Experiences with Telecentres in Germany and Abroad - Top or Flop? Werner B. Korte, empirica GmbH (Bonn) March, 1999 The Beginning of Telecentres in the 80s Since the early 80s discussion about telework has included the conception of collective organisation of telework. These were initially called "satellite offices" or "neighbourhood offices". Later the so-called "teleworkcentres made an appearance and still later the "teleservicecentres" appeared. Since then the two last mentioned terms have been brought together in the term "telecentres". In the meantime, in Germany - also in the 80s - the so-called "telehouses" appeared. Their aims and tasks were mainly concerned with increasing receptivity to information and communication technologies and raising awareness of their potential, especially in rural areas. In Anglo-Saxon language areas these were called "telecottages". It is difficult to clearly distinguish between these different types of telecentres because different telecentres often offer a variety of the same services in different proportions. However, compared with "telehomework" in its different forms the collective forms of telework always remained a marginal topic. Only relatively few came into being i.e., those formed with state subsidies. A broader spread failed to materialise. When, in Germany, at the end of the 80s the "telework" topic slowly vanished from the scene again, the days were numbered for most of the telecentres and telehouses set up by then. The few surviving establishments offered only a very limited spectrum of services and could only secure their survival through state subsidies. The services offered now are often completely different from those originally planned and are often those with no real demand. GLOSSARY: Telework: describes work carried out in close proximity to the place of residence independent of the firm's location on at least one day per week where (co-)operation across distance takes place using primarily information and communication technology and where a direct telecommunications link to employer/contractor is used for work transfer Forms of organisation of telework: Telehomework: The only place of work is the home of the teleworker. Danger of social isolation; only appropriate for few exceptional cases; the trend moves towards mixed forms (see "alternating telework"). Alternating Telework: The teleworker alternates between several work locations, e.g., workplace in the office, at home, at a client's premises, on the road (mobile telework); widespread, many examples. Satellite Office: Decentralised work centre of a company to where areas of responsibility are dispersed as a rule; are often at more economical locations near employees' homes; results furthermore in stronger company presence, proximity to client. Neighbourhood Office: Teleworkcentre which is operated by several companies in order to minimise commuting; are situated near employees' homes; so far only few successful examples; Problem: co-ordination of several companies. Telecottage/Telehouse/Teleservicecentre: Develop in structurally weak regions, provide telecommunication infrastructure for the local economy; have developed out of a mixture of service supply and teleworkplaces; so far few successful examples of commercial telecentres in Germany Virtual companies: Merger of legally independent and spatially separated teleworking individuals or small businesses into a network to form a "virtual" company, which on the market acts as a single unit with one company name. The Renaissance in the 90s At the beginning of the 90s telework experienced a renaissance, however, only as alternating telework to begin with, primarily practised by large organisations or as networks of freelance workers, so-called virtual companies. Since the mid-90s telecentres have once again entered the public's perception. This is again primarily due to subsidy programmes e.g., like "Bayern Online" through which the development of such organisational frameworks is deliberately supported - again specifically as structural aid for rural areas. In addition there are the activities of network operators such as Deutsche Telekom AG which for various reasons want to publicise this form of working and service provision. On the one hand to generate additional demand for its networks, on the other hand to find and evaluate possible new uses for the constantly growing number of vacant properties of the former Federal Post Office - mainly in rural areas or marginal locations. At some time in the future the variety available is even expected to include the franchising of telecentre provision. Well-known examples of telecentres in Germany are the Telehouse Wetter which developed out of a women's initiative and now seems to be established in the market as a service provider, and the Yellow House Schotten. Other telecentres which have received extensive state subsidies - at least in the relatively long setting-up phase - are for example TeleService Fraenkische Schweiz and the Telecentre Retzstadt. Deutsche Telekom AG has opened its first telework and teleservice centre in Hersbruck. Telecentres in Germany - First Results Almost all telecentres (used here as a collective term) in Germany were set up with the provision of state subsidies. In by far the most cases they were quickly closed down again at the end of this subsidised phase because they could not survive on their own. In only very few cases was it possible to use the subsidised initial phase to set-up a range of services in demand on the market and to secure a sufficient number of clients. In the 80s the primary aim was to acquaint small and medium-sized businesses in rural areas with the topic of information and communication technology through these centres which were at the time called telehouses. It is obvious that hardly any income could be generated from this. Instead it was a publicly funded project. At the end of these subsidised phases there were then various attempts to continue