Published on 20-Dec-2012
"This integrated approach has greatly reduced the time our staff requires to respond to inquiries about the retail portfolio and has significantly improved the coordination of activities involved in the delivery of new stores and remodels." - —Associate Vice President, Real Estate Operations, A Top 250 Global Retailer
A Top 250 Global Retailer
When a North American-based Top 250 Global Retailer moved to a store lifecycle management system based on IBM TRIRIGA software, it greatly reduced the time and cost of managing its real estate portfolio.
This Top 250 Global Retailer sought to improve real estate lifecycle management through the use of a single business application and technology platform.
The company’s integrated real estate information system, based on IBM® TRIRIGA® software, helps standardize and streamline construction schedule management, bidding, cost tracking, lease and property management, and site inspection processes.
Reduced time required to respond to inquiries about the retail portfolio; significantly improved the coordination of activities for new store construction and remodels
In today’s hyper-competitive retail environment, retailers have adopted a holistic real estate asset management approach to improve operational efficiency and effectiveness across market planning, site selection, project management lease administration and facility management processes. Doing so enables retailers to streamline new store planning and execution, as well as remodels, closures and relocations within their portfolio.
This shift in approach has been closely aligned with a steady growth over the last five years by progressive retailers to move from lease to lifecycle management systems. This is a move away from disparate point systems, which focus on single business processes, toward real estate asset lifecycle management solutions. Unlike point systems, these lifecycle management solutions provide single integrated web-based systems that deliver predefined integration of various real estate processes to manage the real estate assets from cradle to grave.
This Top 250 Global Retailer―based in North America―represents an organization that has successfully transformed from an aging and fragmented technology portfolio to an integrated store lifecycle management system.
One of this retailer’s most distinct competitive advantages is its strong real estate and construction organization, which manages the company’s leased and owned properties. “Expertise in real estate enables us to expand quickly and efficiently, securing high-traffic, sought after locations for our stores,” says the company’s associate vice president of Real Estate Operations.
The company’s real estate and construction organization manages the entire real estate asset lifecycle including market and financial analysis, real estate acquisitions and lease negotiations, project management and construction, property management, lease administration, maintenance, environmental remediation, and property disposition. In addition to delivering the real estate strategies for the company’s retail business units, the team provides support and services whenever new distribution centers, call centers or corporate offices are required.
Historically, the company’s Real Estate and Construction division relied heavily on disparate point solutions to manage the various stages of the store lifecycle process. Homegrown spreadsheets, separate project management and lease management software applications, and other tools created multiple databases and ineffective processes with inefficient data sharing or cross-functional collaboration. A growth in construction projects exposed the company to additional risks associated with miscommunication and limited collaboration. Duplicate manual entry and data discrepancies resulted in project schedule slippages and cost overruns, while data errors in lease administration, particularly in the area of Common Area Maintenance (CAM) reconciliation, resulted in unnecessary penalties and overpayments.
An integrated system to meet an aggressive five-year business plan
The retailer’s financial success requires both the right real estate strategy and operational effectiveness. In 2005, there was general consensus within the company’s Real Estate and Construction division that the business had not leveraged technology to its advantage. The real estate organization’s ‘Outlook’ growth strategy included a substantial increase in the number of projects that needed to be managed. The management of construction projects had also become more complex due to a major remodel program that requires implementation coordination between projects within the Real Estate and Construction division, as well as between the company and external stakeholders.
The company’s Real Estate and Construction division developed a long-term IT system strategy aimed at an integrated lifecycle system to replace the array of point solutions. The management team developed a comprehensive statement of requirements which included:
- ● Predefined real estate asset lifecycle management system to increase operational efficiency and organizational effectiveness. The system required key business processes to consolidate and manage the entire lifecycle of the retail portfolio from acquisition to disposition within one technology platform, including financial approvals, construction, facilities and lease management, and property disposition. The system also required cross-functional tracking of dependencies and critical path milestones between various real estate and construction functions. Finally, the system required robust reporting capabilities for all aspects of the retail portfolio.
