Making a Business Case for Technology: The Real Estate Industry Must Quantify the Value of Technology Investments
Stanford, David, Journal of Property Management
As the economic climate continues to lag, companies are taking an even closer look at their bottom lines and related operational efficiencies. Technology initiatives, whether a back-office financial accounting system or a Web-based property management front-office solution, continue to be viewed as "expenses" that require significant outlays of capital and human resources. One of the many challenges for today's CIO is to shift the perception of technology from an expense to an investment," whereby value is added and the return on the significant investment is positive. Many technology projects enable or enhance an organization's ability to address key business goals: grow top line revenue, create operational efficiencies and manage expenses to produce a favorable yield across the portfolio.
One way to achieve a positive return on a technology investment is to ensure the optimal solution is selected and properly implemented based on the company's specific requirements and business objectives. The following activities related to selecting financial accounting, property management and reporting applications could be leveraged to help realize the full value of implementing a new solution.
All too often, real estate executives are not exposed to the vast array of benefits technology can provide. How often do CEOs assess their technology groups by whether or not they have access to the network or the ability to check e-mail? How often does the term "system" refer to a set of spreadsheets that may not even be linked?
Often, real estate decision-makers have moved up through the operations or deal side of the industry. Hence, their day-in, day-out focus over the years is likely to revolve around issues such as revenue growth, operational efficiencies and portfolio yield. It's understandable that technology investments often force them into a decision process outside their core competency, which can ultimately generate resistance or barriers.
The irony is many technology projects enable or enhance an organization's efforts to do those things that executives so often emphasize: grow top line revenue, create operational efficiencies and manage expenses to produce a favorable yield across the portfolio. The challenge lies in translating technology investment opportunities into a format and language more suitable to industry leaders.
Long-term strategic planning and short-term tactical planning are crucial to successfully leveraging technology solutions. The objective of each technology initiative and the specific business goals it addresses should be clearly defined and understood throughout the company. Additionally, the successful real estate CIO knows the importance of planning for the people, process, conversion and deployment issues related to a technology initiative. Identifying and planning for any barriers to implementation increases the chances for success. Much consideration and planning for the larger task of preparing the organization for the business and process changes must be made in order to fully realize the expected benefit of a new solution.
Best Use of Capital
In the minds of many executives, technology investments ultimately come down to an alternative use of capital. What is the highest and best use of available funds? Essentially, technology investments must compete with all other projects for any money made available for investment initiatives.
Frequently, those who review and approve technology investments also are involved in the process that evaluates and executes portfolio decisions. It's not surprising, then, that the methods by which each of these opportunities are measured contain several similarities.
Much like the building of a road or a bridge has no direct dollar-for-dollar return (except for toll ways), the value of technology lies in the indirect benefit potential created as a result of these investments. …