these telecentres with other service profiles. The plan to also "sell" these centres also as teleworkcentres has so far failed almost completely. Some could only survive by offering specific courses on the use of application software - similar to adult education centres - for which there was a certain demand. At the same time there were also several attempts to run telecentres as commercial concerns from the very beginning. As a rule, however, state subsidies were taken for start-up (e.g., Telehouse Wetter, TeleService Fraenkische Schweiz and others). Some of those centres managed to fill niche markets with at least in part very specialised services or have secured a basic guaranteed workload through a larger (semi-public) client, e.g., TeleService Fraenkische Schweiz via a Fraunhofer institute which provides enough orders to secure a basic guaranteed workload. At present the impression is that hardly any centre is successfully established in the market and the question remains whether the subsidies spent on it so far represent money well invested. There are presently also attempts in some towns to set up telecentres with private funds as purely commercial concerns. Whether and how this will succeed remains to be seen. Telecottages in Great Britain and Ireland Different to Germany and probably unique world-wide, British telecottages have developed slowly but consistently. The British Telecottage Association which was founded in the 80s now represents almost 200 telecottages. By far the largest part of them has - at least at some time - received state subsidies. The original aim of telecottages was to familiarise the population especially in rural areas with the potential of new information and communication technologies, to make it accessible and to achieve employment for its users, ultimately outside the telecottages, as teleworkers for companies and contractors from other regions. Today most offer a mixture of different teleservices and other services and offer teleworkplaces for people from the region. Telecottages have mainly developed into public information and communication technology training and education establishments and offer services such as translation, mailing, bookkeeping, web-page design as well as additional services, e.g., Copy Shop. In by far the most cases the services offered are relatively basic. Some business starters have called themselves telecottages in the hope that with the name alone it would be easier to acquire contracts. This hope however quickly proved false. On average a telecottage has around 40 users. About 25% are situated in rural areas, almost no telecottage makes a profit, few can be described as successful. About half of them break even, at most 15% can show a small profit. The average turnover lies at around DM 150,000 per annum, with employee numbers around 1.5 per telecottage. Voluntary work is very important. Without the great willingness to undertake voluntary work several telecottages could not exist any more. In most cases the problem for telecottages which also wanted to be commercially successful lay in the lack of a clear commercial focus. Many wanted to achieve a large number of aims, some of which - often the primary ones - were definitely not commercial. Furthermore telecottages were often placed in rural areas, which while there might be an interest in information and communication technology there was no demand for the services offered. Here it also quickly became apparent that the importance of a larger local or regional client base, i.e., the proximity to potential clients, must not be underestimated. Thus British telecottages are strongly geared towards the local need but often have a great problem of translating this need into demand which clients are also prepared to pay for. However, there are some initial approaches where the pattern of telecottages is copied by commercial providers. For some this is a sign that the great and successful era of telecottages is imminent. However, it seems very doubtful whether a breakthrough can be achieved with their relatively basic ranges with no added value as compared to those services already available on the market. At present, whether or to what extent an increased outsourcing of businesses' services, predicted years ago but not yet at forecast levels, could produce a new market cannot be answered conclusively. In conclusion it should be recorded that the telecottages have certainly fulfilled their original task of acting as community resource centres, of familiarising the local economy in rural areas with the potentials of new information and communication technologies and of making them accessible. It has never been the aim of these telecentres to offer highly profitable services and thereby become economically independent and make huge profits. At most the aim was to translate a local need into a demand for services which could be satisfied by the telecottages. The fact that some telecottages also market other services in a more commercial way must certainly be viewed as a success. Experiences with Telecentres in the Netherlands The starting point for telecentres in the Netherlands was the idea of the Ministry of Transport to reduce the traffic volume in the outskirts during rush hours. Already at the end of the 80s/beginning of the 90s a number of pilot projects were carried out around Amsterdam. Here the telecentres were conceived as teleworkcentres where commuters could work at least for some days. The trials are moderately successful as almost exclusively only teleworkers from participating investors took up the offer. Participation was low with other run of the mill commuters. There was a tendency not to carry out telework in the teleworkcentre but to do it straight from home, i.e., the advantages of teleworkcentres over telework from home could not be passed on. The attempt to enrich these centres with service components and develop them into telework- and servicecentres failed - as in