Five questions will help you capitalize on a hidden resource—your business information.


Editor’s Note: This is the last in a series of three Opinion articles on topics of central importance to leaders of real estate enterprises large and small. See the first two, “Revitalizing Your Real Estate Organization” and “Recasting
Your Real Estate Strategy


Apgar_2_250Information is the hidden resource in real estate organizations. You may have revitalized your team and recast your strategy only to run out of the fuel that powers both. You can no longer rely on instinctive, resolute leader­ship alone to capture market opportunities and solve internal problems. You must be informed by robust data, filtered through metrics and analytical tools, to anticipate the future, drive growth, surpass competition, and manage complexity. However, producing such transformational intelligence is supremely difficult: many organizations have spent heavily on information technology and incurred substantial risks—yet they still do not have the information they need.

To meet this imposing challenge, ask yourself and your colleagues five questions. Each requires critical tradeoffs about real estate business information.

Should you standardize or customize information and the systems that provide it?

Though each firm is unique, don’t assume that your information structures and systems must be customized. Most real estate processes can be managed with standard commercial technology at relatively low cost.

Think modular, as you would when contemplating a building. First, identify your specific requirements and the reports you would like to have. Using these high-level specs, search for available tools that allow meaningful tailoring of data hierarchies, report labels, graphic displays and other elements. Then fill in gaps with your own analytics and overlay a report template designed to meet your requirements and tastes. Many off-the-shelf systems have comprehensive category structures, simple access tools, and customizable report formats. If you retain consultants to assess the options, ensure that they are independent of the systems providers.

Should you reduce or expand metrics?

The answer depends on whether the metrics you use now fully meet current and anticipated needs while revealing new insights. It’s not the number of metrics but their relevance and format that count. The right metrics will help you distill meaning from information and create the “a-ha” moments that drive innovation.

Much as your car’s dashboard highlights basic performance indicators, your business dashboard should show a limited number of metrics for planning (for instance, portfolio supply/demand, “what if” scenarios); managing (occupancy/leasing, costs); and monitoring (project status, inventory tracking). The key difference from fixed formats, such as the car dashboard, is that the business dashboard allows you to gain leverage by diving into the databases behind each measure using powerful, low-cost business intelligence analytics that span all your systems. New perspectives emerge when property and project data are linked with finance, human resource, and operations data and are visualized through decision-based graphics. From several hundred choices in a “metrics library” you probably will pick a dozen for real-time display, with thousands of supporting data points and the flexibility to alter them quickly as conditions change.

Should you restrict or open data access?

The quest for transparency pervades decisions on information availability and use. Many firms still manage as if they were intelligence agencies, limiting information access to those with a need to know. Today, that’s futile. Ubiquitous databases and sophisticated search engines enable access without your knowledge, much less approval, to data that you would prefer to keep private but which must be treated as public. Competitors can analyze your strategy and profitability almost as well as you can; development and operations factors are common knowledge. So, decide which of your data are proprietary, requiring restricted access, encryption, and other safeguards, and which are generic, assumed to be available in government or commercial databases. Restrict access to the former but open up the latter, imposing the discipline of regular, integrated reporting that synthesizes all the firm’s activities.

Should you outsource or in-source information management?

With the onset of cloud computing, few real estate firms need large IT units, much less data centers. Cloud service providers offer immense capacity. The cloud allows you to shift software, hardware, and maintenance costs to the service providers. If you have little to no capital investment in internal systems, you will be more agile in capitalizing on the cloud than will competitors with heavy systems and facilities that are costly and difficult to unwind. To use these capabilities, however, you must be as smart about information as you are about deals. This core competency combines metrics that suggest strategic direction and monitor operations and strong governance of the under­­­lying data. The facilities and systems administration can be entrusted to third parties. Remember that IT is a support service. It is always more efficient, and usually more effective, to focus on choosing and customizing applications rather than on providing the facilities and systems that house them.

Should you centralize or decentralize IT?

Whether you outsource or in-source IT, this tradeoff becomes more difficult as firms grow and projects proliferate. To aid your decision, it helps to distinguish functions, such as development and asset management, from operations, such as human resources, procurement, and finance. The former are both strategic and area and site specific, vary by local requirements, and depend on integration of global insights with local, hands-on intelligence. Operations are generic to the business, should be managed enterprise-wide, and should be standardized across the organization, not only for efficiency but also for consistency among areas and asset types. For example, Tishman-Speyer decentralizes multiple systems to meet local requirements in many areas, yet has a central data warehouse and a corporate-wide information governance model.

Information is critical to your success. Restructuring it is more a leadership challenge than a technical one because it requires significant organizational change and sophisticated oversight. Focus on what you and your team would like to know, how you would like to see and hear it when and where you want, and how best to inform your investors, clients, and stakeholders. Technical problems may be solved by IT experts, but you, as leader, must ensure that information substance drives information systems.