By Lisa Stanley
From the October 2017 Issue
The impact that emerging technologies, including artificial intelligence (AI), blockchain, and others, will have on the real estate industry is just starting to be realized. Other industries, including financial services and insurance, are much further ahead than real estate and have made some significant advances in exploring how these technologies can be implemented in their businesses. Collaborative efforts have been formed that have already completed pilot projects. Major financial institutions have applied for patents to create applications and protect revenue streams. Platforms have been developed that are changing the way information is collected, shared, and stored—planting a firm footing in the ground for the future.
Just how big an impact can emerging technologies have in how we conduct business? Gartner research firm is now tracking more than 2,000 technologies. Many companies are taking a “wait and see” approach, but is this approach managing risk—or risky business—for corporate real estate and facility management (FM)? While the sheer number of emerging technologies may appear daunting, there is an inherent danger in doing nothing.
Opportunities for competitive advantage exist for organizations that can get a jump-start on determining how to harness the power of emerging technologies and which ones to pursue. Emerging technologies can turbocharge decision-making and connect information in ways that weren’t previously possible. For example, AI and machine learning hold promise for better decisions than the human brain has capacity for, with a learning curve that is far more sophisticated and faster than humans have demonstrated with much more experience. Healthcare is recognized as an industry leader for a variety of AI applications, including predicting recurrence of disease, cognitive robotics performing surgeries, and supply chain. Could acceptance of cognitive robotics applications for FM be far behind? AI applications for FM already include energy management, cleaning, waste removal, and catering, with strong potential for more applications to come.
Meanwhile, blockchain is gaining attention, and implementations are advancing at an accelerated pace in some sectors. In a report published earlier this year by Deloitte’s Center for Financial Services, the value proposition of blockchain was explored for a variety of public utility services, including smart parking, energy billing, and core commercial real estate (CRE) operations. Blockchain technology isn’t coming, it’s here. Smart contracts, payments, maintenance schedules, and improvements can be built on a blockchain and shared with relevant parties on a secure platform.
What is blockchain? Blockchain is a cloud-based, permanent, distributed digital ledger of activities between parties. Let’s break it down. Cloud-based means it doesn’t sit on your company’s private server, or any other company’s private server. The permanence of this ledger means it lives as a permanent record of activities between parties, such as recording property transfers, HVAC system activities, occupancy of cubicles, or security access. Over time, this historical perspective can enable you to improve your decision-making, make decisions faster, and can be shared with other emerging technologies, like AI. The distributed digital ledger means it’s distributed among a group of participants. This can be a large group, like a public blockchain accessible by anyone that holds records of real property transfers (think public records), or a private blockchain shared between a client and their service provider, software developer, a consultancy, or a benchmarking firm. Changes to the blockchain occur in plain view of all participants, improving transparency. Applications include cryptocurrency (Bitcoin) that can accomplish financial transactions in just seconds, smart contracts, and more.
What steps must real estate and facility professionals take to prepare for these emerging technologies?
Start with the data. We’re talking about (1) a strategy that starts with an unbiased assessment of the data that provides the information used to drive your business decisions at every level of the organization and (2) a mandate for a standardized approach to collecting, organizing, and analyzing data across business units, platforms, and companies to build an effective data governance program. This approach enables your organization to create the needed infrastructure to implement emerging technologies and a strong foundation for the future. No shortcuts are available at this stage of preparation, and the effort put forth now will help identify which emerging technologies hold the greatest opportunity for implementation.
What we still see too often in FM are multiple platforms that don’t communicate with each other, creating disparate systems (and sometimes desperate measures) to extract information needed to move the organization forward. To implement emerging technologies effectively, team members need to develop the skills to make this transition to data governance, and build it into every aspect of the organization. Who is responsible for data governance? Every business unit in the organization should be, and the skillset to build and maintain a data governance program must be a top priority.
Leveraging technology to improve business decisions has a foundation based at least in part on increasing the three Cs—collaboration, complexity, and connections between humans and machines. It’s a digital world, and there’s no turning back. A major challenge is to figure out how to allocate resources among these emerging technologies while managing risk. IT and business units must partner to determine priorities that will enable leaders to more carefully evaluate the myriad alternatives of emerging technologies available for investment and exploration.
There is no one emerging technology that provides an ideal solution to FM and CRE challenges. As with any investment in infrastructure, an evaluation of associated costs and benefits is required. Our industry requires collaborative and innovative leaders to step up and participate in pilot projects that explore applications of these technologies that will change the way we conduct every aspect of our business. Leaders who have the vision to commit to collaborative innovation will find extraordinary opportunities.
Are you ready?
Stanley is CEO of OSCRE International, a member based organization focused on transforming the way digital information drives real estate businesses. For more information about OSCRE’s Blockchain Initiative, e-mail email@example.com.
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