E-commerce report
E-commerce report
In a report released in June 2000 on the use of management information technology in Europe's real estate sector last year, the extent to which property managers embraced Internet technologies to manage their property portfolios beggars belief.
The report, entitled REMIT [Real Estate Management Information Technology]2000, and sponsored by Ernst and Young's Real Estate division and the International Development Research Council, reveals that only 6 per cent of the 186 companies surveyed across 13 European territories used any form of e-commerce. Only 23 per cent of these same respondents – who manage a total of 190,336 properties with 7,362 property staff – claimed to use the Internet. Just 11 per cent claimed to use intranets. Zero registered use of extranets. If these figures weren't depressing reading enough, the absence of Internet links on four out of five companies' information technology wish lists confirmed that e-commerce was likely to remain in its infancy within the European real estate in 2000.
Other missing links
If real estate teams seem to be failing to connect to a wider world –either within or outwith their companies due to the lack of Web-enabled technologies – their apparent corporate isolation is compounded by their failure to exploit other "collaborative" tools.
Ernst & Young's REMIT 2000 survey reveals that real estate management information technologies are not, to any significant degree, being linked to other systems – such as those of accounting – within a given company and that less than 25 per cent of property managers claimed to share their data with other functional teams. The implications are intriguing. If, as the survey indicates, there is an overall lack of real estate systems integration, are real estate management teams "disregarded" within a given organisation as a whole?
Do we know how we are doing?
The real nub of the systems integration issue is less to do with its by-product – lack of efficiency – than primary issues of performance measurement that are the very cornerstone of business performance improvement. This is confirmed by the REMIT 2000 survey which reveals companies' "staggering lack of interest in performance measurement", according to Waller. "How can you move forward if you do not know where you are starting from?" REMIT 2000 shows that only 17 per cent of respondents reported that they attempted to measure performance improvement when they implemented a given information technology system; 59 per cent reported that they did not measure performance. The remainder, significantly, failed to comment.
Something on the horizon?
According to Ernst & Young Real Estate Group consultant, Andrew Waller,however, the light is beginning to dawn. "The most commonly identified improvement in our survey of real estate management systems identified process efficiency, followed by robust data, improved reporting and time saving. Companies reporting performance improvement made significantly more use of reports than accounting and diary functions, while companies reporting improvements are more integrated than those that do not".
It is common sense to measure the effectiveness of IT investment
The report revealed a link between effective reporting and increased integration of systems. These are areas which Ernst & Young know from experience can yield enormous efficiencies. Interestingly, companies that measure performance improvement are significantly less likely to believe that software limitations are constraining the development of their teams' efficiency according to the report. This may be because performance measurement exercises force a business as a whole to understand the capabilities of their systems and relevance to the organisation's business objectives.
Advice for CEOs
The report's implications for chief executive officers are clear. Estates teams are making buying decisions and spending budget on technology. However, in the majority of cases, REMIT 2000 shows that they are experiencing problems with the systems they buy, do not measure whether the systems improve business performance within their departments and firm-wide, and have no plans to take advantage of the Internet revolution that is threatening many non-e businesses.
Waller says:
If CEOs want to know that their real estate teams are purchasing systems that provide the functionality that the Board requires for the business,then real estate business processes must be organised to provide a solid platform for the use of enabling technology.
Advice for the real estate manager...
Advice for real estate managers is similarly robust. "Planning and the measurement of performance and its improvement is critical if real estate teams are to get the most out of systems and, critically, freedom from future constraints. If teams are to be adequately resourced, they must communicate with the Board more effectively by presenting their cases based on business-, not technology-lead, processes. If performance is measured, financial directors are much more likely to be disposed to further investments."
… and their suppliers
Ernst & Young says that IT suppliers should invest in measuring the improvement in business performance to their customers as a result of their systems. Says Waller:
There is no point in wasting time selling to customers who are not then equipped to build a business case and obtain funding. One option, particularly where large companies is concerned, is by demonstrating capability through pilots rather than demonstrations.
The gap between perception and reality
Concludes Waller:
The overall message of REMIT 2000 is that respondents think that they understand their business and real estate management information technology problems. The report also shows that there is a huge gap between perception and reality. Real estate managers are, unfortunately as our survey of two years ago revealed – a long way from realising the full potential of their systems both for the benefit of their teams and their overall business.
The upside, says Waller, for those few forward-thinking companies who have implemented e-business or e-commerce solutions and have, therefore, changed the way they work, is "the huge advantage they will have gained over their competitors by embracing this technology".
For further information or interviews with Ernst & Young Real Estate Group consultant Andrew Waller, please contact him direct on 07818 015924 or via Fiona Greig on 0207 951 3957or via e-mail on fgreig@cc.ernsty.co.uk
