New technology can mean new potential for real estate owners and developers. Even so, tech tools themselves are only as powerful as the strategy you employ to use them.
From streamlined operations to automated systems and processes, strategically adopting the right tech solutions now is critical for real estate companies adjusting to a new normal operating environment – especially as we move toward a post-COVID 19 market.
Why? The pandemic is speeding up a tech evolution that was already underway. Companies are working to do more with existing systems, supercharging ongoing industry transformation in the way people use buildings and real estate infrastructure. Real estate owners and developers will need to go even further as the pandemic ultimately recedes and reimagine their operations to glean more value from every asset in their portfolio. But achieving the kinds of milestones the industry needs next — think using new services or lines of business to diversify revenue streams — requires better use of technology.
The thing is, it’s how companies employ those tools that will really mark the difference between industry leaders and laggards in the months and years to come. In a recent global survey, EY found that while 61% of real estate companies have adopted a technology solution, only 28% have embraced multiple products. More still haven’t even begun to think through how this technology can be applied effectively.
In sharp contrast, many industry leaders are already using technology to differentiate themselves by adopting multiple solutions at a portfolio or firm-wide level. They’ve also invested in tech-savvy talent to develop and activate company-wide tech strategies. As these pioneers make the most of internally generated portfolio data sets and analytics to fuel investment and operating decisions, existing gaps will continue to widen. Property technology (proptech) adoption will play a huge part in how these players evolve to remain relevant.
Fast followers should take advantage of a meaningful opportunity to seize this moment and build a more connected technology strategy that sets their business apart. To fully realize the potential of your technology, start by diving deep to address three fundamental components of implementation.
Develop an actionable technology strategy
Any company’s technology strategy must align the enterprise architecture with the organization’s strategic direction, and real estate is no exception. To derive true ROI, your strategy must allow each application to communicate seamlessly across the entire business platform as part of a fully integrated infrastructure. Getting there requires the kind of cultural buy-in that can only come with deliberately managed transformational change.
What does that look like in reality? An actionable technology strategy demands more than specific, targeted steps, like hiring a strategy champion or sourcing a particular vendor. It must redefine various management approaches to tie the technology strategy right into the business objectives.
Start building your strategy by clearly defining your business case for implementing the technology to begin with, and then assess how you’ll roll-it out. For example, EY research shows more than 60% of real estate owners consider making operations more efficient or reducing cost to be their top technology priority. Focusing on the long-term business goals you’re trying to address through the technological infrastructure is critical. You also want your strategy to be as flexible as it is scalable, knowing you’ll have to refresh the approach regularly as you seek to keep infrastructure current.
Then ask these questions at the front end of your planning process to help you design a technology strategy that’s truly fit for purpose:
Build a path to implementation
Implementation is a trouble spot for many real estate companies. EY research shows 58% of companies find new systems don’t integrate easily, often because so many different systems are in use. It’s the classic story of a business using specialty systems for specific functions — like common area maintenance costs, construction management or hospitality management — and then struggling to integrate them directly into the general ledger system.
A fragmented proptech market and gaps in expectations between real estate owners and tech companies are exacerbating the issue.
On the bright side, we expect the situation to improve as products consolidate under longstanding — as well as new and emerging — technology companies. Integrating will become easier as more end-to-end solutions become available. We’re already seeing signs of progress. Since the pandemic began, venture funding has migrated toward later-stage rounds and products with strong adoption. These well-funded leaders with market penetration are now driving consolidation by absorbing complementary products.
Either way, the best paths to implementation begin by identifying the right proptech tools for your specific business goals. Start creating that unique implementation plan by asking these key questions now:
Create a sourcing plan
Reliability is everything. Sourcing providers you can count on and trust is just as important as ensuring they fit with your budget and are willing to operate as collaborative partners. That’s true even if you’re buying an individual-point solution or a managed service product.
On the flip side, we’re seeing more and more real estate companies developing and managing products in house or customizing existing products. These options can certainly work as part of a broader strategy, where companies also look for solutions from outside the real estate sector to compare notes and understand varying capabilities better.
Maybe you’re one of the 90% of real estate companies that have already considered or adopted data and analytics tools. Perhaps you’re among the 60% thinking about IoT technologies. Whether you’re investing in existing tools, co-developing products that have the potential to be commercialized, or fall somewhere in between, you’re going to need a clear sourcing plan to harness the full potential these tools allow.