A Global 100 company

Transforming real estate operations into a highly efficient, high-return operation

Published on 20-Jul-2012

"We are constantly seeking ways to improve our processes, and to change when necessary to meet critical objectives for success." - —Manager, Real Estate Operations, A Global 100 Company

Customer:
A Global 100 company

Industry:
Industrial Products, Media & Entertainment, Financial Markets

Solution:
Asset Management

Overview

This Global 100 company has a significant real estate portfolio worldwide. The company dramatically transformed its global real estate delivery through centralization of the corporate real estate (CRE) function and has placed a large emphasis on data and data management.

Business need:
The company found that it had redundant, underutilized real estate assets in key metropolitan areas with duplicate IT, telecom, reception areas, and excess support space such as conference and training rooms. It had no centralized and systematic means to identify these inefficiencies and opportunities to significantly reduce costs.

Solution:
The company transformed one of the world’s largest real estate portfolios into a highly efficient, high-return operation with IBM TRIRIGA.

Benefits:
Generated more than USD925 million in real cost savings between 2003 and 2007; Substantially improved user satisfaction, cycle time and staff productivity; Enables the necessary actionable insight into corporate portfolio management process and performance

Case Study

This Global 100 company has a significant real estate portfolio worldwide. The company dramatically transformed its global real estate delivery through centralization of the corporate real estate (CRE) function and has placed a large emphasis on data and data management. Throughout the process, it pushed for an increased focus on controllership, governance and measurements while placing a major strategic focus on real estate asset performance. The company has made great strides toward its objectives, and has laid a solid foundation that will enable it to address challenges of today and those well in the future with its operational requirements, environmental imperatives, and financial results.

To put the company’s real estate services transformation into context, it is helpful to look back on what the company had been doing to manage its vast property and building asset portfolio. In 2002, the company’s real estate organization was completely decentralized and performed independently within each business unit. Each business unit would develop its own portfolio strategy, and execute real estate and lease transactions against that strategy. The company had a limited global view of the real estate portfolio across the business units and the overall utilization rate of assets within the portfolio. This made it difficult for real estate and facilities staff to identify inefficient and high-cost properties, and to easily eliminate unnecessary duplication and redundancy in its portfolio in the major market cities it had assets in throughout the world. As a result, the company found that it had redundant, underutilized real estate assets in key metropolitan areas with duplicate IT, telecom, reception areas, and excess support space such as conference and training rooms. It had no centralized and systematic means to identify these inefficiencies and opportunities to significantly reduce costs.

In 2003, the company began to centralize its real estate operations at the corporate level. It sought to ensure a consistent, cross-divisional approach to real estate portfolio strategy and transaction support. Today, there are now three workplace organizations at the corporate level. Real Estate Services Operation (RESO) supports portfolio planning, real estate transactions, and property data management. Property Services oversees the corporate facilities portfolio, which includes hundreds of properties worldwide, from a facilities management, space management and maintenance perspective.

The third group, Project Services, has responsibility for management of construction and tenant improvement projects. All transaction activity is handled through RESO. The business units continue to operate their respective facilities relative to maintenance and space management on their own, but turn to Project Services for construction project support as needed.

As the company moved forward with this transformation in the areas of organizational design, process development, and performance measurement, executives and staff understood that they needed a technology platform to support real estate delivery around the world. The company sought a technology that could initially provide capabilities in the areas of transaction management, lease administration, and portfolio management while providing the ability to grow into facilities management in the future.

The goal was to obtain an end-to-end solution that could be used on a global level while being flexible enough to adapt to a constantly-changing business environment. The company had the following drivers:

  • Reduce costs: identify and consolidate inefficient and high cost properties and to continue to improve utilization and drive cost savings across the company’s real estate portfolio and workplace operations.
  • Improve operational effectiveness: identify and reduce real estate transaction times from the time of the initial real estate request to the final approval and to collaborate and share best practices for real estate strategies across business units.
  • Consistency: to create and codify real estate processes, procedure, forms, and reporting across business units to ensure consistent and reliable outcomes for real estate transactions and real estate analysis and reporting.
  • Risk reduction: to have a single source of information, system and process to execute and real estate transactions with systematic checks controls to ensure compliance and to provide a single set of robust financial models to analyze and compare real estate performance.
  • Governance: to have key visibility and oversight to measure and manage the real estate processes and performance and ensure real estate operations and practices aligned with corporate policies and objectives.
  • Data transparency: single source of real estate information across business units to provide accurate and timely data and uniform and standardized reporting on utilization, real estate costs and real estate returns.

This combination of these drivers led the company to seek a technology to wrap around its real estate delivery process and to transform how real estate services are delivered.

RESO’s transformation (2003-2006)
The foundation of the company’s real estate services and operations transformation strategy is built upon five key components, as follows:

1. Organizational design. The RESO organization has a tight focus on portfolio planning and lease transaction support. There are two key roles within the organization. First, the portfolio managers interface with the business units in the development of portfolio strategy such as consolidations, collocations, and other cross divisional opportunities. Second, the transaction managers report to the portfolio managers and assist in executing individual transactions stipulated by the strategy. In the United States, portfolio and transaction managers support the business units irrespective of geography. Outside the United States, RESO is deployed on a regional basis. A key to the organization’s strategy is proactive development of partnerships with the business units: partnerships in which the portfolio managers assume the role of relationship managers or liaisons with senior leadership within the business units.

