Chances are, your corporate real estate (CRE) organization is leaner, and more highly leveraged with external resources, than it was five or 10 years ago. That’s consistent with a broad, evolutionary trend across the industry, particularly in North America.
But Eric Canale, Director of Real Estate and Facilities, Asia Pacific, for high-tech leader EMC, also knows a thing or two about running a lean operation. Except for a single assistant who works with him out of his Singapore office, he oversees an expanding portfolio in the world’s most dynamic region with just one headcount.
That one headcount is him.
All other CRE resources in the region are supplied by partner Jones Lang LaSalle. The relationship – obviously a good one – has been in place for the past five years.
“There’s more integration across the different services now as a result of the partnership, and we’re delivering services faster,” Canale says.
“We’ve got a great solution with them as our partner in Asia,” adds Dan Fitzgerald, EMC’s Vice President of Global Real Estate and Facilities.
EMC (www.emc.com) is the world leader in products, services and solutions for information storage and management. Based in Hopkinton, Mass., just outside Boston, it employs some 26,500 people around the globe, with revenues of US$9.7 billion.
Leader met with Fitzgerald and Canale in Beijing shortly after the successful CoreNet Global Summit there in late March, which attracted a record-breaking 300 attendees.
EMC’s growth in Asia has been breaking records too, with double-digit revenue growth across all business lines. Fitzgerald oversees the global portfolio with Canale responsible for Asia. The entire Asian portfolio is leased.
“We’ve got 600,000 sq. ft. (55,740 sq. m.) in Asia in 40 locations,” Canale says. “Most of those are sales offices. We have an R&D center in Bangalore, India, and we have call centers in Bangalore, Sydney and Tokyo. It’s very much a sales, go-to-market portfolio here because that’s the business we’re supporting.”
Fitzgerald and Canale’s shared passion for their work comes through clearly as they discuss EMC’s approach for real estate management in Asia and more. The story begins some six years ago.
The Right Model
At the Right Time
In early 2000, EMC’s business was booming. The company had acquired Data General the previous year, and Fitzgerald was in Hong Kong, visiting with one of Data General’s real estate service providers – Colliers Jardine.
On the Colliers team was a promising young man who’d recently transferred there from Toronto: Eric Canale.
With the workload growing rapidly, Fitzgerald knew he needed an EMC person on the ground in Asia. “I spent a weekend getting to know Eric, and on Monday he was an EMC employee,” he recalls. “We talked about where the business was going and the various approaches we might take for managing the portfolio. Asia was clearly a growth area for us, but I didn’t want to get to the point where I needed 10 people on staff in the region. I call that ’empire building,’ and it’s the wrong approach. Plus I didn’t want to get into a position where six months down the line I might have to let people go if it didn’t work out.”
Employing a more leveraged approach offered other benefits too. “As we looked at the organization and how we were supporting EMC’s business, we really didn’t think there was a lot of integration across the different services we were providing,” Canale says. “Speed and accuracy of service delivery were challenges for us as well. So we looked to an outsourced model. We thought that if we gave a lot of the services to vendors, and had them work on the integration and make that part of their SLAs and KPIs, we would achieve what we were looking for.”
And that’s the way it happened. After a period in which EMC worked with multiple providers, Jones Lang LaSalle is now the company’s sole provider in Asia, providing fully integrated services for corporate real estate. Fitzgerald says that type of highly leveraged approach is the right one for EMC in the region going forward.
“When Eric came on board, we were in just five major concentrations,” he recalls. “Now we’re in 40 offices across 18 countries, and we can see the bandwidth we’re going to need as we continue to grow. I don’t have the ability to put internal resources out there – people who can learn the economy and culture of each market and react with the speed that’s required today. That’s why the leveraged approach is the right one for us here in Asia.”
In North America, EMC’s primary service provider is CRESA Partners. “They drive all the way through the corporate services aspect of it,” Fitzgerald says. “But our North American model is a little different in that the landlords there actually provide a lot of the FM services to the building.” In the third major global region – Europe – Healey & Baker is EMC’s biggest service provider.
Innovation
In Bangalore
EMC has had a major facility in Bangalore for years. But what’s new is that now some corporate real estate functions, for the entire Asia-Pacific region, are being handled there too.
“We’ve set up what we call the VOC, or _________________, which is an off shoring center for real estate,” Canale explains. “It’s not an outsourcing center. We’re finding that more and more requirements are coming up internally that require process-documentation activity. The issue we have strategically in terms of delivering that service is that these functions were being handled by senior facility managers and transaction managers at Jones Lang LaSalle in the various countries around the region. Now we’re shifting a lot of the work that these senior resources were doing to India so that more time is freed up for them to do the additional things that we need to get done.
