Takeaways from the Panel on Proptech Best Practices in Commercial Real Estate

MRI Software’s commercial user groups participated in a day of conversation and collaboration at Pier One in Sydney last month, culminating in a panel of industry experts sharing their approaches to Proptech implementation, their unique strategies for navigating the technology landscape, and their thoughts on trends that will shape the future of commercial real estate.

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The Digital Transformation Journey

PropTech best practices for commercial real estate from now to 2028.

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The panel was moderated by Nikki Steadman, MRI’s Senior Director – Professional Services, who drew on some of the main themes emerging from MRI’s recent survey and report The Digital Transformation Journey – PropTech Best Practices for Commercial Real Estate as a springboard for discussion.

Panel members included Denis Leane, CFO at Cygnet West, Joanna Marsh, Head of Venture Investment and Advanced Analytics at Investa/CEO and Co-Founder at Unseen, and Peter Galante, Operations and Transformation Leader – Commercial Property at ISPT.

Proptech Best Practices Survey reveals top three challenges

Nikki explained that the top challenges for real estate professionals as revealed in the survey results were:

1. Streamlining complex processes and reducing manual workloads.
2. Enhancing reporting and analytics capabilities to make more informed decision making.
3. Achieving measurable performance improvements and business outcomes.

She asked the panelists how they are dealing with these issues in their own organisations.

The first challenge was one that Cygnet West had faced prior to its recent digital transformation project, according to Denis.

The biggest limitations for us were our heavily customised, on-premise legacy systems. We couldn’t integrate them with our other inhouse systems, so data wasn’t flowing freely between them, which resulted in a lot of double handling. It meant that our staff, property managers and accountants were spending less time working on our clients assets and more time doing manual and menial tasks.

– Denis Leane, Cygnet West.

Joanna observed that real estate is “one of the last really opaque industries”, lacking the sort of data transparency that is the norm in other sectors and adds that it’s wrong to expect teams to wrestle with “dinosaur systems” in an era where everyone has a smartphone in their pocket. “We have to be more empathetic and make things a little easier,” she said.

“There are some fantastic point solutions out there, but achieving an innovation edge requires much more granularity,” she adds. “In the same way, for example, that Bloomberg provides detailed financial information, but for buildings.”

Many proptech founders and leaders might not realise the impact they’re having on the rest of the workflow by focusing on fixing just one thing. That’s where integration and dealing with legacy systems come in. It’s crucial.

– Joanna Marsh, Investa.

“What’s amazing is that as we make things more detailed and transparent, the whole industry benefits. More diverse stakeholders can come together, and we all start seeing different issues in the data and analytics because we each have different perspectives. And the exciting part is that ROI is starting to jump as a result.”

Several of the reported challenges also resonated with Peter. In his words, “It doesn’t matter how much optimisation or digitisation you do, if you don’t have adoption from the users, it’s not going to succeed. Property managers, facility managers and asset managers are creatures of habit, and unless you’ve invested in change management you’re destined to fail from the start.”

Peter reflected on the importance of data quality in relation to the second and third challenges, “particularly where you’re looking to make resources more efficient.” He believes the real test lies in identifying how the capacity you’ve freed up for a resource is reassigned, and measuring how it ultimately impacts your ROI.

The keys to a successful proptech implementation

Next, Nikki asked the panel about taking a proptech project from concept to reality. How do they achieve their goals and what does success look like?

For her own part, three critical success factors sprang to mind, namely, securing executive engagement and sponsorship for the project through to completion, defining and locking down scope, and including proper project governance and QA.

Key factors highlighted by the panel included:

Making change management a priority

According to Peter, change management is the biggest consideration in an effective implementation.

“You often see a change management plan that’s just a series of emails. There has to be more than that. It’s got to be followed up with hypercare and ongoing training and you really need to nurture the end users right through the term,” he said.

Taking a deep dive and getting comfortable with detail

Joanna said that delving into the specifics of a new system can be laborious but is often essential to success, and also to avoiding unwanted surprises down the line. “(You need to realise that) the devil’s in the detail – in a good way,” she emphasises.

One of the strategies Joanna employs involves taking a deep dive into the problem, and engaging the entire team in understanding it thoroughly for a set period before initiating any further action.

