Automation has been a trend for decades in many industries, but less so in commercial real estate, where owners and investors have traditionally focused on the next deal rather than front and back office efficiencies. Slow adopters, they typically rely on older tools or gut instinct to make decisions. For 2021, real estate leaders should seriously consider implementing technology to drive automation in three areas: process, workflow and analytics. Doing so will result in improved efficiency that will drive operational effectiveness, productivity, and accuracy. Application of technology in these areas is already changing how commercial real estate is being done, a trend that will accelerate in the coming years.
One of the technologies to take the real estate industry by storm is robotic process automation (RPA), including companies such as Blue Prism, Automation Anywhere and Pega Systems, as well as Microsoft and other giants of the technology industry who have gotten into the RPA space more recently. RPA automates work activities by creating a digital workforce that mimics office employees’ predictable tasks. Any digitized process can be carried out with RPA technology, which delivers real efficiencies to organizations, and in the process, helps them achieve meaningful ROI.
For example, RPA technology can assist with asset management, accounting, or budgeting and forecasting processes by facilitating the collection and movement of critical data about accounts receivable, journal entries and financial subprocesses. Investors and owners can gather and analyze data in real time, with fewer people needed to create new reports and pull old manual reports (which can now also be done more quickly and accurately). In another application, step-by-step accounts payable tasks are managed automatically—from a bill’s arrival to approval to its placement on the accounting system for payment, with a clear audit trail. These tools also enable companies to scale up or down with relative ease, which is valuable given today’s unpredictable business environment.
Large-scale mall or retail operators can use process automation to streamline such common processes as common area maintenance reconciliations across the organization. The technology can even send and receive customized emails and update cloud-based MS Excel files stored on a shared network drive.
The human resource savings are real. According to the Center for American Progress, the median cost of turnover is 21 percent of an employee’s annual salary; therefore, replacing employees is expensive. Further, jobs with some of the most repetitive tasks also have the highest turnover rates; by eliminating or reducing the repetitive labor that often leads to turnover, RPA can ultimately improve employee retention and reduce associated labor or HR costs.
A related technology is workflow automation technology, which allows users to define a particular workflow, develop queues and define the responsible parties for each activity. In short, human tasks, data or files are routed between people or systems based on pre-defined business rules. By providing beyond-human, number-crunching capabilities to create deeper insights into market conditions, this technology can allow investors and owners to make optimized decisions driven by accurate, real-time information.
An example of an innovative real estate workflow tool is Dealpath, which streamlines the deal management process for investors and developers and helps them monetize the massive amounts of data they compile to generate capital. Whether in the front or back office, these technologies create collaborative workflows and provide analytics, interwoven through the process, enabling stakeholders to more seamlessly connect.
Workflow automation technology can also be used in conjunction with RPA, further automating a process, particularly if multiple application technologies are involved. For example, a process may require that steps be performed in a customer relationship management (CRM) tool and then in the general ledger, moving data between the two tools along the way. The combination of automated workflows and RPA would enable a seamless process that requires no human interaction from start to finish.
It is worth noting that, while workflow automation and RPA enhance data compilation and reporting, these technologies cannot replace the real-time decision making or judgment of humans, who are leveraging the data—and very often, their intuition, honed from years of experience—to make those decisions.
Real estate organizations generate a tremendous amount of data. Here again, automation saves on manpower and speeds up number crunching with the ability to quickly provide meaningful data models that inform business decisions, with analysis and visualization delivered per prescribed criteria. Rather than rely on manual data retrieval and analysis, analysis can be automated reliably and quickly with little or no human intervention, saving valuable time and human resources. For many owners, this automation may also figure into asset and portfolio management workflows, as well as acquisitions, given that many steps in those areas are focused on data analysis. There has also been an explosion of data tools that feed the analytics process, which starts to address the long-standing issue of limited transparency in the real estate industry.
One such data tool is CompStak, a commercial real estate data platform that crowdsources leasing and sales data from brokers nationwide to deliver immediate access to average comps for various properties within specified geographies. Another is Reonomy, which sources data from numerous, publicly available sources.
Automation is growing and rapidly changing, and with it, the capabilities available to commercial real estate entities. This technology helps to increase value by lowering operating costs and providing sharper visibility into financials and property data on which to base strategic decisions—game changers for those who understand how to leverage them going forward. However, many real estate companies lack the scale needed to invest in the level of technology they will need to remain competitive; for them, outsourcing is a cost-effective answer that hedges against scale considerations and brings them the technology necessary in today’s marketplace.
Josh Herrenkohl serves as senior managing director and head of business transformation services within the real estate solutions practice at FTI Consulting Inc. He can be contacted at [email protected].