Jessica - What do you believe are key factors to consider when setting a digitalization strategy for a company operating in the real estate space?
Nicolas - The first question is why now? And is the intent to make the organization run better? To grow? Or to transform the organization? An understanding of the global and local context, organizational digital maturity, the operating context, understanding across silos and a complete grasp of what problems need solving. Others can help traditional companies solve whatever needs solving and what technology, if any, should be used. But the existing companies in the real estate space must be masters at understanding their own ways of working and knowing what to solve. Irrespective if they are owners, consultants, integrators, hardware vendors, or offering Software as a Service offerings, the real estate industry is changing fast. More and more people and companies understand that the lifecycle perspective and sustainability metrics are more important than ever before.
Simply because there is no business to be done on a dead planet. It is also important to understand that there are different types of assets.
This is important because the needs from the users are very different. They all have their own set of Key performance indicators and it is crucial to understand how well the building can cater to these KPIs and not to fall into the trap that one-size fits all. There are regional factors at play due to vendor-lock in, existing systems inside the buildings, how easy it is to service the building after a tech-upgrade and many other contextual factors that should be considered.
Any digitalization strategy should be tightly coupled to the overall mission and vision for the company to state how technology choices contribute to the overall strategy. Because without a mission and a vision, all digitalization efforts might fall flat because there’s not enough context to understand what benefits the strategy is supposed to realize. And how well that ties into where the company needs to be in the next 5 years.
There are new technologies emerging for wide adoption, increasing requirements for sustainable buildings and that everything needs to work together. And on top of these trends an increased demand for social distancing from the Covid-19 pandemic which creates a higher sense of urgency, than ever before.
There is a lot of questions out there from all sides in the industry:
It is important to view technology as an enabler, not a threat. Technology is just a tool, and means to an end, not an end by itself. How well do these technology solutions support our 5-year strategy? How well can they bring us towards the goal, and how aligned are we with where the world is heading?
It has never been as easy as it is today to find suppliers for any given use case. This also makes it exceedingly challenging to pick the best solutions. That is why it is important to not only focus on the cost perspective, but to find the potential value and business case. If the potential value outweighs the cost, the investment will naturally be worth it.
Jessica - Would you recommend real estate owners to develop their own solutions or source from third party suppliers?
Nicolas - If the real estate owners, and/or any other company operating in the real estate space have a specific problem defined and a goal of where they want to be, I would invite vendors to battle for glory, based on outcomes that the real estate owner in this case want to see. And how they want to differentiate themselves from the crowd in the future. This goes back to understanding their problem well enough, and let others solve it for them. There are amazing products and solutions out there from existing vendors. But the real estate industry is an industry plagued by obsolete technology and vendor lock-in from all sides, including suppliers, consultants, integrators, and procurement organizations driven by obsolete metrics.
I would therefore recommend the organization to think about what they can bring to the table. Basically, understanding what jobs to be done:
A lot of the digitalization initiatives end up as innovation theatre and that is not good for anyone. Understand what you know and do well as a real estate company, work with the companies that understand the “Proptech” side of things, and with the companies that can help bridge the gap in terms of technology.
Depending on the speed and organizational capabilities, companies could be just as well off developing their own solutions as buying off the shelf. Pilots are less a test about technology fit, and more about how capable the organization is of delivering benefits to the ones that need it the most.
Key questions are:
From my experience there tends to be a high level of risk aversion among real estate companies and if it is not broken, why fix it? But now, we see that the entire real-estate industry is broken. And that is why there is such an urgency to get started, get going and hopefully also succeeding with digitalization initiatives. The new normal is anything but normal. And the rate of digitalization has never been higher than it is right now. Which makes it even more important to make strategic decisions that are made in a data-driven capacity of what will work today, and into the future.
Jessica - What type of digital solutions do you think a real estate company should start with?
Nicolas - My immediate response would be none. They should start with understanding where they are today, where they want to be tomorrow, and in the future. And to figure out how they want to differentiate themselves from their competitors and what their true north star strategy will be. The strategy dictates what digital solution they might want to start with. It could be on the transactional side, it could be on the real estate side, it could be in how they do internal operations in the company, how they communicate with partners or a different business model entirely.
But in general terms, the ones that can provide quick wins and can scale and not only solve problems one, two and three. But also, four, five and into the future. Any digital solution must be useful (for whom), robust (scalable), and attractive. Other important metrics when choosing technology platforms is that they are:
And if we are talking about “Smart Buildings” in general and we see a shift from an energy-focus towards a people focus. And a general desire for the building to adhere to whatever KPI is important for the users of the building. And we also know that the challenge seldom lies in collecting the data, but rather acting on the insights the data provides and following up to deliver an intended impact.
My interpretation is that if there is no end-to-end vision and strategy from the beginning, it is difficult to succeed with digitalization strategies. It is therefore important to understand the relevance and the need for an end-to-end strategy from the beginning. And that the strategy is aligned with global trends.
Jessica - How do you start defining an end-to-end strategy with your client?
Nicolas - By asking questions on how they do business today, if they have defined what they would like to achieve, and exploring what success looks like for them. Benefits realization strategies are an important key to this, to align what they want to achieve from any initiative. To understand how this tie into the overall strategy and what the world will look like are also important to quickly assess their fit from a macro-level perspective.
Once we discuss their current ways of working regarding people, systems, culture, processes, and hierarchy, it is easier to assess if this vision is aligned with their current strategy. Do they have the people needed to develop this in-house? Do they have the organizational chart it takes to make it “fly” in their organization? How can we ensure that pilots do not get killed by middle management and that new ideas and innovation (if needed) get the runway they deserve? All in order to find out if they aim to run, grow, or transform the organization/parts of the organization, as stated at the beginning.
It is important to avoid diving into a specific technology solution that does not harmonize with existing vision or technology. By prioritizing this discussion at the start, we find that we are able align on a holistic vision for the organization, whatever buildings they have. All segments have their own intricacies. It is not the buildings that differ. Rather how people are using them, who are using them, is it a hospital, university, nursing home, port, logistics, apartment complex, even a city?
Another option is of course also to reach out to the users of the buildings to better understand their needs and if they are being met. Not only the tenants, or end users, but also the technical asset managers, facility management team, and other stakeholders that interact with the buildings. If the standards are not met, the need is verified, and you know where to start. Providing there is a business case to support it.
The easiest solution is adding non-invasive digital solutions to the building, independent of existing technology. However, this does not necessarily mean that it is the smartest thing to do. Will the technology harmonize with existing technology? Will it provide synergy effects? What is the cost of integrating new solutions into existing products? And how fast can benefits be derived? By whom?
Real estate companies that want to get started with digitalization therefore often turn to experts to ensure they make the best strategic decision. And this is where WINNIIO can support. We help decision makers be their best, so they don’t have to make decisions in a vacuum.
You can hear more about WINNIIO’s CEO on his podcast Beyond Buildings. Nicolas is involved as a strategy expert in several Smart City projects, Proptech Sweden, Digitala Fastigheter and a recognized speaker regarding digitalization initiatives with vast knowledge regarding the concept of True Digital Twins.
About WINNIIO - It is a consulting company that helps companies find their role in a Smart City, Smart World context. WINNIIO has a narrow and broad focus around anything cutting edge, such as Smart Cities/Smart Buildings, IoT and connectivity, Construction, 3D printing, re-inventing the real estate lifecycle, national innovation platforms, industry 4.0, shipping/cruise ships, manufacturing, automotive, mobility, energy, and how to realize the full potential of AI/ML initiatives at scale.
