My position at a technology firm that helps our clients manage over 1.5 billion square feet of property offers me a pretty unique point of view on an industry. I’m fortunate to have this perspective of the Commercial Real Estate (CRE) market, a sector that is quickly changing as the worlds of technology and customer expectations collide.
As we head into the new year, I wanted to offer some commentary on two very specific trends that I believe impact the road ahead for providers and consumers of commercial real estate technology (CRE Tech.)
The Threat of Low CRE Tech Adoption & Utilization
As we all know, CRE is generally not known as an industry on the cutting edge of technology usage to make progress. To illustrate this point, BisNow reported about 13 months ago:
Commercial real estate is falling behind on investing in tech and data analytics, and it’s creating potential roadblocks to effective asset management, decision-making and deal flow.”
The irony here is that there are more technology options available to the industry than ever before. A common refrain heard from a property team is that they used to get a call from 3 to 5 of the same CRE Tech vendors a month, and now receive over 20.
While each of them may be able to solve a problem they have, a typical property team or organization simply doesn’t have the bandwidth to go through a buying process for each of these. Additionally, even if they could, the ability to fully absorb and utilize new technology is limited by existing skill sets, resistance to change and a host of other obstacles.
This deluge creates a sense of resistance in the market to making technology investments. I speak to our customers all the time, and we hear quite often that when an executive considers the decision to invest in a tool and push it into the field, their biggest concern is, rightfully, utilization.
Propmodo.com reports that one-third of the CRE industry still runs on Microsoft Excel. “This resistance to innovation may be a legacy issue related to the old guard of industry CEOs and CIOs. A generation that believed in spreadsheets and silos,” they write.
These executives are worried that it won’t generate a strong return on investment, that their teams simply won’t use it, that it won’t show fast time-to-value, and that it won’t fundamentally improve their teams’ lives.
Here at Building Engines, we invest heavily in customer success that focuses on change management to drive adoption because we have accepted a simple truth – change is scary – that often prevents many teams from evolving past spreadsheets and manual processes.
Overall, the burden has shifted to major technology players, like us, to help our customers make the right decisions, and improve how technology is utilized in their organizations. If we are able to do so, both sides of the ecosystem – vendors and practitioners – benefit. If not, we’re all going to be held back.
The Importance of User Experience
There is an enormous rush of CRE Tech companies developing products, that have received significant funding and are rushing to the market to introduce new capabilities. Anyone who looks at the space can see that there are myriad processes within a commercial building and tenant experience that can be optimized through the use of technology. And it’s a BIG market!
The CRE industry knows and recognizes that.
But, although CRE executives and practitioners have the ability to select from a growing number of great solutions that solve very real problems, they’re still the same teams they were five years ago. They have the same number of people working against growing pressures to perform, and they’re time-crunched to serve and retain tenants in increasingly competitive markets.
You may have developed the best product in the world, but your CRE buyers have the same amount of work to get done in the same amount of time. Buying technology can become a burden, as many firms often operate without resources like a global IT staff or project management team to help them out.
What does this mean for CRE technology vendors like us?
We believe it dictates that all products must be remarkably EASY to use. Business app consumers, are still consumers in the age of the iPhone. They expect an intuitive user interface, a well-thought experience, and they expect you to understand the business value your tool is expected to deliver.
In other words, if your product requires a user manual, you’re likely falling behind.
In the age of cloud tech, each customer is assembling their own combination of tools. The onus is also on providers to ensure your technology plays well with others in a building’s technology stack.
If the industry extends our innovation and focus into improving the experience every user has with our systems, from selection, to implementation, to adoption, I believe the rising tide will lift all ships.
I’d love to hear your thoughts on these issues and look forward to continuing the dialogue in 2018.
Happy New Year!