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4 Reasons Why Modern Tech Companies Should Ditch Archaic On-Prem Business Models

The cloud is eating the world. According to Flexera, 94% of enterprises have moved to the cloud, with the average enterprise running four to five clouds, and 58% running hybrid environments.

It's easy to understand why. Cloud computing is less costly and more flexible and scalable than depending on data centers. Multicloud and hybrid environments give companies the best of both worlds; with several platforms to choose from, they can run their workloads where it makes the most financial and logistical sense to do so. It's a great IT model.

It's a great business model as well. All of our IT resources aren't on-prem anymore, so why should all of our employees be? An ideal hybrid business model would be composed of a small on-site team supplemented by a global team of remote workers. Outsource work to people and places where it makes the most financial and logistical sense to do so (sound familiar?).

Certainly, of any industry, tech companies should be at the forefront of driving hybrid business models – right?

Maybe not. Although there's no shortage of tech startups developing disruptive technologies, most insist on clinging to a traditional – and outdated – model where all or most of their employees are required to come to an office and punch a clock every day.

We've all seen it happen. A small, bootstrapped startup promotes its dedication to being distributed and remote, which is better for employees, the environment, and the Bay Area's very serious housing shortage. Then, they snag a big funding round or two. All that commitment to being truly innovative goes out the window, and massive, gleaming headquarters sprout up, usually smack in the middle of Silicon Valley.

Here are four good reasons why modern digital companies should get with the program and stop clinging to clunky, old school business models.

Access to a far larger talent pool

Companies should want to partner with the very best people, regardless of where they are located. In doing so, they can have access to a global talent pool, while other companies are stuck with whoever is available in about a 20-mile radius of their physical locations. By leveraging remote workers and outsourced freelancers, they always have access to top talent, even in highly specialized niche areas. They can also scale up or down at will and accelerate deliverables and projects in a way they never could if they were restrained by the skill limits and availability of a local area.

More productive, engaged workers

One of the biggest myths still about remote workers is that is cannot deliver the same levels of productivity or engagement as having everyone on-prem in an office. However, study after study is showing that this is demonstrably not true, and in fact, the opposite occurs. According to Owl Labs, which produces a global state of work survey, productivity is the #1 reason why people choose to work remotely.

Modern communication and project management platforms empower organizations to create a highly interactive, collaborative, and motivated company culture. On-prem employees and remote team members can communicate instantly when needed. They can collaborate constantly and are far more efficient than most 100% on-prem teams.

Lower costs

Operating in Silicon Valley is insanely expensive, and it's only getting worse. This cost burden is borne not just by tech companies but their employees. It's a lose/lose situation where companies pay a premium to have an office in the Valley, employees pay exorbitant rents for tiny, rundown apartments, and both are locked in a constant battle where the company is trying to control costs while the employees are continually looking for pay rises to combat their rising cost of living.

Wouldn't it be more optimal to take this money and put it into new products, features, and other investments that drive the business?

Harnessing remote employees and freelancers turns this lose/lose into a win/win. Enterprises save money on wages and other related costs, such as liability insurance. Employees/freelancers are free to live where they want and enjoy higher standards of living than they could ever hope for in Silicon Valley.

A much smaller carbon footprint

Green construction aside, large on-prem workforces are simply not good for the environment. According to the U.S. Green Building Council (USGBC), buildings account for an average of 41% of the world's energy use. It's estimated that buildings use 13.6% of all potable water, which is roughly 15 trillion gallons of water per year.

Large office complexes also bring congestion and commuting. In many areas of the U.S., public transportation is insufficient for most office workers, and using personal vehicles is still the norm. A telecommuting workforce could save two billion gallons of gas annually in the U.S. alone.

Why would a modern, allegedly forward thinking tech company want to add to urban sprawl, condemn people to hours of commuting, and restrict its talent pool – all while spending more money than it needs to? The future of the truly global enterprise won't be found in huge "campuses" accommodating teams of hundreds of worker ants. It will be found in hybrid models where digitally connected teams work together to make positive, long-lasting impacts on their communities.


Nikolaus KimlaNikolaus Kimla is founder and CEO of Pipeliner CRM, a sales enablement software built specifically for sales management and salespeople.

Pipeliner uses a remote distributed workforce to ensure access to the top talent while ensuring more benefits to the environment.

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