By Andrew Day | Investment/finance | 17-09-2019 | 04:38
For all the talk, hype and bluster surrounding proptech over the past few years, the truth is that the vast majority of real estate businesses don’t look dramatically different from the way they did before. They have the same number of people – performing much the same processes – as they always have had. Change is often minuscule, with low levels of adoption. Yes, the industry has created lots of influencers and conferences, but something seems to be holding it back.
For the past 12 years, I have been working in technology project delivery – from multi-million-dollar schemes for some of the world’s largest banks to launching new fintech products in some of the most exciting and fast-growing economies.
My journey has bought me to real estate. But unlike the world of banks and multinational companies, real estate has never previously shown any interest or invested in technology. The industry has definitely never built a business strategy around it. Even today, firms are looking at incremental gains or some efficient replacement of paper; very few players are creating businesses based on today’s technology.
For the few who are now realising that technology has to be a core part of their strategy, there is a big knowledge gap. Most real estate organisations do not know how to run successful IT projects, and they are not exploring ways to learn about new technology. There is a push towards wanting to know about “products” but not to inform the company’s skills sets with the way technology actually works or is delivered.
I will call it out… few in real estate really understand the concept of enterprise IT. Their experience is by and large from a consumer perspective, purchasing off-the-shelf software and apps that help them improve aspects of their lives. They expect that software products can be bought for a few pence and that they will miraculously “just work”. And when they don’t work, the blame is often put on the “vendor” for not understanding “our needs”.
Ironically, every real estate company insists on telling their vendors that they are unique and different from everyone else in the industry, while expecting off-the-shelf products to just plug in and solve their current crisis.
In theory, real estate should have a better chance than most industries at understanding enterprise technology. It is built on the same principles and there are huge parallels to its own industry.
When I first started working with my co-founder (who was used to delivering construction projects), we quickly realised that our project management techniques were very similar. Projects are priced based on risk. That risk is linked to change. They can take years and need a buffer for budgets. Each project needs to be documented and should include support and maintenance. The toolbox meetings on site are similar to our daily scrums. Different parts of the software need to integrate the same way heating, ventilation, and air-conditioning and structural design comes together with architects’ plans. Now, if the industry thinks what it does requires time and effort, why does it think that software and technology should be cheap and quick?
It comes down to a lack of understanding and expertise. If you want to change this, you have to learn more about technology – what it can do and how it is delivered. The same way you build buildings by recruiting architects and engineers and creating an organisation with experience.
Technology is a tool. Whether it is boring or cool should not matter; the outcome is what is important. It is essential that any project, of any size, comes from an understanding of a problem that you are trying to solve. Whether that be reaching more customers, reducing cost of operations or simply training staff on compliance, the problem you are solving comes first.
You started a project because something sounded cool? You heard someone else is using an app? Or because you want your band to be thought of as “tech forward”? It is a sure path to failure. In fact, you are deceiving yourself and everyone around you. Without understanding the business problem you are solving, you will never have a budget and you won’t gain support. If you don’t have a problem to solve or a transformation to bring about, don’t waste your own time (or the time of the vendors you are about to call in for multiple stakeholder meetings).
If you start at a problem or opportunity, recognise the outcome is to change your business. To transform some aspect of your business to operate differently tomorrow from the way it does today. And in doing so, remember that change is hard.
Most real estate companies in the UK currently have a tech adoption process that goes in two ways.
The first approach is to find some cool product or innovation. This is then put in front of a room full of people who are stakeholders. The stakeholders are expected to give a buy-in before (and then after) trials. Everyone in the organisation or department needs to be involved.
The second approach is to bring in a “transformation consultant”, who then roadmaps a change in the technical stack – which in requests for proposals will end up with large enterprise solution players. Again, everyone gets involved and starts customising the new stack for their own teams or departments.
This needs to stop. For a project to run in a transformational way, it needs a core team. A small team that includes the right skills sets – and, yes, that means people who have actual tech skills in addition to someone with the vision from the senior management.
This team needs to be allowed to work in parallel with your existing operations, with both time and budgets. Otherwise, you will have wasted a lot of money and forever more you will have the phantom of that failed project acting as yet another barrier that prevents the organisation attempting change in the future.
The companies that are successful in adopting tech are the ones that build internal capability. I don’t mean people that have managed your email servers or administered your property management system; likewise, I don’t mean your innovation director (who has been sent on a mission to discover cool new things and sit on panels). I mean people that have built technology at the heart of their organisation, top down and bottom up. As a start-up that specialises in research-oriented work, we have learnt that it is critical to have the right kind of client – and often that includes evaluating the client’s technical capability.
From the top, these companies have executive team members with a technology background that help shape the strategy of the business. They have a clear architecture, a clear view of how technology supports the strategy – and accountability for delivering it.
Forward-thinking organisations will have realised that their data is central to everything and will have taken steps to take control of their data, distancing themselves from third-party solutions that can’t provide open application programming interfaces or want to charge them a ransom for accessing their own data.
In doing so, they will have internal developer and infrastructure experts who have the skills necessary to build and maintain their data and connectivity to third-party applications. They will have the experience of delivering software projects at all levels in the organisation, will know how to react when things go wrong – and how to keep projects on track.
Andrew Day is co-founder and chief technology officer of Travtus