other countries - due to the lack of demand for the relatively basic (tele)services offered. Finland The approaches and results in Finland can be compared to those described in the other countries. There is however one exception. This concerns a regional training programme for setting up business on an archipelago in the South West of Finland which as a structural and economic aid measure involved around 200 people. The starting point was the idea that the target groups in this remote area could only be provided with employment opportunities if they were advertising themselves as self-employed business starters with a self-determined teleservice-range on the supra-regional, national and if possible even international market. Several telecentres were set up as training centres and teleworkcentres for 'business start-up'-training and for the provision of necessary teleworkplaces. In parallel and increasingly towards the end of the training measures, businesses in the whole of Finland were approached to offer contracts or workplaces to the new self-employed. Some few candidates gained a workplace in another region through this measure. Around 150 businesses were won over as clients out of which around 40 committed themselves to contracts on a long-term basis. With this measure and with not insignificant public funding it was possible to create employment in a remote region - albeit only in a self-employed form. France In France there are similar experiences as in other countries. Here in the early 90s there were also several waves of a publicly funded programmes which were initiated and carried out by DATAR (public regional development office). It had the aim of furthering the development of telecentres and telework in general. A first promotional wave was aimed especially at the rural area. In total short of 200 projects were supported. Judging the results by their sustainability the programme must be described as a failure. In almost no case was sustainable development achieved. Of the few exceptions Telergos is an interesting example. This concerns a project where in total 4 teleworkcentres with 19 workers each were set up in rural areas. Services that were offered initially included the recording of dictated texts which were played onto a voice server via the ISDN, retrieved from there and recorded. The company guarantees a 48- hour service. There is and always has been a constant effort to increase the range of services. Today graphic design and layout and especially translation work are included. In the interim a further telecentre was founded in Newcastle upon Tyne in Great Britain. The reasons for the success of this company lie mainly in the founder's personality and in his enthusiasm as well as in the fact that Telergos managed to secure a permanent basic workload through a large client (insurance); also in the company's ability to complete large orders - especially translations - which no other competitor could handle in the short period of time required. USA In the USA you can find a number of both publicly funded and purely private telecentres. It can however be established that industry shows hardly any interest in the running or utilisation of such centres. Venture capitalists do not show any interest either, because they do not have any great expectation of a return on their investment in telecentres. Experts in the USA judge telecentres in their own country as "modestly successful at best". Nor do they expect that this situation will change in the future. Carol Buckinger (Manager of the UCD Neighbourhood Telecentres Program, RABO) summarises as follows: "some have been fairly successful, others are grimly hanging on, and about half have failed. According to expert opinion telecentres in the USA have mainly suffered from misguided, wrong and ineffectual funding and planning as well as little purposeful or insufficient marketing. It is not therefore surprising that the majority of these centres are not self supporting and are still dependent on direct or indirect public funding. Results Where successful marketing of services is concerned, telecentres in Germany, Europe and the USA seem - only moderately successful - if at all. However a slightly different point of view should be given here. Point of View: Telecentres as organisations that introduce small and medium-sized businesses in rural areas to telematics and make it accessible to them In some countries publicly funded telecentres still give priority to the task of knowledge transfer and introduction of public and local economy (small and medium-sized businesses) to new information and communication technology and its application. This is especially true for telecottages in Great Britain and Ireland. Thus they fulfil a public service even if it is no longer of such great urgency as in the 80s when the distribution of computer hardware and software was much sparser. Furthermore, to my knowledge, there is hardly a telecentre which beyond the earlier mentioned public service, can be described as commercially successful. In Great Britain for example at most 2 out of around 200 telecottages (one of which is WREN) are regarded as truly successful businesses. Even here however, as in all other remotely successful examples, a combination of circumstances, which may be regarded as the general success factors for economically independent telecentres, is responsible. Some of these success factors will be examined more closely (under Point of View 2) below. Point of View: Telecentres as Commercially Successful Organisations It is noticeable that by far the most telecentres are established in rural areas. This is certainly related to the fact that public funding was and still is available for development in these areas. Ultimately when marketing a telecentre and its services location should play no role at all, special emphasis should be put on its services instead. Many initiatives - with some exceptions - have forgotten, that beyond their primary aim