Why Data Ownership Matters When Engaging a Real Estate Consulting Partner
The global pandemic has changed the way businesses value their real estate portfolios.
This massive change happened relatively quickly. It started with the rise of remote working and is perpetuated (and at times complicated) by the need for company-wide return to work plans.
Senior executives have had to deal with these new circumstances and make important decisions about the long-term space needs for their organizations. And of course, that led to some big questions:
- Should we renew the leases of three buildings or only two of them?
- Will there be room to accommodate all of our new hires when we finally get back to the office?
- How much has remote work saved us on facility maintenance costs?
To answer these questions effectively, they need a lot of data at their fingertips. The more visibility they have on their property and facilities data, the better they can objectively assess costs and make choices that benefit the organization.
Are third-party vendors the correct answer?
Many companies choose to rely on real estate consulting and service partners to understand their data and help them make decisions about their portfolio.
In some cases, consulting and service partners also provide the entire suite of technologies that captures, stores, and organizes all real estate-related data across the organization. When the time comes to assess that data, then businesses are completely dependent on the third-party service provider to deliver the data and provide objective analysis based on its content.
But now, faced with new and complicated scenarios in the midst of the pandemic, business leaders are showing an increased preference for ownership of their tech stack and control of data. By implementing Integrated Workplace Management Systems (IWMS) and other solutions that enable better control and ownership of corporate real estate information, businesses can leverage their service relationships with their partners. CRE, but own, control and manage their data internally.
And as we’ll discuss shortly, this strategy doesn’t have to be a zero-sum game. In this new paradigm, organizations will continue to leverage their relationships with CRE’s consulting and service partners. These organizations simply become users of IWMS owned and operated internally. The CRE companies provide the services and the company takes ownership of the data management and reporting technology.
So which is the better choice: to own or to outsource? The answer will be different depending on the organizational needs. To get a more complete perspective, let’s take a look at the benefits of each.
Own or outsource your corporate real estate data
It is important to note that there is no right or wrong approach when it comes to hiring a CRE consulting and services partner. However, there are obvious advantages to owning and outsourcing your real estate and facilities data. Here are a few.
Benefits of data outsourcing
- Fast recovery time: Third-party workplace data management systems are often turnkey solutions, which means they have out-of-the-box functionality and require little setup time. They deliver a tangible return on investment within months or even weeks.
- Reduced use of internal resources: Small organizations often lack the staff needed to monitor and manage data systems. In these cases, a consulting and service partner that handles all of the data management may be a more efficient and cost-effective option.
- Little technical knowledge required: Third-party vendors typically have a sophisticated technology stack, sometimes running multiple systems in combination with each other. This usually remains invisible to their customers, as the vendor handles most (if not all) of the implementation, updates, and security operations for the technology.
Benefits of full data ownership
- Consistent and immediate access to data: Companies that operate an internal IWMS have their data readily available, often requiring a few clicks to access it. They can also generate their own reports and export data quickly, instead of waiting days or weeks for a vendor to do the same.
- Full assurance of objectivity: Third-party consulting and service partners are always encouraged to sell more of their products and services. For example, if a customer asks whether they should double or triple their existing space, the vendor is prompted to highlight data suggesting that increasing the footprint is the best strategy. Why? Because it means more space to manage for this supplier. Conversely, if data is managed internally, company management enjoys full transparency and visibility and knows the answers to questions before hiring third-party service companies.
- Greater flexibility in the medium and long term: Less reliance on partners for data services means companies can negotiate shorter and more advantageous contract terms. After all, why would you accept a 10-year contract with a supplier that turns out to be ill-suited after a few months? When a company owns its corporate data, management can make deals more selectively without leaving the fate of the organization in the hands of a trusted third party for years to come. The cost and impact of switching providers is also significantly reduced when the business owns the data.
A hybrid solution
Many executives may want more ownership of their company’s real estate data, but they are reluctant to reject, change, or end a relationship with a service provider entirely. In these cases, they may assume that they don’t have much choice and must choose one extreme or the other.
But the good news is that there can be a happy medium.
An ideal future may be one where IWMS vendors and business consulting and service providers come together to offer solutions that can be configured according to the needs of each client. For example, a company may hire a service provider for facilities management services, but instead of also accepting the turnkey workplace management solution from that provider, the company has the option of hiring preferred IWMS provider and keep all of their workplace data in-house.
In this way, customers gain flexibility and choice. They can plug in the parts that work for their business and unplug the parts that don’t. The service 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 balance between business continuity, space availability and cost savings will be a delicate balancing act.
When looking to engage with a consulting and service partner, consider all of the topics we’ve covered above. And remember, at the end of the day, companies with your best interests in mind should give you flexible data management options when making high-stakes decisions about your portfolio.
Written by Tom Stanford.
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