18 April 2019

Preparing for 2020: 5 shifts for CRE managers to consider

Many studies that have taken place over the past decade around how people see the future of real estate have referenced the year 2020. For example, CoreNet’s “Corporate Real Estate | 2020” in 2012 and PwC’s “Real Estate 2020 – building the future” in 2014. These studies have tried to predict the shape of real estate in 2020 and beyond, so organisations can be prepared. 2020 once sounded so far away, but now it is already 2019 and the clock is ticking! So, have you thought about the changes that are ahead of us? And how ready are you? 

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Gartner has just published their view on Corporate Real Estate (CRE) in 2020 together with an action plan to get you ready in time. In their action plan Gartner mentions eight trends that impact corporate functions and require CRE to operate differently. Gartner: “Only by embracing these trends can CRE continue to be a strategic partner and a value driver to the business.” Gartner presents five important shifts CRE managers should consider to start preparing now for 2020 and beyond:

# 1 Focus on employee experience and space flexibility

When it comes to value drivers of CRE, according to Gartner the current focus is on cost savings and space efficiency. This should shift to employee experience and space flexibility. This demands new space alternatives that provide portfolio flexibility and design spaces with a range of features that help attract and retain talent, inspire creativity and enable collaboration. To underline the importance of this, remember that by 2020 millennials will be the largest group of employees. According to a study by CBRE, 78% of the millennials surveyed consider the working environment important when choosing an employer. To show the business value, CRE dashboards will need to relate metrics back to business outcomes and not just cost-efficiency. In addition, CRE needs to work with IT to plan technology and digital workplace investments that improve employee mobile and remote work experience.

# 2 Direct the workplace strategy

When discussing the role of CRE, Gartner states that this should change from acting as a service provider towards being a “workplace strategist”. In this new role, CRE partners with HR, Finance, IT and other corporate functions and acts as a Project Manager to enable multiple ways of collaboration. This implies, as an example, that CRE will be responsible for partnering with IT on digital workplace programmes and incorporating principles of activity-based working into workspace design. By working closely with partners, and combining their strengths, CRE can create those workplaces that satisfy employees and attract and retain talent but are also sustainable financially and for the long-term. Think about finding the right balance of owned and leased assets that offers maximum flexibility with minimum financial impact in the context of the current Lease Accounting rules and regulations.

# 3 Redefine business partner perspectives on space

According to Gartner, as well as changes to the CRE role, a shift in business role is needed: moving from being an information provider towards being a solution design partner. As I interpret this, it is not only about just quoting the numbers anymore, but also about helping the business to make the right decisions based on the information you provide. Take the topic ‘space’ as an example: showing the size of the company’s accessible floor area is often not that hard, but could be the point where a lot of CRE departments stop. The real added value can be achieved when presenting this information alongside other data driven insights, like actual space-usage, and by designing scenarios to improve the usage and lower the costs. As a solution design partner CRE unlocks business interest in real estate decision making that advances both CRE and business needs in the decision-making process.

# 4 Shift outsourced models to an integrated approach

In their action plan, Gartner also mentions the CRE delivery model. This should shift from ‘best-in-class or bundled services’ towards an ‘integrated delivery model’. Nowadays many real estate activities have a high level of outsourcing. Gartner mentions fifteen activities - from Facility Services to Customer Relationship Management - and a survey shows that for fourteen of these activities more than 50% of the CRE work is completed by a third party. The landscape of outsourced activities is getting more intense and complex. To continue to offer best-in-class services to the business, CRE will need to compete for top-tier talent of outsourced service providers and need to consolidate vendors to provide more activities consistently across global locations. With this new approach CRE will drive consistency of process and service delivery across multiple service providers to achieve flexibility and high-quality.

# 5 Upgrade procurement skills and technology

According to Gartner, the last important shift affects the CRE resources in terms of skills and technology. The focus on skills and technology should shift from ‘customer service and portfolio management’ towards ‘influence and real-time analytics’. To be honest, I find this one the hardest one to interpret, because in their action plan Gartner is not very clear about what is meant by a focus on influence and why they mention procurement skills. This could have something to do with the previous shift concerning outsourcing. In any case, Gartner says the investment in talent resources will focus on an understanding of analytics, and influencing abilities and technology resource investment will focus on software for space management and digital amenities. Therefore, CRE will need to tap into shared talent resources across the company, like data science specialists, to improve analytic capabilities. And technology investments will shift to concentrate on providing a personalised and responsive workplace through intelligent apps, virtual personal assistants (VPAs), augmented reality and more.

For all five shifts mentioned above IT, data and technology are key elements in making it happen. In this case PwC was quite right with their prediction: “By 2020, technology will have become mission-critical.” Or what to say about CoreNet’s vision: “By the year 2020, employees considered “digital natives” will be served by a super nucleus of real estate, human resources, technology, finance and other support services, while sophisticated data platforms will transform real estate portfolio optimisation, strategic planning and workplace management alike.”

How an IWMS can support you

This is where an Integrated Workplace Management System (IWMS) comes in by integrating all real estate and workplace related business processes within one single software solution. This solution unifies all stakeholders such as portfolio managers, space planners, service providers, and your daily workplace users in one platform. A seamless integration with existing IT systems and smart building technology ensures maximum value for your business. This allows you as a CRE executive to continuously improve and innovate in both operations and strategy to maximise the value of your corporate real estate, let people be more productive and make workplaces more engaging. In the case of the five presented shifts the use of an IWMS can be invaluable.

It may all sound challenging but once you make the transitions the future seems bright, as CoreNet predicted back in 2012: “By 2020, the corporate real estate (CRE) leader will evolve from a subject matter specialist to a strategic partner with a broad knowledge of business strategies”. Gartner helpfully presents a ‘to-do-list’ suggesting the most immediate actions you should take to get started.

While vision reports are a great way of exploring ideas and opening up discussion on industry issues, we cannot predict the future of course. If you’d like to read more about the economic, demographic and technological developments that we, at Planon, believe are set to dominate the work of CRE and Facility Managers in the next three years, read our white paper: “From trend to reality: 10 trends that will shape property and facility management by 2022.”

I’m always interested to hear different opinions, so if you would like to share any thoughts on this topic, please do get in touch.

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