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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.' ''

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