We are in an era where more and more cor porate real estate (CRE) organizations are outsourcing key functions to service providers. Enterprise information technology (IT) applications are increasingly hosted in the “cloud.” People, no longer tethered to desks, work virtually and rely on mobile computing applications, and new business intelligence initiatives and regulatory changes mandate transparency and demand data from every corner of the enterprise. In this environment, does the traditional approach to CRE technology still work?
This article examines the evolving complexities driving CRE technology and offers some provocative thoughts for CRE executives, as it explores how outsourcing strategy and enterprise IT trends affect the technology platform, application management, technology support and data management.
Historically, the selection of CRE applications has generally been driven by internally focused, specific functional requirements, with little regard to trends within enterprise IT, the general business climate and business regulations. This has resulted in an approach to technology selection and use best described as incremental or organic. In fact, in a recent survey conducted by Ernst & Young in autumn 2010, only 27 percent of respondents indicated they used a formal structured process to construct their real estate technology strategy.
This incremental approach to technology strategy may have yielded acceptable results in the past, but current trends have created a situation where the incremental/organic approach may no longer serve the needs of the CRE organization. Clearly, CRE organizations will need to revisit their approach to the application of underlying technologies.
CRE Technology Strategy: By Design or by Default?
To some extent, the current approach to technology is a result of the relatively narrow market of CRE technology offerings and an inability to apply applications from the broader technology market. Initially, this market was characterized by a large number of offerings with a high degree of specialization — purpose-built, commercial off-the-shelf (COTS) “point solutions” proliferated, as did internally developed (custom) applications and proprietary tools from service providers. While the large number of choices made the decision on what to deploy a difficult one, the lack of integration and interoperability made the decision a tactical one focused on picking the best point solution, resulting in an overall suboptimal solution.
Following this initial period of specialized applications, and in response to heightened interest in lifecycle management, software vendors and real estate service providers responded by consolidating functionality. Integrated workplace management systems (IWMS) emerged, and the number of viable choices was reduced — making the decision on what to deploy a bit easier. Despite this, the decision still has been a result of tactical drivers and is not strategically driven.
Creating the Need for New Navigational Instruments and a Strategy
Now, with the increasing use of outsourcing and partnering for service delivery, either in whole or in part, once-empowering solutions may constrain or complicate otherwise reasonable business options. Many organizations have successfully implemented IWMS solutions, and it continues to be a very viable option. Despite that, some CRE organizations that agonized over their IWMS selection just a year or two ago are seeing their investment marginalized as key pieces of the CRE organization are carved out to service providers who bring their own set of applications or are unable to cost- effectively leverage what has already been put in place. Further, as CRE delivery becomes a multi-vendor orchestration, data custodianship and data strategy become paramount. This is especially true for organizations that have increased governance and transparency requirements and/or business intelligence efforts.
With the advent and rise of cloud computing, solutions-leveraging, location- independent servers accessed over the internet, CRE organizations are no longer constrained to own and administer their own applications. With more and more of the work force accessing information via laptops and netbooks, as well as applications on mobile phones, iPads and other devices, the requirement to deliver data and functionality to nontraditional devices increases daily.
These technological and business changes present both opportunities and challenges to CRE technology strategy and therefore require CRE organizations to treat technology with a far more sophisticated approach. In place of a single strategy or no strategy, the best prepared CRE organizations will use a multi-tiered strategy consisting of specific strategies for data management, applications and technology support.
By separating these three critical elements, a multi-tiered strategy allows for flexible solutions that can accommodate whole or partial outsourcing, tap internal and/or external expertise and support as required and perhaps most critically, ensure that the organization’s data is managed effectively and securely and that it is not subject to the whims of the software industry or the outsourcing of key functions.
