Making the Internet fast, reliable and secure GLOBAL REAL ESTATE & WORKPLACE PRODUCTIVITY MCR...

Making the Internet fast, reliable and secure

GLOBAL REAL ESTATE & WORKPLACE PRODUCTIVITY

MCR Capstone 2015

©2015 AKAMAI | FASTER FORWARDTM

AGENDA

1. 120 Day Observations

2. The Evolution of Corporate Services

3. What do we do?

4. Global Projects completed over the last year

5. Headquarters (REMOVED)

6. Site Strategy (REMOVED)

7. The Business Case (Hong Kong Example)

8. Global Workplace Guidelines


120 Day Observations

TEAM

1. Transparency in decision making was lacking

2. Communication “strategies” ______________ [did not exist, were unclear, avoided]

3. Incongruent perspective between CS & End Users on Customer Service

4. Professional development paths were unclear; seeking leadership, coaching, mentorship

SMART

MOTIVATED

HAPPY

COMPANY

1. Lack of Strategic Sourcing

2. Engineer diagnostics are not data driven (READ: many qualitative factors underpin business decisions)

HUMBLEPROGRESSIVE

ACADEMIC


THE EVOLUTION OF CORPORATE SERVICES: Meet GREWP

MISSION: GLOBAL REAL ESTATE & WORKPLACE PRODUCTIVITY Drive a comprehensive, holistic, and differentiated Real Estate & Workplace Productivity strategy that enables Akamai to deliver on the promise of a hyperconnected world, where entertainment, business, and life are enabled to reach unimagined potential

create significant business value

Enable a relentless focus on customers & partners through growth focus

Create, flexible, collaborative, and innovative environments where our people can consistently perform at highest potential

Ensure innovation is part of everything we do

Drive operational excellence for efficiency, effectiveness, and productivity

ROI Customers Service Delivery Innovation Governance

STRATEGY


Grow revenue opportunities with fast, personalized web experiences and manage complexity from peak demand, mobile devices and data collection.Develop and implement a

new communication & engagement strategy with key stakeholders and implement (i.e. Q of M, Focus Groups with output)

Develop a global workplace guideline which harmonizes best practices for mobility, health & wellness, and office layouts and design which foster the highest degree of productivity

Structure a semi-annual cadence to meet with Key business partners and internal clients regarding their business needs; develop an output for these discussions

Develop a Real Estate Scorecard which indicates “performance” of our Global Workplaces

Prepare a Development plan for every team member and communicate the same

Integrate wellness into the workplace: establish a baseline, objectives, KPI’s

Re-brand Corporate Services as the Global Real Estate & Workplace Productivity Team; improve Website; produce annual report and outlook

Establish Organization model for team; Develop a framework for leadership of the Global Team to foster cross-collaboration, engagement, and high performance

Find a way to leverage partnership with IT for new endeavors (i.e. using WAAP to layer on Utilization, process improvement with EIS)

Adopt a solution-oriented posture when evaluating initiatives which are out of plan (i.e. Atlanta, Champagne, Bellevue, Long Beach, etc)

Develop a concise proposal for a single or multi-site HQ model based on detailed due diligence conducted over the fiscal year. Proposal to include cost, engagement, and productivity references

Prepare the Global Real Estate & Workplace Productivity Playbook (includes processes, standards, templates, guidelines)

STRATEGYcreate significant business value

GLOBAL REAL ESTATE & WORKPLACE PRODUCTIVITY MISSION: Drive a comprehensive, holistic, and differentiated Real Estate & Workplace Productivity strategy that enables Akamai to deliver on the promise of a hyperconnected world, where entertainment, business, and life are enabled to reach unimagined potential [READ: Give Employees a stellar workplace; Align with Corporate Objectives]

Enable a relentless focus on customers & partners through growth focus

Create, flexible, collaborative, and innovative environments where our people can consistently perform at highest potential

Ensure innovation is part of everything we do

Drive operational excellence for efficiency, effectiveness, and productivity

EXECUTION

Develop a 5-year CapEx strategy which effectively addresses the ratio to revenue concern in specific periods

