July 16, 2007—Utilization of real estate and facilities lifecycle management (REFLM) solutions are credited with driving cost reductions to the bottom line while establishing significant process efficiencies, according to a new study published by Aberdeen, a Harte-Hanks Company.
The Real Estate and Facilities Lifecycle Management report leveraged the insights of corporate real estate, facilities management, finance, and procurement executives from more than 250 enterprises. The benchmark report found that visibility into both “spend” and “process” is severely limited. Yet business leaders are recognizing the increasingly strategic role that real estate and facilities management can play within their organizations.
“We are at the outset of a burgeoning transformation within Real Estate and Facilities Management, and automation will be a key enabler,” says Andrew Bartolini, Director of Global Supply Management Research at Aberdeen. This benchmark report is the new standard by which future Real Estate and Facilities Management programs will be measured.”
Enterprise spend on real estate and facilities lifecycle management is more than 30% of total spend for the average enterprise, yet nearly 40% of enterprises report poor or no visibility into this significant category of spend and the processes that support it.
The study highlights the Best in Class enterprises that report superior visibility and greater control over this large spend category. Best in Class enterprises credit automation for the following benefits:
- 5.0% reduction in their total cost of occupancy
- 3.3% reduction in maintenance costs per square foot
- 2.5% reduction in the cost of an employee move
- 56% reduction in amount of time to close facility work orders
“With nearly one-third of total enterprise spend in real estate and facilities management, it is not surprising to find that 71 percent of enterprises see these functions playing an increasingly strategic role within the enterprise,” notes Bartolini.
The report also shows that 57 percent of enterprises indicated that company growth is a main driver for focus on real estate and facilities lifecycle management. The study goes in depth on how top-performing enterprises manage the procurement of their facilities and real estate.
Best in Class real estate departments gain alignment with enterprise strategies by centralizing the function, standardizing their processes, and using solutions that enable visibility into spend and process. Best in Class performers shared many common characteristics with respect to their real estate and facilities lifecycle management strategies:
- 42% use standardized processes more often in real estate and 62% in facilities management (including capital planning).
- About 30% are more likely to trace performance across cost and general performance metrics.
- Between 22% and 71% are more likely to automate the different areas that comprise REFLM.
While the appetite for integrated technologies to manage all the stages of the real estate and facilities lifecycle is growing, the average real estate department depends on a patchwork of homegrown systems and spreadsheets to manage their activities.
Strong alignment of the real estate and facilities management functions with the overall enterprise remains an important, yet, generally elusive goal, according to the report. An astounding lack of automation within these functions places sever limits on the degree of enterprise-level visibility into both process and spend in these areas, creating a huge chasm that must be breached to track and then improve performance and ultimately begin to deliver strategic value to the enterprise.
The opportunity to gain visibility into their processes for the planning and management of real estate and facilities will help enterprises:
- Reduce average occupancy costs
- Improve real estate and facilities management efficiency
- Identify and track key performance metrics for program management
- Make more informed build, buy, or lease decisions
- Make more informed budgeting and capital planning decisions
Required action, states the report, is to develop a platform between the real estate and facilities functions that enables collaboration between the two groups, promotes enterprise-level visibility, and facilitates the tracking of the main REFLM KPIs.
Basis of Findings: In June 2007, Aberdeen Group examined the “use of utilization of technology” to manage the real estate and facilities lifecycle, the experiences, and the intentions of 254 enterprises in a diverse set of industries. Responding procurement and finance executives completed an online survey. Aberdeen is a leading provider of fact-based research and market intelligence.
The Real Estate and Facilities Lifecycle Management was underwritten by Accruent, AMTdirect, FM:Systems, Meridian Systems, and VFA, Inc. Because of their backing, a complimentary copy of the report can be downloaded from their Web site.
