Why Data Ownership is Important When Engaging a Real Estate Advisory Partner
The global pandemic has changed how companies evaluate their real estate portfolios.
This massive shift happened relatively quickly. It started with the rise of remote work and is being perpetuated (and sometimes complicated) by the need for enterprise-wide return-to-work plans.
C-suite executives have had to grapple with these new circumstances and make important decisions about long-terms space needs for their organizations. And of course, that has led to some big questions:
- Should we renew leases for three buildings or just two of them
- Will there be space to accommodate all of our new hires when we finally return to the office?
- How much has remote work saved us on facilities maintenance costs?
To address these questions effectively, they need lots of data at their fingertips. The more visibility they have into their real estate and facilities data, the better they can objectively evaluate costs and make choices that are beneficial to the organization.
Are Third-Party Providers the Right Answer?
Many companies are choosing to rely on—or have historically relied on—corporate real estate advisory and service partners to understand their data and help make decisions about their portfolio.
In some cases, advisory and service partners also provide the entire of suite of technology that captures, stores, and organizes all real estate-related data across the organization. When the time comes to evaluate this data, companies are then fully dependent on the 3rd party service provider to furnish the data and provide objective analysis based on its contents.
But now, facing new and complicated scenarios amid the pandemic, business leaders are showing an increased preference for owning their tech stack and controlling the data. By implementing integrated workplace management systems (IWMS) and other solutions that allow greater control and ownership of corporate real estate information, the companies can leverage their services relationships with their CRE partners, but own, control and manage their data in-house.
And as we’ll examine shortly, this strategy doesn’t have to be a zero-sum game. In this new paradigm, organizations will still leverage their relationships with CRE advisory and services partners. These organizations simply become users of internally owned and operated IWMS. The CRE firms delivers the services, and the company takes ownership of the data management and reporting technology.
So, which is the better choice: owning or outsourcing? The answer will differ depending on organizational needs. To get a more complete perspective, let’s take a look at the benefits of each.
Owning vs. Outsourcing Your Corporate Real Estate Data
It’s important to note that there isn’t a right or wrong approach when it comes to engaging an CRE advisory and services partner. However, there are clear upsides to both owning and outsourcing your real estate and facilities data. Here are just a few.
Pros of data outsourcing
- Fast time to value: Third-party workplace data management systems are often turnkey solutions, meaning they have out-of-the-box functionality and require little setup time. They offer a tangible return on investment within months, if not weeks.
- Reduced use of in-house resources: Small organizations often lack the personnel required to monitor and manage data systems. In these cases, an advisory and services partner that handles all of the data management can be a more effective and cost-efficient option.
- Little technical knowledge required: Third-party providers usually have a sophisticated tech stack, sometimes running multiple systems in combination with one another. This typically remains invisible to their clients, as the provider handles most (if not all) of the implementation, updates, and security operations for the technology.
Pros of full data ownership
- Consistent and immediate access to data: Companies that leverage an in-house IWMS have their data readily available, often requiring just a few clicks to access. They can also generate their own reports and export data quickly, as opposed to waiting days or weeks on a provider to do the same.
- Full assurance of objectivity: Third-party advisory and service partners are always incentivized to sell more of their products and services. For example, if a client asks whether they should double their existing space or triple it, there is a business incentive for the provider to highlight data suggesting growing the footprint is the best strategy. Why? Because it means more space for that provider to manage. Conversely, if the data is managed in-house, company leadership has full transparency and visibility and knows the answers to the questions in advance of engaging third party services firms.
- Greater medium to long-term flexibility: Less reliance on partners for data services means companies can negotiate shorter and more beneficial contract terms. After all, why would you agree to a 10-year deal with a provider that turns out to be a poor fit after a few months? When a company owns its enterprise data, leadership can more selectively enter agreements without leaving the organization’s fate in the hands of a trusted third party for years on end. Cost and impact of changing providers is also greatly reduced when the company owns the data.
A Hybrid Solution
Many leaders may want greater ownership of their enterprise real estate data, but they’re hesitant to reject, change or end a relationship with a services provider entirely. In these cases, they may assume that they don’t have much choice and must pick one extreme or the other.
But the good news is that there can be a middle ground.
An ideal future may be one where IWMS providers and corporate advisory and service providers partner to offer configurable solutions based on each customer’s needs. For example, a company may engage a service provider for facilities management services, but instead of also accepting that provider’s turnkey workplace management solution, the company has the option to engage a preferred IWMS provider and keep all their workplace data in-house.
In this way, clients gain greater flexibility and choice. They can plug in the pieces that work for their business and unplug the pieces that don’t. The services provider wins, the IWMS provider wins, and the client receives exactly what they need to effectively manage their real estate portfolio.
Finding the Right Balance
Moving forward during the pandemic and beyond will be a challenge for many companies. Finding the equilibrium between business continuity, space availability, and cost savings will be a delicate balancing act.
When looking to engage with an advisory and services partner, consider all the topics we’ve discussed above. And remember that, ultimately, firms that have your best interest in mind should provide you with flexible data management options as you make high-stakes decisions about your portfolio.
Written by Tom Stanford.
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