will help employees book the most appropriate resources while delivering optimal use of the office space.
“The market is growing rapidly, and it is a race to both develop innovative new solutions and to gain market share. Flowscape is the market leader in the Nordic region and has strong growth in several markets in both Europe and North America. Our development team has driven this market with leading innovations since 2013, and during the past year we have jumped to the forefront when the market demanded new solutions. I believe that there will be consolidation in the market in the coming years and Flowscape will be one of the key players.” says Peter Reigo, CEO and founder of Flowscape