On one hand, commercial real estate has been responding in unison to the unprecedented challenges wrought by the ongoing pandemic and heightened focus on sustainability. Across property types and business structures, there has been rapid technology adoption to improve efficiencies to do more with less and gain transparency to make better decisions.
On the other hand, the way in which individual portfolios have gone about technology adoption has been wide-ranging. The diversity of approaches have naturally led to both successes and failures.
Unfortunately, attempts to develop sweeping master strategies have ended up as large, complex, multi-year endeavors that have often borne very little fruit. Likewise, adopting technology in silos has led to faster decisions, but also undermined the bigger picture, like aggregation of data and portfolio-level decision making.
With the goal of portfolio-wide standardization around as few platforms as possible, we published a white paper earlier this month that walked through the approaches we’ve seen work:
Download Now: 4 Strategies to Portfolio-Scale Technology Adoption
But like anything else, knowing what not to do can be just as valuable as knowing what to do. Here are the pitfalls we’ve seen that have led to wasted time and money, limited flexibility to changes in the future, and subpar business results.
Prior Relationships and Familiarity
Too often, technology is in place (or renewed) because there is a long-lasting relationship with a certain vendor, sometimes one that has lasted 20-plus years.
To be clear, relationships are critical and any successful deployment of technology requires a strong working relationship. However, when decisions are made based purely on who knows who, it’s the tenants, end users and portfolio that ultimately suffers.
In an environment with few players, it’s natural (and effective) to lean on personal interactions and cues from peers to form judgements and make decisions. However, in a world with an increasingly complex web of tenants, staff, investors, vendors, and partners, depending on personal familiarity can be very bad for business.
An example of this is tenant utility billing, where a vendor is contracted to generate monthly utility bill backs to tenants.
The basics of this business are pretty simple - collect tenant consumption data, apply a rate based on the most recent utility bill and create tenant bills. In fact, many providers developed software to deliver on these requirements in the 1990’s.
The problem is that this software hasn’t been updated much since then.
The environment that many submetering vendors grew up in is similar to a habitat with no natural predators. These companies have had no need to innovate the product because of strong ongoing relationships with owners and MEP firms.
However, today, this lack of innovation can prove increasingly costly as competitors adopt newer, more effective solutions. To continue the example, tenant utility bill backs, for so long an afterthought in commercial real estate, now plays a big role in ESG reporting and transparency, tenant engagement, and maintaining stable cash flows.
No matter how strong that relationship is, or how long it’s lasted, a legacy provider that cannot support the ever-growing requirements is putting the portfolio at a competitive disadvantage.
Ad Hoc Adoption
Relationships are usually maintained in a top-down manner. On the other end of the spectrum, there’s technology adoption made from the bottom-up; by the property managers and engineers at each property.
Like relationships, end users are critical to a successful deployment. But if they are depended entirely on to make purchasing decisions, the portfolio will suffer.
For perspective on how this approach plays out, we recently did a portfolio technology survey and found that there were an average of five technologies per site used for basic workflows and 50 unique vendors across the 53 asset portfolio.
The problem with this messy tech stack is self evident.
At the property level, the specialization of solutions leads to specialization of knowledge. That usually means that only one person in the building uses, and knows how to use, the platform, whether it’s used for maintenance, energy, capital planning and so on.
This translates to fragility, the operational effectiveness of that property is one person away from falling apart.
At the portfolio level, this lack of standardization makes aggregation of data impossible. It stops asset managers from getting transparency into what’s happening on site, deepening silos and inhibiting accountability.
Some portfolios believe that standardization of solutions isn’t necessary, it’s only the standardization of data. While a nice thought, we have not seen that play out in practice.
The cleanliness, accessibility, breadth and organization of data is extremely varied across providers and on-site teams can’t be reasonably expected to know how to evaluate solutions on this dimension.
Traditional RFPs
In our white paper covering successful approaches to portfolio-scale tech adoption, we cover the Needs-Based RFP. In short, this involves interviewing business units to determine a specific (and limited) set of business requirements against which to evaluate technologies, leading to faster and better decisions (after a decent amount of upfront work).
Unfortunately, that’s not how most RFP processes go.
Usually, it’s something like this:
- Hire an expensive consultant to write out an RFP (often outsourced anyway)
- Collect 50-page responses from dozens of vendors
- Nobody reads the responses due to the sheer quantity of information
- At best, a few companies are selected (usually based on name recognition and relationships)
- The process starts at the beginning anyway, with discovery of business needs, demos, identifying assets, and proposals
This wastes huge amounts of time and almost never ends in innovation at the portfolio level. Meanwhile, competitors have gained an edge and the organization hasn’t learned very much about what works and what doesn’t.
If the traditional RFP approach is going to be taken, at least provide all the specifications necessary for real scopes of work to be submitted and evaluated, rather than just feature-based capabilities.
Head in the Sand
Nothing is worse than technology adoption for its own sake, simply to check the box.
Technology should always be tied to specific business outcomes and support existing workflows before adding or changing processes. There’s no faster way to run into adoption issues with end users than forcing them to use technology that doesn’t help them in their job.
That said, there are always voices in the organization that believe that the way things have always been done are working just fine, that technology is an unnecessary distraction.
This can happen for a number of reasons.
Sometimes, it’s as simple as job security. There’s a false belief that technology will entirely replace the jobs of property managers and engineers.
That is nowhere near the case. Technology allows the real talents of these individuals to be realized by automating and streamlining the repetitive tasks, analysis and administration.
This sentiment also comes from a lack of understanding of the bigger picture. The truth is that the way things have been done really have worked for a long time.
The problem is that the world is changing and exerting pressure on the industry to adapt. It’s not that they’ve done anything wrong up to this point, it’s that continuing on the exact same path will no longer lead to success, especially compared to competition that is adapting.
As mentioned before, portfolios need to think about the bigger picture, about being able to pull granular data about their operations on demand. They need to be able to make better decisions to cut costs and reduce emissions, and they need to improve resiliency against unforeseen shocks to the business.
Burying heads in the sand is not an option. Fortunately, in our experience, these detractors can be converted once the benefits of technology are realized and their fears assuaged.
Enertiv has developed a deployment model that is easy to get started and engages both on-site teams as well as executives. Get a tailored demo to see our unique approach
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