Getty
Getty
We’ve seen this coming. Anyone who had a shred of interest in digital transformation and took notice of its eventual upheaval and subsequent implementation within first the consumer-driven industries, followed by industrials, then financial services and finally healthcare should have been prepared for the ripple effect technology would create in commercial real estate. Perhaps the old guard felt insulated by the industry’s reluctance to deviate from the status quo, and most sat by as digital technologies kicked our proverbial door down to usher in a new normal.
Transformation may be digital, but it’s not necessarily about the technology.
Digital transformation in the CRE market is underpinned by the operational efficiencies that technology provides, whether it be the long overdue automation of manual processes, data collection and analysis or greater marketability. In my opinion, however, true transformation can only occur with internal cultural alignment and a fundamental change in customer philosophy.
This begins with a solid definition of what digital actually means to your organization and an interpretation that aligns top to bottom. Better said, while having a digital strategy endorsed by your executive team is important, the translation of that to the people actually doing the work and impacted by the work needs to be black and white. After all, in order to really drive transformation, you have to be able to transform from the inside out. The people utilizing new technology on a daily basis are the catalyst to positive change.
Digital transformation starts with a clearly articulated and focused strategy. It is not a solitary, one-off exercise, but a holistic change in the way companies work. When launching a new technology or project, it’s important to focus efforts by process of prioritization. No doubt your first instinct will be to immediately identify an unwieldy list of initiatives, which only should be used to pare down based upon strategic impact, cost and practicality. Remember to keep the focus on the areas that need digitalization — not the ones that ask for it.
Beware of empty promises, snake oils and magic elixirs.
With all its pomp and circumstance and the giant upswell of support it has received, why then hasn’t technology transformed the commercial real estate industry as it has with predecessor industries? The answer lies in the fintech explosion. Not too far in the recent past, the financial services sector was invaded by an army of technology startups which quickly became in vogue and left every national bank to community credit union scrambling for the next new shiny toy. And like most toys, the majority ultimately ended up in the trash. Once the dust finally settled, the fintech brands that survived were those that solved real-world problems with practical, easy-to-use solutions.
If you’re paying attention, this is eerily similar to the current climate in the commercial real estate market. CRE tech became a buzzword overnight and opened up new opportunities for software firms, entrepreneurial tech gurus and venture capitalists to launch an unprecedented number of startups to an unexpecting audience with little technical know-how. For further proof, ask yourself how many tenant engagement apps have launched in the last 12 months. History does repeat itself and a market correction of sorts is inevitable, because CRE tech solutions have been commoditized. Why? Simply put, instead of designing with intimate market knowledge, tech developers are building the proverbial peg for a round hole. In other words, easy-to-use, practicality and customer-centric are rarely inputs in the research and development process, resulting in significant booms and subsequent busts in the space.
All is not lost, however. If history can teach us anything, the market will adjust and digital technology will prevail. Inevitably, the commercial real estate industry will adapt and adopt, whether that technology is developed internally within the larger commercial shops or built by technology accelerators with real-world market knowledge. It’s all about sustainably reinventing yourself as a CRE practitioner or company.
The biggest opportunity for digital change and immediate impact in the market is most probably in the area of process automation, with lease automation and renter experience being the two most talked-about topics as of late. Having noticed a huge gap in offerings at the day-to-day property level to improve retention and increase greater net operating income, this is where my company and various others have begun to focus our attention.
Reflect, review, renew.
Today, there seems to be a solution to fit every need in the market, some needs we may not even be aware of at the moment. How do you find the one that’s right for you? A staggering amount of transformative digital undertakings fail within the first year. How then can you ensure a successful implementation, but more importantly long-term success?
Start with the end in mind: What is your challenge, and if implemented, could the solution provide an easy-to-use tool to solve for it without compromising your bottom line? Remember, more than likely, you’re going to partner with a solution that requires not only a financial investment, but a potential long-term investment in time. Choose a partner who understands the real estate industry as much as technology — one you are confident will be around another six months, one year or five years — and a nimble solution that can scale as your needs evolve and your business grows.