April 18, 2019

Preparing for 2020: 5 changes for CRE managers to consider

In the past decade, there have been many studies on the future of real estate that reference the year 2020. These studies have tried to predict the shape of real estate in 2020 and beyond, so organizations can be prepared.

The year 2020 once sounded so far away, but now it is already 2019 and the clock is ticking! How ready are you for the changes that are ahead of us? 

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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 plan, Gartner mentions several trends that impact corporate functions and require CRE to operate differently. Gartner writes, “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 prepare now for 2020 and beyond:

#1 From cost savings to employee experience

When it comes to value drivers of CRE, the current focus is on cost savings and space efficiency.

This should shift to employee experience and space flexibility. This demands portfolio flexibility and new spaces with a range of features that help attract and retain talent, inspire creativity, and enable collaboration.

To underline the importance of this, millennials will be the largest group of employees by 2020. 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.

# 2 From service provider to workplace strategist

The role of CRE should shift towards being a “workplace strategist.” In this new role, CRE is seen more as a project manager enabling collaboration between other departments such as HR, Finance, IT and other corporate functions. By partnering with these other departments, CRE can create workplaces that not only satisfy and attract employees but are also sustainable financially long-term.

As an example, CRE will be responsible for partnering with IT on digital workplace programs and incorporating principles of activity-based working into workspace design. Another example is working with Finance on 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 From information provider to solution design partner

In addition to being a workplace strategist, CRE should also shift towards being a solution design partner. It is not only about quoting the numbers anymore, but also about helping the business to make the right decisions.

Take the topic of “space” as an example: it’s easy to show the company’s accessible floor area, but CRE departments shouldn’t stop there. The real added value can be achieved when presenting this information alongside other data-driven insights, such as actual space-usage, and by designing scenarios to improve the usage and enhance the employee experience.

# 4 From outsourced models to an integrated approach

In their action plan, Gartner also mentions the CRE delivery model. Their recommendation is to shift from many individual outsourced providers to a limited number of integrated service providers.

To emphasize the value in this, Gartner mentions fifteen activities - from facility services to customer relationship management - and reveals that more than 50% of the CRE work is completed by a third party for fourteen of these activities. The landscape of outsourced activities is getting more intense and complex. CRE will 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 to achieve flexibility and higher quality.

# 5 From customer service to influence

The last important shift affects 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, such as data science specialists, to improve analytic capabilities. And technology investments will shift to concentrate on providing a personalized and responsive workplace through intelligent apps, virtual personal assistants (VPAs), augmented reality and more.

For all five shifts mentioned above, data and technology are key elements in making it happen. Those past studies got several things correct: PwC wrote, “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 optimization, 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 a 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 maximize the value of your corporate real estate, allow people to be more productive, and make workplaces more engaging. In the case of the five shifts mentioned, the use of an IWMS can be invaluable.

It may all sound challenging but once you make the transition, 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.

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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