Data Over Instinct: What We Think We Know
Data conversations can be intimidating. Let’s be clear, despite all of the attention being paid lately to data, commercial real estate owners have always relied upon facts, statistics, et.al., (aka data) to inform underwriting, acquisition, project management, and capital deployment across the asset lifecycle.
“Data-driven decision management (DDDM) is an approach to business governance that values decisions that can be backed up with verifiable data. The success of the data-driven approach is reliant upon the quality of the data gathered and the effectiveness of its analysis and interpretation.”
The rise of technology as an accelerator and differentiator means that this data is accessed, aggregated, and analyzed with greater accuracy in less time than it used to take before the PropTech era.
Data Mining in CRE: Memories, Binders, and Spreadsheets (Analog)
In “The Owner’s Dilemma: Driving Success and Innovation” by Barbara White Bryson with Canan Yetmen,
“the fragmented project environment often teems with misinformation, miscoordination, and misalignment.”
Before the emerging digital age, data mining meant hunting and gathering institutional memory (aka the people who remember) to determine how, and at what cost, a project was done. That might require finding out who knows what, determining whether records are stored, if they exist, and understanding the most efficient process by which to extract useful information.
We Moved From Finding Out “Who Remembered” to “Who Has the File?” (Digital)
Once teams grew and became decentralized, it became essential to document useful, useable information in a format that could be accessed centrally, by participants and stakeholders.
“By some estimates, more than 1.2 billion users, including most of the real estate industry, rely upon Microsoft Excel. While Excel is a powerful commercial tool for statistical, engineering, and financial data tracking and analysis, the software was not designed primarily for use as a collaborative platform—an environment in which the commercial real estate and construction industries thrive…"
While clearly an improvement over purely analog solutions, unless organizations are committed to custom programming or dedicated teams to own documents, tracking, reporting, etc., by spreadsheets can be a nightmare. Concerns include issues with keystroke errors, version control, and if multiple users are working with the same information concurrently, you might end up with more than one supposed “single source of truth.”
"Effective project management—particularly cost tracking—requires meaningful, regular and ad hoc reporting. Incomplete, inaccurate, or misrepresented data will not sufficiently represent the business case necessary to move projects or decisions forward, easily delaying or derailing plans."
Available, Accessible Data
For commercial real estate and construction, software options with familiar spreadsheet capabilities are limited, but they do exist. SaaS platforms centralize project cost tracking, automate workflows, standardize reporting, building secure, searchable records across owners' portfolios. The result is accessible, available data, shareable via integrations, sorted and analyzed as necessary.
Time (Saved) is Money
Saving time and money through automation makes it possible to reduce errors and prevent tasks from falling through the cracks. Cloud-based project management and automated workflows “returned the equivalent of one additional week per month to teams,” according to one commercial real estate analysis.
This matters for commercial real estate owners because according to Deloitte's Annual Commercial Real Estate Outlook,
“While CRE companies have been slow to embrace technological innovations, investors’ expectations indicate it is time to take a more proactive stance...To enhance agility, CRE companies should innovate continuously and improve organizational fluidity rather than work within set guidelines and in silos...Ultimately, the winners will be those that can adapt to the forces of change faster than the speed of change itself.”
The pace at which commercial real estate moves is not expected to slow down. We’re going to need to do everything faster, and with greater consistency and efficiency to stay on top.