Establish a Sustainability Strategy for GREWP: Create and Measure Sustainability KPI’s to incorporate into the Business Cases

Re-vamp Facility Management Model; Institute better systems (i.e. help desk ticketing, Building Mgt, Room Mgt)

54321

ROI Customers Service Delivery Innovation Governance


Employee Engagement - increase velocity

Global Workplace Guideline

{Internal} Customer Relationship Management

“CRM” Model

Scorecard

Develop, Align, and Deploy development plan for every team member

Integrate wellness into the workplace: establish a baseline, objectives, KPI’s

Re-Brand CS to GREWP (website, annual report)

Organization Design for evolution of GREWP

Lever IT Partnership for new endeavors (i.e. using

WAAP to layer on Utilization)

Business Case

HQ Strategic Due Diligence

Global Real Estate & Workplace Productivity

Playbook

STRATEGYEXECUTION

5-year CapEx strategy

Sustainability Strategy tied to metrics Deploy new FM Model

ROI

Customers

Service Delivery

Innovation

Governance

THE EVOLUTION OF CORPORATE SERVICES: Strategy Status Report


WHAT DO WE DO? (Historical)

PROJECTS

Site Selection Transaction Management Project Management Lease Administration Change Management Moves, Adds, ‘s Relocation Management Space Planning

FACILITIES

Office Services & Administration Reception Mailroom Operations Building System optimization Building Maintenance Cleaning & Janitorial Food & Beverage Services Corporate Services Help Desk Parking Security


WHAT DO WE DO?

REAL ESTATE

Location Strategy Workforce Planning Incentive

Negotiation Site Selection Capital Expense

Planning Transaction

Management Project Leadership Portfolio Strategy Lease

Administration Lease Accounting

WORKPLACE

Master Planning Strategic Planning Change

Management Benchmarking Moves, Adds, ‘s Project Management Relocation

Management Space Planning

OPERATIONS

Office Services & Administration

Reception Mailroom Operations Building System

optimization Building

Maintenance Cleaning & Janitorial Food & Beverage

Services Corporate Services

Help Desk Parking

SECURITY

Physical Security Loss Prevention Travel Security Management of

Security Operation Center

System Integration & Harmonization

Investigations* Risk Management* Business Continuity* Disaster Recovery*

ADMINISTRATION &

HOSPITALITY

Event Planning Event Management Partnership with

HR & Wellness in HQ and company-wide initiatives

PARTNERSHIP WITH INTERDEPENDENT FUNCTIONS

M&A

WELLNESS

GOVERNANCE

SUSTAINABILITY IT

HR

CHANGE LEADERSHIP

FINANCE

TAX

TREASURY


Grow revenue opportunities with fast, personalized web experiences and manage complexity from peak demand, mobile devices and data collection.

Sao Paulo

Santa Clara, CASan Francisco, CA

Long Beach, CASan Diego, CA

Cambridge, MA (x3)Westford, MAWashington, DCReston, VAFt. Lauderdale, FL

Bellevue, WA

BelgiumAmsterdamDusseldorf

FrankfurtHamburg

ParisMilan

CanberraMelbourne

Seoul TokyoOsakaFukuokaShanghaiTaipeiHong KongShenzen

MalaysiaSingapore

Gurgaon

StockholmCopenhagenKrakowPragueZurichIstanbul

Northfield, ILChicago, ILDallas, TX

2014: 11 New Offices, 47 Total Projects

MumbaiChennai

Bangalore


Grow revenue opportunities with fast, personalized web experiences and manage complexity from peak demand, mobile devices and data collection.

