How Organizations Can Excel by Overcoming Information Failure in Management of Real Estate Assets
Today, Every Organization Is A Real Estate Organization
In a simpler era, companies and institutions viewed their real estate as assets to support operations. Only those organizations focused on the property business actively tried to generate value and risk appropriate returns from buildings and similar assets.
Fast forward to today. An accelerated and volatile operating environment requires organizations to manage real estate for strategic advantage, even if property does not constitute their raison d’être. Yet real estate, more than virtually any other domain of organizational activity, is vulnerable to information failure. The concept of information failure comes from economics and describes when inaccurate, incomplete, uncertain or misunderstood data can lead to suboptimal decisions and incorrect assessment of risk.
As pressures mount, organizations are realizing to an extent never before that information failure in real estate creates significant and often hidden costs. Solutions have been elusive, but advances in technology offer new potential.
While the London Underground famously warns us to “mind the gap,” organizations now have tools to mine the gaps in data, gaining a full view and overcoming information failure. By integrating financial and operating information for fixed assets, organizations can make smarter decisions, minimize risk, optimize capital deployment and improve performance.
In this white paper, we will explore the changing environment for real estate decision-making, the causes of information failure, evolution of solutions to this problem and the hallmarks of organizations that are leaders in “mining the gap.”
We will cover:
- How value creation has become a driving focus for chief financial officers and requires an understanding of both strategic and operational performance.
- How information failure is a vulnerability of traditional approaches to real estate assets. Financial managers are handicapped by ledger-driven systems that provide information on real estate costs without a complete context of operational or strategic information.
- Overcoming information failure requires flexible technology capable of a) aggregating diverse information including operational data and data derived from plans, maps, drawings, spatial and geographic sources, b) placing them within the context of related disciplines such as asset lifecycle, lease management and compliance and c) extracting insights in a form and language familiar to stakeholders in different disciplines within an organization.