Data Management Strategy
Applications come and go, but data remains (most of the time) and is the lifeblood of strong business performance. A well-developed data management strategy is therefore the first priority. Fortunately, CRE has a relatively narrow core set of data. Most of us can rattle off the key CRE data pretty quickly. Technically, this is known as master data. Typical CRE master data thus includes items such as property/location ID, lease number, lease expiration date and square feet, as well as work order number, work item, date performed, etc. CRE master data such as employee ID and vendor ID will likely also be considered corporate master data. It is therefore imperative that the CRE data strategy be integrated with the overall enterprise data management strategy. The temptation to build a CRE data warehouse should be avoided.
Of course that means working with the chief information officer and corporate IT — something many CRE organizations unfortunately do not do often enough. But given the trends, stand-alone data management strategies will either not be able to keep up with the demands of effective data management or will not be cost effective. By moving CRE data out of the shackles of CRE-focused applications and into the enterprise data warehouse, working within the framework of the enterprise data strategy, CRE organizations will be well-positioned to take advantage of outsourcing opportunities as well as changes in leading practices for process management, new application solutions and technical architectures.
Application Strategy: The Comeback of “Best of Breed”
The outsourcing trend is not unique to CRE. In fact, within two years, Gartner is predicting 20 percent of companies will not own any IT assets, enabled by leveraging outsourced, cloud and soft- ware-as-a-service providers. By delinking data management strategy from application strategy, organizations will have a much wider choice of applications, platforms and providers. This is critical as less and less CRE work is performed by employees and more by service providers.
Further, with data essentially becoming portable, applications can be more closely tailored to the specific processes employed by the CRE organization. They can reside virtually anywhere and be supplied by a far greater number of providers. For this reason, rather than deploying a one-size-fits-all package application, where the maturity of individual modules may be highly variable, CRE organizations can more cost-effectively deploy “best-of-breed” application strategies, leveraging point solutions as well as modules from various IWMS systems. Indeed, current IT trends bear that out. The proliferation of the application concept on the consumer and mobile computing side is slowly but surely making its way into corporate IT and will certainly find a way into the realm of CRE technology.
Another important trend affecting this landscape is the ubiquity of computing today. Rather than having a single do-itall device, many of us now carry around multiple devices such as smart phones, iPads and laptops. Some may still have a desktop computer. The expectation is to be able to access the data from each and every device, anywhere, anytime. That is quite a burden for a single-package application, but a best-of-breed application strategy, delinked from data management, can be very effective.
Savvy software and real estate providers will likely embrace this movement and begin to offer highly specialized, sophisticated applications (as opposed to modules) that will enable CRE organizations to ramp up efficiencies and effectiveness.
Support Strategy
Delinking application strategy from data strategy yields yet another benefit — the ability to put in place a support infrastructure that is as configurable and definable as the situation warrants. Historically, CRE organizations have had to supply their own support mechanisms, as the narrow applications were beyond the typical applications supported by IT; or had to rely on software or real estate service providers. With an effective data management strategy firmly integrated into and supported by the enterprise, application support can be handled in various ways. One of the more effective ways will be to bundle the support into either process support or application. Again, this further enhances opportunities for outsourcing and the close tailoring of applications with business processes.
Multi-tier Strategy Aligns with Key Criteria
In a recent survey by Ernst & Young, CRE organizations were asked what criteria they considered when determining overall CRE technology strategy. Consistency, quality and scale topped the list of priorities by a significant margin. By providing independent strategies for data, applications and support, the multi-tier approach to strategy technology allows CRE organizations an improved basis for delivering a highly consistent user experience with diverse functionality, improved data consistency and quality and the ability to scale both large and small. Further, a focused data management strategy yields improved control and access to data and enhances overall value as the data is integrated with the enterprise data.
Making the leap from a narrowly focused strategy or no strategy to a multi- tier strategy doesn’t happen overnight. It requires dedicated resources, a close examination of business processes and data needs and collaboration with IT. But the technological winds are blowing as fast as ever, and when combined with the current business climate driving the acceleration of outsourcing on multiple levels, the perfect storm has arrived for radically altering our approach to CRE technology.
