We in the CRE industry tend to focus on the larger, pioneering corporate organizations who are embracing technology to improve CRE processes and integrating it into the framework of their global enterprise decision-making. But what about the mid-sized companies who desperately need improvement and are ready to take the step to the next level, but don’t have the infrastructure, budget, or dedicated resources to mirror the big companies? Is there a middle-ground or manageable starting point of tech essentials that deliver real, measurable improvement while at the same time sets the stage for future technologies as they become necessary?
Not surprisingly, the answer is both Yes, and No. Yes, in the sense that never before have there been more applications, technologies, and tools available that are scalable and relatively inexpensive. No, in the sense that there doesn’t appear to be a general consensus on what the best “starter kit” CRE tech bundle would include.
In this three-part series related to CRE technology for mid-sized companies we’ll cover: the profiles of such companies and who is best primed to deploy solutions; questions for leadership to ask and resources to uncover the answers and strategically plan for the transition; and steps to take to help identify the best solution to meet a company’s needs.
Profile of a mid-sized company ready for advancement
The vast majority of companies who utilize multiple real-property locations for their operations are included in to this category, which by the most conservative estimates, represent more than 20,000 in the U.S. alone. They may include regional retailers, banks, medical/dental providers; office users such as insurance, executive search or advertising firms; or manufacturers and distributors who utilize warehouse as well as office space. In many cases, these firms will have somewhere between 15 and 200 locations.
Most of these are leased, but it is common for a combination of owned facilities as well. Further, it is typical that a CFO or COO will be responsible for setting CRE strategy, negotiating leases, and managing the real estate portfolio. The IT department is often overworked managing all network activities, email, finance/accounting and HR platforms, and is continually trying to keep pace with the requests of various functional executives who have identified the “latest greatest” technology.
These companies face many of the same issues the Fortune 500 companies face, albeit on a smaller scale and with perhaps less repercussion for mistakes. They are also burdened with the growing pains of trying to maintain growth with lagging resources.
When I spoke with Anthony Nazarro at NOI Strategies awhile back, he said, “It’s not easy to move from a nimble, manual environment because there’s fewer people and fewer transactions. Those days go away pretty quickly though if you’re growing. They’re caught in a bit of a quandary between trying to get their work done and figuring out how to gain efficiencies.”
As an organization grows, it is essential for the leadership to reflect and employ true strategic planning, which requires timely and accurate data – the bedrock of solid decisions. And when it comes to real estate holdings, all executives are aware that not only is real estate one of the biggest expense items, it is also the most inflexible. Long-term lease decisions that are made today can prove disastrous if strategies or conditions change.
It is critical that a company understands what real estate assets and obligations they have and how they are performing. It is equally vital that real estate decisions and assets be positioned to support the mission of the company. This can only be accomplished through better internal communication, the availability of reliable information and the clear alignment of human activities. Simply stated; everyone needs to understand company objectives and collectively draw from the same information-pool.
Now that we are twenty years into a CRE technology “enlightenment period”, many of the younger, emerging firms get it. They are well aware their real estate choices impact every single aspect of their business. These firms’ leaders understand the “dwellings” that house their operations influence everything; image, brand, employees, customers, recruiting, retention, productivity, expenses, taxes, logistics, product pricing, wages, energy, liability, culture, and arguably the most important, the implementation of their strategy.
Many of the older, established, yet smaller companies who have not yet integrated CRE operations into the primary strategic fold are ready to embrace some healthy change. Unlike the younger companies however, they face the daunting challenge of relatively disruptive change. They will have to confront cultural change, technology change, and facilities change (potentially the most expensive) that could take 5-10 years to realize.
Once a company has determined it’s the right time to jump into the CRE technology pool, leadership needs to strategically plan for the implementation. In the next blog post, we’ll talk about how a company can identify areas of improvement and what best practices and resources company leadership can deploy to find a CRE technology to best fit their operations.