It is evident that digitalisation is key to the growth of many industries, and real estate is no different as the impact of the Covid-19 pandemic still persists. The real estate industry is currently adapting to evolving market conditions, a changing regulatory environment, and a fast-growing technological landscape. This development is described in detail in our recent 2019 European Operations and Technology Survey for Real Estate Investment Managers. A survey that was completed by a range of European real estate investment and asset managers, from the largest to the smallest, but that was surprisingly consistent. What can be learned from their replies? How to achieve an effective digital transformation in the real estate industry?
Key messages from the industry
The overwhelming message across Europe is that there is a drive to embrace and exploit digital innovation. More specifically key messages were that:
The level of interest in innovation and the use of disruptive technologies is very strong.
Identifying inefficiencies and maximizing value across all activities is a common denominator.
The digitalization of contracts/documents, big data and data analytics, as well as robotic process automation and AI, are increasingly becoming a key target area for investment.
These trends were all evident before COVID-19 caused a temporary upending of business life and pushed almost all participants into forms of remote working.
Increased digitalization of processes and remote access to management information is moving to the top of the agenda for many more operators in real estate.
The drive for increased business resilience, and the need to have managers able to operate in as agile a fashion as possible, should provide a further impetus for change.
This viewpoint is further supported by a recent ‘Technology and the Future of Real Estate Investment Management’ White Paper1 that stated that ‘as with other industries, digitalization is expected to lead to industry concentration’, and that ‘only 25% of real estate investment organizations currently boast an established data strategy’.
How to define digital transformation
A digital transformation can be characterized by six main elements: elevated and frictionless human experience, real-time relationships, empowered employees, data-based decisions, on-demand delivery, and technology-enabled actions and processes. It is no surprise that the first three elements involve people. It is a common misconception that a digital transformation is all about technology. The success of popular applications is based on the level of adoption by people around the world, and the agility of the applications in maintaining relevance.
The impact of digital transformation within organizations
COVID-19 has proved the adaptability of businesses to react to the need for rapid change. Remote working, different retail models, the digitalization of contracts, and enhanced remote global collaboration are all examples of how companies have adapted – in some cases almost overnight. Due to this agility they have managed to offset some of the business disruption that might have been predicted from the pandemic, but obviously not in all cases or industries.
Digitalization must be value-enhancing and aligned to solving real business problems. Historically some technology has been implemented because businesses fall in love with the promised functionality and end up disappointed with the reality.
To achieve success, in all cases, strong leadership and sponsorship is a basis requirement. The implementation of new ways of working, which may not necessarily display a tangible benefit at an individual level, is tough to drive through an organization. In addition, a digital transformation may require completely different skills, such as those of data scientists, and may make some roles redundant. This is likely to change the dynamics of the workplace.
عبدالرحمان زمین پیما
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آرمان جعفری
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