“We think this is innovative. We’re quite interested to see if the market will follow us. Companies are going to India for many types of functions. So why not real estate? What makes us different?”
Alternative Workplace Strategies
Not quite as new, but innovative nonetheless in the context of Asia, is EMC’s alternative workplace strategies (AWS) program.
In North America, of course, companies have been experimenting with alternative workplace strategies (e.g., telecommuting, working from home or other remote locations, etc.) for years. And the pace of adoption there is accelerating.
In Asia, adoption has been less robust. Yet EMC has had an AWS program in the region since 2001, established initially as a way to reduce operating costs in the face of a slumping economy.
“We developed a ‘Flexible Workplace’ presentation and presented it to country management teams,” Canale says. “It showed how the program would reduce real estate costs and create more flexible, scalable office environments that were better aligned with the business. We also showed how employees would be given the tools to become more mobile and effective.”
The program was adapted to fit unique cultural requirements in each country across the region. Today it provides that customer-facing staff (Sales, Pre-Sales and Customer Service) are Flexible at a ratio of two people per seat (2:1). All other job roles have assigned seats. Approximately 50 percent of employees in each office will be Flexible.
“Seats are utilized on a first-come, first-served basis,” Canale says. Meeting rooms and breakout areas are used as overflow space when all seats are occupied.
Connecting with HR and IT
Coordination with HR and IT was important to the success of AWS. And it’s an important focus for Real Estate and Facilities on an ongoing basis around the world.
“As a corporate initiative in all my geographies, HR and IT are in almost every weekly planning meeting,” Fitzgerald says. “They get a forecast of projects that are going to be happening. Unlike some organizations in a company, Facilities and Real Estate has to plan more than 3 months ahead. It’s a year out, sometimes more. We can’t say, ‘You want a building next quarter? We’ll have it ready for you.’ It just doesn’t work that way. But allowing HR and IT into that planning mode gives them an insight into what’s coming down the line.”
It’s important to have them at the table for other reasons too. “On the day-to-day project side, sometimes you’ve got to hammer,” he says, pounding his fist for emphasis. “If your schedule is at risk, you’ve got to ask, ‘When are you going to have it?’ It’s not all roses.”
Though there aren’t any formal linkages or mandates in Asia, “Finance, HR and Legal are extremely important to how we deliver service,” Canale says. “So we meet with them often. In fact, we’re now starting to bring Jones Lang LaSalle into meetings with these internal functions. We’re making them part of the process as well.”
Shared budgets are another way EMC is bringing integration across different support functions in Asia. “One thing we do with our IT organization is that anytime there is a proposal to go and expand space, take a new space, relocate, or anything to do with real estate spend that involves acquisition or disposition of space, we include the IT costs in that internal budget request,” Canale says. “So when the corporation and all the senior people are looking at the cost to the company, it’s a total cost of ownership – TCO. It really is a consolidated budget so it gives everybody a clear picture of what the total company impact is, both real estate and IT.”
Customer Relationship Management
Canale reports directly to Fitzgerald, who oversees the global Real Estate and Facilities organization. He doesn’t have a formal matrix reporting relationship in the region.
“But from a relationship point of view, for us to be successful, we definitely need to be treating our customer as if there is a bit of that matrix report,” he says. “You’ve got to understand the needs and goals of the region and the business you’re supporting. I talk with the President and CEO of Asia Pac on a regular basis. We hold real estate reviews – kind of a strategic opportunity to get information in front of them on the portfolio and how we’re looking to support their business. We also get key decisions back from them on how they want to go about making certain investments or go about certain strategies.”
EMC continues to evolve in terms of its product solutions and how it approaches customers. “What we’re finding is the organization is changing as well,” Canale says. “There are new reporting structures, new business units, new companies that we buy which become divisions and so on. As a result, we need to evolve our organization structure in terms of how we communicate with the business a bit more this year. We need a few more touch points within the business. I think we have some great relationships at the very senior level, the president and CFO level, but we need to do a bit more communication and take a bit more feedback at other levels and really understand more about what’s going on in the region, how the service is being delivered and how we can improve it.”
Customer relationship management, Fitzgerald says, is a constant challenge for a dynamic company like EMC. “You’ve got to have a process and structure in place that is not individually dependent, but organizationally dependent,” he emphasizes.
“Dave Streeter [who was President of CoreNet Global predecessor organization IDRC some 16 years ago and led real estate for Digital Corp. as well as EMC] taught me that you’ve always got to have 30 minutes with senior executives every 30 days,” he continues. “You get in front of the country managers and division vice presidents and become part of their staff. It’s very critical to understand their side of the business, but also to understand where concerns and pressures could be coming down the line. We really try to push a very interactive and very integrated type of approach to customer relationship management within our organization.”