2015: 47 Projects Planned

TorontoOttawa

Costa Rica

Sao Paulo

Denver, COBellevue, WA

Manchester, NHCambridge, MAWestford, MAWashington, DCReston, VANew York, NYAtlanta, GADallas, TX

Santa Clara, CASanta Monica, CA

Long Beach, CAPhoenix, AZ

DusseldorfFrankfurtHamburg

AmsterdamBelgiumMunich

Paris

MalaysiaSingapore

Dubai

BeijingTokyoOsakaFukuokaShanghaiTaipeiHong Kong

MumbaiChennai

Bangalore

Gurgaon

CanberraMelbourne

MilanCopenhagenKrakowPragueZurichIstanbul


THE BUSINESS CASE: Hong Kong Example

Agenda: Hong Kong Office Relocation & Expansion

1. Business Case

2. Demographic Map

3. Timeline

4. Project Team

5. Financial Summary

6. Next Steps


Business Case: Hong Kong Office Relocation & Expansion

Current Situation: 36 employees work in a serviced office environment. The

office was establish in 2011, and the current lease continues through 9/30/15.

The layout is fragmented which impinges upon collaboration

The three (3) year growth plan is: +16 (2015), +7 (2016), +7 (2017) for a total of 65 employees

This region is often cited for potential M&A activity

It is not financially feasible to continue to grow in the serviced office environment

Objectives: Identify 10,000 SF – 13,000 SF (150 SF - 175 SF/seat) in the

preferred neighborhoods/districts of Quarry Bay, Taikoo Shing, North Point, Admiralty, Causeway Bay and Central.

Remain – or move closer – to clients

Access to public transportation is a high priority

Pursue flexibility in the acquisition of additional space, which contemplates expansion and contraction

Deliver a collaborative environment which affords innovation and effectively supports productive work

Prospective Outcomes:OPTION 1:REMAIN IN AND EXPAND IN PLACE

Advantages: Limited business disruptionTrade-offs: Operating Expense is a Premium for Serviced Office space; flexibility for growth is constrained; current environment does not foster collaboration or a cohesive culture

OPTION 2 (Recommendation):RELOCATE

Advantages: Flexibility in responding to growth; improved working environment which fosters collaboration and innovationTrade-offs: Change Management process to garner engagement in a new working environment (Global Workplace Concept)


Demographic Map: Hong Kong Office Relocation & Expansion

Employee demographics indicates 35% to 40% of employees live on the “Hong Kong” side and 55% to 60% live on the “Kowloon” side.

Of the 55% to 60% of employees located on the “Kowloon” side, almost all are located on the red, blue and yellow MTR lines which reach out to the “Hong Kong” side very easily.


Timeline: Hong Kong Office Relocation & Expansion

Kick-Off

• Initial meeting with internal business partner(s)

• Identify project scope, schedule & team

• Engage internal PM & EIS PM

• Market Overview• Prepare market survey

for discussion

Site Selection

• Establish tour team • Commence search

(10-15 locations)

Lease Negotiations

• Define shortlist of options

• Develop RFP for RE shortlist

• Review & compare all proposals

• Execute LOI• Lease review &

signature• Form design team,

develop space plans & create preliminary budget

Construction Commencement

• Finalize project vendors, overall schedule & final budget

• Construction procurement

• Apply for building permit

Move-in

• Acquire certificate of occupancy

• Finalize any outstanding TI budget/ general financial close out items

• Occupy space

February 2015 September /October 2015March 2015 April 2015 – June 2015 July 2015 – September 2015


Project Team: Hong Kong Office Relocation & Expansion

Steering Committee

• CHRO: Jim Gemmell• CFO: Jim Benson• RGM: Sanjay Singh• RE: Erica Chapman

Management Team • RE: Brian Murray• HRBH: Rachael Fitzpatrick• LFIN: Nitin Agarwal• LBUL: Andrew Wong• LBUL: Nirupesh Joshi

• RE: Erica Roux• RE: Avinash Navalyal• LBUL: Parimal Pandya• LBUL: Edwin Padlan

Internal Partners Project Leadership Infrastructure

LEGAL EIS TREASURY & TAX

INSURANCE &RISK

HR OPSFINANCE

LOCATION STRATEGY

TRANSACTION LOCAL PM

ARCHITECT & ENGINEER

CONSTRUCTION MANAGEMENT

FF&E

D. Aitken G. Ranganath D. Neshat

N. Agarwal D. Neshat R. Fitzpatrick

C&W C&W TBD

TBD TBD TBD


Financial Analysis: Hong Kong Office Relocation & Expansion

Managed Office Relocation

(Rent ONLY) Relocation

(Rent & Fit Out Costs)