of setting-up of an ultimately self-supporting telecentre in a rural area, they should actually be selling the (tele)services and not the location (the rural area). Only by this means can they ultimately contribute to creating a successful business and economic stimulus in the region. Furthermore, I feel it is likely to be more promising for a commercially orientated telecentre to choose its location in a business park, for example, giving closer proximity to local clients and facilitating new business contacts. Experiences abroad have also shown that a critical client base is of central importance and that this can only be achieved if, at least initially, there are enough potential clients in the local area. It is equally important to achieve a basic workload through one large contractor or a number of small ones. As a number of national and international examples show, this greatly facilitates all further activities and developments of the telecentres. It is also advisable to be able to service niche markets with at least part of the range offered (see Fraenkische Schweiz) so that not all services offered are exposed to overwhelming competition where contracts are often only secured by offering cut-throat prices. Ultimately, telecentres are no different from other business start-ups, i.e., everything that applies to business start-ups and their success or failure also applies to telecentres. Here however we are fast approaching a general problem in our country: A large part of our population lacks a spirit of enterprise. We are faced with a "culture of dependence". "Culture of dependence" here describes the fact that in Germany an employment which required social security contribution and which is therefore dependent is looked upon as the norm. Other forms carry the stigma of being abnormal or at least less desirable. With some exceptions, it is crucial that self-employment becomes socially more highly valued. In any case, it is essential to ensure that the next generation is well prepared for emerging developments. It will be necessary to sensitise and motivate interested individuals for a business start-up as an alternative to an increasingly insecure workplace and give guided support to their setting up on their own, or at least in considering the possibility. It is also necessary already to prepare pupils for the developing needs and to provide them with relevant qualifications which will ease the way to a new "self-employment". Point of View: Telecentres as Teleworkcentres Where telecentres are primarily teleworkcentres I get the impression that these could, to a large extent, become obsolete because, due to falling price, an increasing proportion of the population possess PCs and Internet access and could therefore realise telework opportunities primarily from home. Furthermore, there are many indications that familiarity of those concerned with telework's organisational forms directly brings about the wish to realise this as work from home as here, apart from a freedom from commuting, a number of other, probably more important, advantages can be realised (especially the more flexible combination of work and private life). Preview It still remains to be seen whether telecentres in the future will face a fate of permanent state subsidies or whether they will become the next big growth industry. Though, with some exceptions, little points to the latter, certainly not in the short or medium term. We are possibly well advised to leave the matter of business start-up and the founding of purely commercially orientated telecentres to the free market and rather devote our efforts preparing the ground for the next generation so that opportunities can more easily and quickly emerge. As for business start-ups, in Germany there is still a lack of venture capital providers. Banks with their often extremely exaggerated safety thinking are often the biggest innovation stoppers. Perhaps in these cases it would be better not to refer to such organisations as telecentres as they might then stand a better chance to secure funding. Ultimately, to be called a telecentre does these establishments no favours as telecentres today still carry the stigma of being state subsidised with only semi-professional service provision, particularly where commercial outlook is concerned. Concerning knowledge transfer and familiarisation of the public with new information and communication technologies, particularly in respect of certain areas and for specific target groups, it is yet to be considered whether there is still a place for publicly funded telecentres in our society. It seems advisable to consider - especially against the background of the British telecottages' experiences - whether telecentres have enough advantages (what could they be?) for there to be a public service demand for certain types of telecentres; to set up and run telecentres as public utilities such as libraries or community centres and thus provide them with permanent public funding. Here possibly some room for design and a deal of creativity is required. However, I do believe that combining both approaches - commercial service provider on the one hand and state subsidised establishment with a specific mission on the other - serves no-one. I therefore suggest clearly distinguishing between them and keeping them separate. Thanks My special thanks go to my friends and telematics experts in Europe and the USA: Philippe Baudouin (IDATE, France) Jane L. Berry (WREN, Great Britain) Simon Berry (WREN, Great Britain) Imogen Bertin (Cork Teleworking, Ireland) Tom Durkin (USA) Gil Gordon (Gil Gordon Assoc., USA) Denis Haulin (Telergos, France) Esko Hurme (Finland) Ari Luukinen (KUV, Finland) Hans Overmars (Overmars Organisatie Adviseurs, Netherlands) Juhani Pekkola (Ministry of Employment Finland) Uli Wismer (Blackbox, Switzerland) Richard Wynne (Work Research Centre, Ireland) and my colleagues at empirica. Without them this contribution would not have been possible.