The Need for Speed
To be sure, Fitzgerald, Canale and the rest of the Real Estate and Facilities team have faced their share of challenges – some new, some not so new.
Capital allocation is one. “We have to work with the business units and help them understand that they’re all vying for the same dollar,” Fitzgerald says. “I don’t have 10,” he says. “I have one. It’s a big challenge because everyone thinks they’re the priority. So you have to have a prioritization model that aligns with the corporate strategy.”
In 2000, EMC’s business fell off due to the weakening economy. As a result, it restructured a lot of its real estate. “Now, over the last 18 months we’ve seen an incredible amount of growth,” he says. But we’re not going to start breaking leases and moving into bigger space, or more expensive space, just because of that. So the challenge is to manage a change in the workplace attitude.”
Additionally, the need for speed is always there. “There was a time when you could put a product on the market in two years, and you’d still be No. 1 in the market,” Fitzgerald says. “Now you’re seeing products come on the market in two, three or four months. So Real Estate has to really figure out how strategically we’re going to need to align to support it. We have a little term in-house that we call ‘Flash Track.’ That’s how fast we move – faster than anything we’ve ever seen,” he laughs.
Managing the companies EMC has acquired (e.g., in terms of culture) is another challenge. “We were very much a hardware company back in the late 90s,” Canale says, “but now we have evolved to more of a mixed model where we have hardware and services. So as we buy these software companies, a lot of times the culture is different from how we do things at EMC. How do you service that customer and make sure the customer satisfaction levels are high, but at the same time drive and execute what we’re trying to deliver in terms of EMC standards of meeting budgets, strategy, and how the workplace is going to be designed? We continue to work on that.”
Aligning with the Business
Despite those challenges, the team has logged a number of significant accomplishments in the region.
“We’ve tried to map the changing structure of the business,” Canale says. “Our business has gone from a hardware company to a solutions company. How do you manage in those different environments? And we used to have a single decision maker that gave us the plan to follow. But now we have different touch points. We’ve got the corporate plan, the in-country plan, the regional plan. How do you balance those factors and drivers and get decisions? I think we’ve done a relatively good job in trying to get good decisions that reflect all these different inputs.
“Over the past couple of years I think we’ve also done incredibly well in controlling growth. We’ve gone to alternative workplaces strategies. And through our outsourcing initiatives we have shortened cycles and reduced the cost of our delivery.”
From Fitzgerald’s perspective, aligning the entire team with the business early on has been of crucial importance. “We’ve gotten in touch with the business strategies, become part of their team and tried to give them what they really need,” he says. “We’ve become part of the decision-making process.”
But there’s something else Fitzgerald is proud of: the decision to hire Canale. “He’s one of the biggest reasons for the success of our real estate program here in Asia Pacific,” he says. “Our approach here was very different from what I’ve managed in all the other geographies. It was a risk. He took it upon himself to get into this highly leveraged, fully integrated model. And it works.”
The Personal Side
Canale, born in Toronto, has always liked architecture. That led him to study real estate and pursue a career in the field, joining Colliers in Toronto and later transferring to Hong Kong.
That’s where he met his future wife. “She’s English,” he says, “and she followed me to Singapore after I moved there. Now we’ve got a 15-month-old daughter.”
Canale enjoys all kinds of sports: running, swimming, hockey, tennis. “Going to the gym in the morning is a great way to clear the mind and plan the day,” he says.
One of nine children, Fitzgerald has been at EMC “all my life. Officially, I’ve been here since 1986 because that’s when we went public. But I really started in 1982, when we were making computer furniture.”
Coming in as a junior real estate executive, perhaps?
“Actually, I was the company’s first maintenance person,” he reveals. “I did office cleaning at night. And since then I’ve just worked my way through. I learned never to say no. They’d ask, ‘Do you want to take this new assignment?’ I’d always say yes. Luckily for me, they never asked, ‘Do you know how?’ ” he laughs.
“I’ve had a good career at EMC, but you’re only as good as your team. I consider myself to have one of the best teams in the high-tech industry.”
Fitzgerald enjoys baseball, golf and target shooting, and he used to play basketball. “But then I had an ankle injury,” he laments.
As the interview draws to a close, Fitzgerald – a Boston native – hastens to share one more vitally important point: “Go Red Sox – beat the Yankees in ’06!”
EMC at a Glance
| Revenues (2005): | US$9.66 billion |
| Employees: | 26,500 |
| Major Business Locations: | Manufacturing: Massachusetts, California, Ireland, North Carolina R&D: Massachusetts, India, Israel, Japan, North Carolina Customer Support: Massachusetts, Australia, Ireland, Japan |