Size 4,830 SF 10,000 SF 10,000 SF

Total Costs (Undiscounted) $6,489,557($1,081,593/annum)

$5,758,383 ($959,730/annum)

$6,403,283 ($1,067,214/annum)

Cost Per Square Foot $219.39 $95.97 $106.72

Cost Per Seat $16,640 $14,765 $16,419

Cost Per FTE $30,044/current FTE $14,765/planned FTE $16,419/planned FTE

Total Costs; NPV at 8% $5,174,949 $4,591,891 $5,213,812

Preliminary analysis compares the managed office suite (assuming 65 seats) vs. relocating (assuming 10,000 SF & 65 seats) based on a 6 year term.


Next Steps: Hong Kong Office Relocation & Expansion

Approved to Proceed:

Jim Gemmell _______________________________

Jim Benson _______________________________

Sanjay Singh _______________________________

Parimal Pandya _______________________________

Andrew Wong ____________________________

Commence search in preferred neighborhoods

Continue due diligence

Obtain approval from internal business partner(s) & finance


GLOBAL WORKPLACE GUIDELINES

1. “Best place to work” experience

2. Work/life balance & flexibility

3. Productivity

4. Partnership with leaders & employees

5. Communication & feedback

6. Fiscal & environmental responsibility

7. Community & culture

objectivesOFFICE/WORKPLACE

MOBILITY

AMENITIES

COMMUNICATIONS

TECHNOLOGY


GLOBAL WORKPLACE GUIDELINES


ADDENDUM


Capital Expense Discussion

• Tom Requests (or another authority)

• Value Add Opportunities (BUT, CapEx could converted to OpEx)

• Big Asks



Tom Requests (or another authority)

Priority Project Proposal Location Details Estimated GREWP CapEx

Stage of Est. Timing

1 150BW Akamai Labs office space Cambridge Furniture and cosmetic $ 120,000 Estimate In Process

1 150BW Akamai Labs-Demo space Cambridge Repurpose 150BW lobby LROTF $ 50,000 Preliminary In Process

1 90BW Studio Cambridge Creation of a studio space for Tech Talks, EMEA/APJ All Hands, A. Champagne

$ 500,000 Estimate tbd

2 150BW 3rd floor reception Cambridge Tom's 3rd floor vision. Exact scope to be discussed. Budget (gu)estimates range $100K - $750K

$ 400,000 Preliminary tbd

2 Office for new Web SVP Santa Clara Convert video conf room to office $ 20,000 Preliminary Q2/Q3-15

2 Tokyo SOC Tokyo Scope of work being refined next week. Cost estimate may decrease.

$ 240,000 Estimate Q4-15 or 2016

3 Chicago Lobby Chicago Lobby renovation to improve entry, small meeting space, and proximity of EA

$ 60,000 Quoted Q4-15 or 2016

Total: ~$1.3M



Value Add Opportunities (BUT, CapEx could converted to OpEx)Priority Location Project Proposal Details Estimated

GREWP CapExStage of Est. Timing

1 Atlanta Expansion – at capacity & have stalled new hires, low cost market to grow

Reconfigure space, Capex for furniture, IT, etc.