● Enterprise-class technology to deliver company’s operations and reporting needs. The system required web-based technology architecture with a single and unified database to provide a “single source of truth”. Additionally, the technology required system flexibility to meet configuration needs of unique business processes.
The management team identified a number of operational and financial benefits by moving to an integrated store lifecycle management system. These benefits included:
- ● Increased financial return
- – Increased revenue gained from reduced project cycle-times
– Increased productivity to manage additional projects without more headcount
– Reduced administration and printing costs through document management
– Reduced IT Total Cost of Ownership (TCO) from one software application
- – Reduced risk of missed targets through improved notification and collaboration
– Increased cross-functional collaboration between business processes
– Increased system and data integrity by shifting the responsibility of system support to the IT organization
- – Increased data accuracy and consistency across all applications through a single data source and standardized reporting
– Increased integration with critical corporate business systems such as an interface with ERP financial systems
– Increased collaboration with external vendors and contractors
The company undertook an exhaustive evaluation of 16 software vendors to meet its real estate asset lifecycle management objectives, and included existing products in use within the organization. The company selected TRIRIGA software (now IBM TRIRIGA software) because it was the only product that satisfied all its specifications, including: strong usability through highly intuitive role-based user interfaces; a system architecture to modify real estate management and construction needs as they changed and evolved; configuration tools that easily tailor the system to meet the retailer’s unique needs; the system’s ability to link data between documents and projects; and the system’s ability to meet audit requirements through robust security settings and protocols.
Initially the implementation plan was predicated on the delivery of a number of concurrent modules such as online bidding, leasing and construction management. However, a revised approach was adopted due to business resource constraints, a change in business drivers and priorities, and the decommissioning of legacy systems. This revised approach relied on a number of sequential phases starting with construction schedule management, followed sequentially by online bidding, cost tracking, lease and property management, and site inspection processes. The phased approach allowed for flexibility to change with business priorities; reduced the operational impact on business resources; strengthened user acceptance; reduced the change impact; and built knowledge, expertise and experience as the project unfolded.
The company’s Real Estate and Construction executives are clearly committed to indelible organizational improvement and have crafted a compelling vision based on a comprehensive understanding of the organization’s demands and internal capabilities. The company’s implementation of TRIRIGA software has unfolded smoothly over the past three years. Key to its progress has been a number of critical success factors that align the project resources with the clear vision and established project goals. These included:
- ● Project governance: The project was strongly supported by an executive sponsor who gave continued guidance and support at the senior management level. In addition, a steering committee provided interdisciplinary oversight to the project at each step along the way.
● Intergroup collaboration: An interdisciplinary project team was formed including representatives from real estate, IT and TRIRIGA (now IBM). Business members of the team included a business lead, business process analyst, developer, system administrator, and representatives from the business users. IT resources included a project manager, test analyst, solution architect, solution analyst, and data analyst. Vendor resources included an executive sponsor, project manager, implementation business consultants and technical specialists.
● Change management: A number of key change management techniques were applied to help ensure user acceptance and support. These included:
- – Role-based graphical user interfaces (GUIs) configured to shorten the user’s learning curve
– Establishment and communication of common terms with the users to reduce complexity and technical jargon
– Frequently updated project documentation to keep users abreast of changes as the project unfolded
– Standard functionality and processes deployed in the application modules to minimize configuration requirements
– A strong emphasis on clean data preparation prior to migration from legacy systems to increase user confidence
Improved real estate performance
With an integrated real estate information system, the company has realized a number of benefits including:
- ● Increased project management effectiveness and efficiency from standardized business processes and the use of common project templates
● Increased productivity from reduced duplication of effort
● Increased collaboration and communication with external vendors and contractors, and across the organization
● Increased data access and timeliness from remote access to the system
While the retailer has made substantial progress with its integrated real estate information system, the management team has identified a clear roadmap for future system expansion and implementation. The roadmap includes a three year system plan that aligns with the retail business strategy; a roll out of several additional TRIRIGA modules including facilities management, real estate environmental sustainability, and expanded use of the project management module. Another key priority is to integrate the system with other corporate applications such as its PeopleSoft financial system.
- ● IBM® TRIRIGA®
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IBM products and services that were used in this case study.
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