In corporate real estate, it all
begins with the leasing process
In years past, someone asked the infamous bank robber, Willy Sutton, why he robbed banks. Sutton responded, “Because that’s where the money is!” Sutton’s pragmatic answer could be the guiding principle behind software prioritization for facilities and real estate applications. In other words, what are some guiding principles for selecting and investing in software functionality in support of your facilities and real estate operations? To use Willy Sutton’s logic, CRE managers should follow the money in the prioritization process.
In corporate real estate, it all begins with the leasing process. Having a well thought out leasing and portfolio strategy is the first step in developing a software application strategy. Everything in corporate real estate begins with the lease portfolio. Corporate leases define obligations, tenant rights, options, costs, and in terms of new accounting rules, assets and liabilities.
We know that company lease obligations represent the second largest cost on the P&L statement behind labor, and thus the systematic and attentive management of these costs is crucial to company profitability. Leasing is a complex and labor intensive activity. Typically a medium to large enterprise must handle hundreds of distinct transactions per month generating thousands in leasing cost and related expenditures for utilities, insurance, amortization, taxes, and other related costs. Beyond the lease negotiation and contracting activities, the enterprise must administer a myriad of tasks, including rent payment, lease renewals and extensions, escalations, CAM charges, and cancellations. Thus, the first priority in selecting a software application is to start with a lease management tool that becomes the central focus for developing a company wide leasing strategy.
Following the money trail, the second priority is acquiring a space management tool to support space planning and to assist in space forecasting. This includes moves, adds, and changes as well as the myriad activities and tasks in managing the details of facilities demand and capacity. As we wrote in an earlier blog, the space management module can be readily integrated with the lease portfolio application so that a leasing record can be linked to space layouts, furniture plans, and human resource data. The space management tool can be enormously effective in planning consolidations, expansions, reductions and collocations of related staff offices.
The third priority in the IWMS prioritization process is the selection of a maintenance management tool to handle the various maintenance tasks, such as predictive and preventive maintenance, repairs, and major refurbishments. There are a host of best in class software products to support the maintenance process. Like the space management tool, it is paramount to integrate these tools with the lease management applications and portfolio database. Like virtually all the applications related to the CRE process, it is important to ensure that the maintenance applications are adapted for mobile use, so that maintenance staff can access and input data from the field.
Underpinning all these applications will be a best in class project management capability, so that whatever corporate real estate function is being considered has a well conceived operating process supported by the project management application. These tools are typically role based and have pre-determined approval and calendaring functionality, designed to streamline and control the various processes governing the leasing, construction, and maintenance processes.
Selecting and configuring software in support of the real estate and facilities management process can be a time consuming and expensive endeavor. For many larger enterprises with vast portfolios, it may be wise to go with a single integrated IWMS system, adding modules over time. This offers a single source, with “one throat to choke” if things go off the rails. But now with cloud computing and powerful middleware, it’s possible to select best-in-breed solutions on a prioritized basis, and integrate over time. No longer are user organizations confronted with the “big bang” possibility of going with a full suite of applications at the outset, costing millions and taking years to implement. So going on a prioritized basis is smart like Willy, because, “that’s where the money is!”