THE AGE OF THE ``ROAD WARRIOR''

By LEON JAROFF

Even in Venice, California, with its bizarre assortment of skaters, body builders and semi-nude exhibitionists crowding the famed boardwalk, the building at 340 Main Street is an attention grabber. The three-story edifice, headquarters of the Chiat/Day advertising agency, is wrapped in brick beams and topped by a concrete slab, and its entrance is straddled by a pair of 100- ft.-tall black binoculars. Inside, the building is even more remarkable. Gone are the choice corner offices where agency executives once held forth, the cubicles once occupied by their secretaries, the once ubiquitous rows of filing cabinets. Executive chairs have been replaced by couches, business phones by the portable, flip-top variety. The only spaces left that employees can call their own are the red, green, blue and black high school-style lockers where they stow their personal belongings. Unanchored, workers move about wherever their business takes them. Given the choice of working where they please, nearly half the staff telecommutes either from home or from the road, keeping in touch by pager, cellular phone, fax, computer and modem.

Welcome to the virtual office, a glimpse into the information age, which promises to change the way business does business. Some 3 million employees of U.S. companies already telecommute, performing all or part of their work away from their offices, and their numbers are increasing some 20% every year. The trend is likely to accelerate with the arrival of newer, more user- friendly technology designed specifically for mobile employees -- or ``road warriors,'' as they are called. The impact could be profound, and not necessarily all for the good. For one thing, managers and workers will have to make difficult psychological and social adjustments. For another, restructuring is sure to produce some unexpected costs, both financial and managerial.

The transition at Chiat/Day, which announced plans in January to merge with TBWA International, was abrupt: just six months to transform the workplace from conventional to virtual. Now, employees who choose to go to the office on any given day stop at a ``concierge's desk'' in the lobby to pick up laptop computers and portable phones, which can be programmed with any employee's extension. The workers then head for any one of a dozen or so living room-like settings in a large, red-carpeted open area, plug into nearby modem jacks and get cracking. For the occasional meetings of working groups, several ``strategic business units'' (conference rooms) have been set aside, but they are practically the only enclosed spaces.

Other than personal stationery and files stashed in each employee's private locker, paper has all but vanished. Faxes and memos show up on personal computer screens, and messages are left on voice mail. Documents once stored in filing cabinets are available only electronically on any of several computer terminals conveniently scattered around the premises. Clients can selectively tap into the firm's computer system to view advertising strategies and even critique new concepts.

Though perhaps not with the flair of Chiat/Day, other big companies are also experimenting with the virtual office. IBM, at which mobility is mandatory for more than 13,000 sales, marketing, technology and administrative staff members, has outfitted these employees with PCs, printers and fax-modems, enabling them to work away from its central offices. The computer giant's Denver operation, for example, was able to reduce its office space from nine floors to four, and it projects savings of $6 million over five years.

Ernst & Young, the nation's second biggest accounting firm, is in the process of eliminating 50% of its total U.S. office space by converting most E&Y accountants and consultants into part-time telecommuters who must literally make reservations to use the remaining offices. Under a system known as ``hoteling,'' E&Y employees in need of space must book at least one day in advance. Each office is equipped with the necessary hardware -- as well as room for a few personal belongings, like portable pictures of the family. A similar switch to telecommuting and hoteling by the Chicago staff of industry leader Arthur Andersen & Co. enabled the firm to reduce the number of individual offices by nearly 100, saving more than $1 million annually.

Converting to the virtual office can be costly, however. At the CKS Group, a Cupertino, California, advertising agency, about a quarter of the agency's 160 employees work elsewhere, using the cellular phones, pagers and PDAs (personal digital assistants) supplied by CKS to help them keep in touch. Not only does the firm pay half the purchase price for a staff member's home computer, but new technology is costing CKS an additional $10,000 to $15,000 per employee each year. CKS president Mark Kvammi estimates that technology expenditures amount to about $2 million every year. And the technology keeps getting more sophisticated. Last fall, for example, AT&T introduced PersonaLink Services, a package of communications software that facilitates computer, phone, fax and paging functions in hand-held personal communicators such as Sony's Magic Link and Motorola's Envoy; soon the AT&T interface will provide expanded wireless connectivity and be usable almost anywhere but underwater. In the rush to embrace virtual-office technology, some managers may not be giving enough consideration to the psychological impact of the change. Executives who have labored for years to win such corporate status symbols as secretaries and luxurious corner offices are reluctant to shed their hard-won perks. Ambitious junior managers, mindful of the old adage ``Out of sight, out of mind,'' resist spending too much time away from headquarters. For employees whose social life revolves largely around their co-workers, the transition can also be wrenching. Some complain that their creativity, stimulated in part by informal corridor chatting or lunches with fellow employees, has been dampened. Even at Chiat/Day the metamorphosis has not been easy. ``A lot of people left,'' admits Tony Stern, the firm's creative director. `` `It isn't what I want,' they said. `It's too hard for me.' ''

But technology that takes personal interaction away can also make up for it in new forms. At the New York City office of Chase Manhattan's Private Bank, executive vice president James Zeigon is able, with the click of his computer mouse, to dial his London and San Francisco branches and within five seconds conduct a ``face-to-face'' meeting with two colleagues thousands of miles apart. Using an advanced teleconferencing system from Avistar, the Chase bankers get consistently sharp video images in synch with clear sound and smooth movement. Their system allows for the onscreen display of documents as well as people from up to four locations at the same time. The cost per seat for such systems currently ranges from $2,000 to $5,000, but it could decline, say analysts, to $500 during the next two years.

The combination of plummeting costs and soaring sophistication in communications technology is changing the nature of business competition. Newfound access to vast libraries of digitized data, combined with the means to communicate cheaply and rapidly, has given small firms tools that until recently were available only to big corporations. Properly wired, so-called mom-and-pop enterprises now have the wherewithal to compete without overhead costs to weigh them down. Conversely, many big companies are finding it harder and harder to justify large proprietary staffs. To compete effectively with small rivals, many large companies have begun replacing those staffs with new digital gadgets in a process Bell Labs Nobel laureate Arno Penzias calls ``the hollowing out of corporations.''

``What we're going to see over the coming two decades is the devolution of many large corporations,'' says Peter Schwartz, president of Global Business Network, a cyber-age research and consulting firm. Case in point: IBM. In the same massive restructuring that is bringing virtual offices and high-tech gadgetry to every level of its business, Big Blue has slashed its work force by more than 170,000 jobs since its employment peak in the late 1980s. Many of these erstwhile employees have set up shop on their own, often doing business on a contract basis for IBM itself. Thoroughly armed with the modern weaponry of the road warrior, they, like the telecommuters at Chiat/Day, are among the forerunners of employment in the information age.

With reporting by DAVID BJERKLIE/NEW YORK AND PATRICK E. COLE AND DAN CRAY/LOS ANGELES