2. Process development. The second element in the transformation strategy was the development and standardization of critical planning, approval, and operational processes. The driving principles behind process development were twofold: simplification and the removal of bottlenecks. The company’s core competence in Six Sigma techniques and tools was applied in ways that vastly improved and reduced the cycle time required to execute its transaction and financial approvals.

3. Workflow. Standardization of workflows brought clarity and focus to the process re-design. By using the workflow tools of TRIRIGA® software (now IBM TRIRIGA software), the RESO organization took disjointed, paper-based work documents and redesigned them in digital formats to flow electronically, an improvement that not only recorded critical “tollgate” events and increased visibility of approvals, but also improved information transparency and, in turn, productivity.

4. Performance management. The company used the performance management capabilities of IBM TRIRIGA software to build a series of performance metrics that provide insight to specific aspects of its portfolio operations. Metrics were created for financial performance, cycle time, and even RESO organizational performance. Each of the metrics was organized by role and executive level. Senior RESO managers can see portfolio and operational performance at a worldwide level, while portfolio and transaction managers see performance as it relates specifically to their respective portfolio responsibilities (or individual project performance). A similar performance management capability was created for facilities management operations. Here the focus was on space utilization, maintenance operations including service-level performance, user satisfaction, and various quality measurements associated with Six Sigma indicators.
5. Systems integration. The final component in the transformation story, and perhaps the most significant, is use of IBM TRIRIGA software. The solution provided the capabilities the company needed to execute and integrate the other four elements of the strategy noted above.

The vision: centralized integrated workplace management system
The company understood the value of implementing a global system that handled the entire real estate life cycle within its portfolio. It required a system that could provide a global view of its real estate portfolio across geographies, organizations and locations.

In addition, the system needed to provide intuitive user interfaces and integrate easily with other systems such as treasury, billing, email, calendars, and contact management applications. The system had to include all of the key business functionality to manage the real estate lifecycle—for example, portfolio management, transaction management and lease administration, lease accounting and facilities management—particularly as they relate to both service and vendor management.
And finally, executives wanted a single, integrated data repository that could be shared by all organizations involved and to achieve a 360-degree view of its real estate assets. Given the size and scale of the portfolio, the system required enterprise-class workflow tools, content and document management, performance management, decision support (including scenario analysis, market analysis, business case analysis) and financial reporting (including real estate expenditures, lease payments, and budget variance analysis).
IBM’s IWMS solution, IBM TRIRIGA software, addresses each of the company’s specified requirements. The solution’s portfolio, transaction and lease management fulfilled each of these initial requirements, followed by additional facilities and project management modules that addressed subsequent requirements. The company plans to upgrade to the latest IBM TRIRIGA software platform with additional plans for installation of TRIRIGA’s reserve, facility assessment, and workplace performance management modules. Other enhancements are being considered to improve lease administration, off-line capability, and lease payment functionality, all of which will significantly expand RESO’s performance metrics and reporting capability.

Environmental leadership and the role of RESO
Environmental sustainability is a major corporate strategy for this company. To support this, RESO is aggressively implementing a green strategy associated with its portfolio management responsibility. The strategy’s initiatives include the adoption of a number of industry standards including the U.S. Green Building Council’s Leadership in Energy and Environmental Design (USGBC LEED) certification process for green building design.
The company has also adopted the U.S. Environmental Protection Agency’s Energy Star standards as deployed by the EPA and the U.S. Department of Energy. RESO has so far executed LEED certification with real estate projects in a number of countries, and has LEED-driven projects across the United States. A particularly innovative initiative RESO engaged in is the development of a “green lease” document that would specify a number of terms and conditions that are more environmentally compliant.

Results with IBM TRIRIGA software
The company’s real estate transformation has generated more than USD925 million in real cost savings between its inception in 2003 and 2007. This is the culmination of process improvements, standardization of workflows, reductions in overall space needs, a constant focus on cost, and the adoption of cross-divisional portfolio strategies that resulted in facilities consolidations. RESO’s performance gains and the ability to deliver services have clearly been enhanced by the adoption of an integrated workplace management system. IBM TRIRIGA provides the uniform database, workflow tools, user interfaces, functional modules, and performance metrics that enable the necessary actionable insight into corporate portfolio management process and performance. RESO management is committed to the IWMS solution and has heavily used IBM TRIRIGA to provide substantial improvement in user satisfaction, cycle time and staff productivity.

Solution components
Software
  • IBM TRIRIGA®

For more information
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Products and services used

IBM products and services that were used in this case study.

Software:
IBM TRIRIGA Strategic Facility Planning, IBM TRIRIGA Facilities Manager, IBM TRIRIGA Real Estate Manager

Legal Information

© Copyright IBM Corporation 2012 IBM Corporation Software Group Route 100 Somers, NY 10589 Produced in the United States of America June 2012 IBM, the IBM logo, ibm.com, Tivoli, and TRIRIGA are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml The content in this document (including currency OR pricing references which exclude applicable taxes) is current as of the initial date of publication and may be changed by IBM at any time. Not all offerings are available in every country in which IBM operates. The performance data and client examples cited are presented for illustrative purposes only. Actual performance results may vary depending on specific configurations and operating conditions. It is the user’s responsibility to evaluate and verify the operation of any other products or programs with IBM products and programs. THE INFORMATION IN THIS DOCUMENT IS PROVIDED “AS IS” WITHOUT ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND ANY WARRANTY OR CONDITION OF NON-INFRINGEMENT. IBM products are warranted according to the terms and conditions of the agreements under which they are provided. TIC14243-USEN-00