Are you ready? More to the point, are your information systems ready?
Ready for what you ask? Ready to provide you and your organization with the critical actionable business intelligence needed to address the convergence of issues facing CRE professionals today:
- The intensifying focus real estate will receive from the senior management as a result of the sweeping accounting changes coming into effect in January, 2012 that will capitalize future rent obligations bringing millions/billions of dollars onto the balance sheet;
- The increasing need for organizations to reduce real estate related operating expenses thru lower occupancy costs; and,
- The desire among corporate leaders to achieve environmental sustainability through LEEDS certified design principles, effective energy management and building efficiency.
Each of these dynamics on their own offers unique challenges but, the combination will demand visibility of costs down to the invoice level. And, summary level “executive dashboards” to measure, manage and act by implementing initiatives that will deliver desired results.
This “thirst for data” will place demands on your information systems like never before. It will require a massive aggregation of information from RE/FM point solutions, IWMS systems, your company’s ERP system, energy utilization and materials management systems and the now famous “super duper, one-off, excel spreadsheets” or legacy access databases that too many people currently rely on. Compounding the challenge of tapping into these potential sources is whether you have consistent data across the portfolio on properties you self manage and those you don’t.
WOW! A daunting task indeed. The key for you and your CRE team is to access, source and deploy a solution or solutions that calculate the components that comprise your total costs of occupancy and measure the financial performance of all owned and leased facilities.
As importantly, these solutions will help you answer the inevitable questions you will be asked in the coming months:
- “what is our total costs of occupancy and how can we reduce it?”
- “what is the future rent obligation of our leased facilities?”
- “how can our real estate assets contribute to achieving environmental sustainability?”
My suggestion is to get ready, NOW!!! Don’t wait to be asked. The steps to get ready may include:
- Create a multi-disciplined team of professionals (RE, FM, Accounting, IT, Operations, outsourced service providers, etc.) to fan out across the enterprise to assemble the data
- Work backwards from the reports being demanded by senior management to populate the detail under the column headings
- Determine where the occupancy cost information is currently being held and figure out how you can access it
- Develop the key performance indicators required to make strategic decisions – you can’t manage what you can’t measure
- Prepare reporting mechanisms for the data senior management hasn’t asked for but will need to get an accurate picture of facility operating costs
- Develop a plan to get clean, reliable and consistent data across the entire portfolio (don’t underestimate how hard this one will be)
- Focus energy on displaying the synthesized data – what will the dashboards look like
- Make an honest assessment of your current systems and get the necessary budget to fund a comprehensive information system or integrated solution that will deliver the metrics to develop and implement a CRE cost reduction strategy
- Get a clear understanding of the reporting demands you will need to comply with the changes to the lease accounting standards
- Establish a rigid and attainable timeline to complete the process
- GET GOING NOW
Our industry has never been challenged as much for information than now. The ‘back of napkins’ and ‘shoebox records’ won’t work anymore. Management will demand a higher level of sophisticated reporting that we’ve never seen. The time for action is NOW…Are you ready?