$ 200,000 Estimate Q4

1 Cambridge 1400KSQ ROFO Space Expansion space, turnkey by LL $ 600,000 tbd Q4

1 Chennai Chennai – at capacity and have no space for new reqs/hires; dedicated space produces ROI

Relocate to traditional office $ 350,000 Preliminary Q3/Q4

1 Santa Monica Santa Monica – workspace does not sponsor productivity

Office relocation with turnkey construction. Capex for furniture, IT, security, etc

$ 400,000 Preliminary/ Touring

Q3/Q4

1 Westford Westford - at capacity with current reqs; potential prototype for multi-site model; low cost market to grow

Office relocation or expansion with turnkey construction for 18,000 sf. Capex for furniture, IT, security, etc

$ 1,500,000 Estimate Q3/Q4

2 Bellevue Bellevue – lease expiration in Q4FY15; workspace does not sponsor productivity


$ 600,000 Preliminary/ Touring

Q4

2 Dallas Dallas – lease expiration in Q1FY16; workspace does not sponsor productivity


$ 500,000 Preliminary Q4

$4.15M CapEx or $750K OpEx per annum


Capital Expense Discussion (CapEx vs. OpEx)

Solution Price $48,000 Monthly Payment $781 Tax Bracket 35% (Estimated) Return on Invested Capital 12% Estimated Purchase Option 26%

Lease Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13

Annual Lease Payments $9,371 $9,371 $9,371 $9,371 $9,371 $12,480 $0 $0 $0 $0 $0 $0 $0 Depreciation $0 $0 $0 $0 $0 $1,783 $3,056 $2,183 $1,559 $1,114 $1,113 $1,114 $557 Tax Savings $3,280 $3,280 $3,280 $3,280 $3,280 $624 $1,070 $764 $546 $390 $390 $390 $195 After Tax Cash Flow ($6,091) ($6,091) ($6,091) ($6,091) ($6,091) ($11,856) $1,070 $764 $546 $390 $390 $390 $195

Cash Purchase Day 1 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Solution Price $48,000 $0 $0 $0 $0 $0 $0 $0 $0 Depreciation $0 $6,859 $11,755 $8,395 $5,995 $4,286 $4,282 $4,286 $2,141 Tax Savings $0 $2,401 $4,114 $2,938 $2,098 $1,500 $1,499 $1,500 $749 After Tax Cash Flow ($48,000) $2,401 $4,114 $2,938 $2,098 $1,500 $1,499 $1,500 $749

Present Value of Lease* $26,668 * Present Value - In general, the present value of a sum due in n years in the future

is the amount which, if it were on hand today, would grow to equal the future amount.

Present Value of Cash Purchase* $36,527

Special Note: This analysis is for discussion purposes only! Please consult with

Advantage to Leasing $9,859 your Tax Advisor / Accountant for a more detailed analysis.


Capital Expense Discussion (Benefits of OpEx)

• Managing the balance sheet – return on equity and return on asset ratios

• Realize Tax Benefits – monthly payments may be treated as tax-deductible operating expenses

• Increased flexibility – flexible payment and end of term ownership options

• Easy adds (or removal/change)

• Fixed rate financing



Big AsksPriority Project Proposal Location Details Estimated GREWP

CapExStage of Est. Timing

1 50 Hampshire Phase II Cambridge Seats required to address capacity of 92% which occurs at start of Q4.

$ 4,000,000 Estimate Q4-15

3 90BW Gym Cambridge Space is high quality, low cost space which affords an opportunity to offer a wellness amenity to large employee base

$ 1,000,000 Estimate Q4-15

$5M CapEx: opportunity to split over periods; and, defer some to OpEx


Capital Expense DiscussionPriority Project Proposal Location Details Estimated

GREWP CapEx

Timing

1 50 Hampshire Phase II Cambridge Seats required to address capacity of 92% which occurs at start of Q4.

$ 4,000,000

Q4-15

3 90BW Gym Cambridge Space is high quality, low cost space which affords an opportunity to offer a wellness amenity to large employee base

$ 1,000,000

Q4-15

Spend ½ in Q4 and ½ in FY16 Q1

Convert to OpEx (in lieu of $10.5M CapEx)

Net Result: • $2.7M of CapEx• $750K OpEx, • defer $2.8M CapEx to

FY16 • Reclassify $900K

Making the Internet fast, reliable and secure GLOBAL REAL ESTATE & WORKPLACE PRODUCTIVITY MCR...

Documents

Transcript of Making the Internet fast, reliable and secure GLOBAL REAL ESTATE & WORKPLACE PRODUCTIVITY MCR...