Taking an inclusive approach with effective training

Cygnet West broke its technology implementation project into two stages, Denis explained. The first involved creating a detailed roadmap so that data could be transferred to the new PMS. This required keeping the channels of communication open with staff, stakeholders and clients while ensuring continuity of all critical day-to-day services.

The next stage involved staff training. Here, initial feedback suggested that sessions were too long and complex, and of little benefit to employees who didn’t yet have hands-on user experience. “As a result, we designed 50 minute flash training sessions which are just bite sized chunks, so staff can actually absorb them and stay engaged,” he said.

Having empathy for the end user

The critical importance of user-centric technology came up repeatedly in the panel discussion.

“First and foremost, you’ve got to put the the end user as your main customer and you need to make sure they’re adequately engaged through the process,” Peter said.

We try and encourage (our technology providers) to come and spend a few days in the field and on the frontline to actually experience what it’s like to be an accountant under pressure, or an FM who’s just had three buildings flood, to really understand what their drivers are and make sure they’re having a win….You join them on that journey and you’re destined to succeed.

– Peter Galante, ISPT.

Measuring success and securing a meaningful ROI

Nikki quoted the two key statistics on measuring success that came out of the recent survey:

1. Enhancing collaboration and communication within the team and stakeholders.
2. Having a clear ROI on the investment and cost savings.

She asked the panel to talk about the business outcomes their organisations valued and measured.

“When you’re rolling out any new technology or system and looking for immediate monetary benefits, you’re probably going to be a bit disappointed because there’s often a big upfront cost to do anything like this,” Denis said. “You have to look for more long term gains. Like how new systems can improve communication within the company, help you streamline processes and automate manual tasks. These things will all lead to future cost savings.”

(Having moved) from on premise to cloud, we are now able to give our clients access to our systems. And that’s been massive for us because I think it’s not something that has been traditionally done in an agency. Clients really value the ability to go in, print an invoice, print a report, and not have to wait (for it to be done for them). And in the long run, if your clients are happy and satisfied, that will turn into top line revenue, which will give the board the ROI they’re looking for.

– Denis Leane, Cygnet West.

When it comes to ROI, Joanna said that Investa runs a sophisticated portfolio prioritisation model and is looking closely at use cases and returns in the current down market. In this context “efficiency and cost savings” are a basic necessity. “(It comes down to how we) widen the funnel, and provide more support for board decisions with confidence and clarity,” she added.

To be honest, if we can’t pull 50% out of the cost errors and inefficiencies, we shouldn’t bother,” she said. “So we’re looking at it at a use-case level, and we’ve got to show something that is actually demonstrably moving the dial either on deal fees, investment management fees, new capital, new leases or new acquisitions.

– Joanna Marsh, Investa.

Peter mentioned the importance of less tangible measures like increased compliance and reduced risk, both of which are of obvious value to the board and executive.

Another factor in measuring ROI is the efficiency you’ve gained through things like rightsizing, he added.

“Or even better, now we’ve digitised a lot of our processes we need to ask ‘can I hub that resource?’ And the beauty behind that is once you’ve got it hubbed and someone’s doing the same job every day, your data quality goes through the roof.”

Emerging trends in proptech

Nikki noted that AI and predictive analytics were highlighted in the survey as two defining future trends for commercial property. She asked the panel how they thought these innovations would shape the industry in 2024 and beyond.

Joanna believes that large language models are particularly well suited to the real estate sector. This is because of the large volumes of text and untapped data contained in the industry’s operational and transactional archives.

(We have) clauses, lease documents, heads of agreement – all of those huge boluses of text that we can structure and append metadata to. And then we can query the metadata with other large language models. And so real estate is about to jump a lot of other industries that have more structured datasets that aren’t as conducive to the LLMs.

– Joanna Marsh, Investa.

According to Peter, the industry’s customer service ethic has been lost in recent years (ironically sometimes owing to digitisation) and technology should be harnessed to help restore it.

“Over the last 20 years, particularly as digital property management came into the fray, people have been stuck behind their PC, doing data entry or processing. I’m hoping these technologies will bring us out the other side of the cycle where all that deskbound inputting can be done autonomously and we can get people out of the office and seeing customers again,” he said.

Denis believes that while AI tools like Microsoft Copilot and ChatGPT will help the industry to automate manual processes, they won’t replace the human element, and will actually be the foundation for it to flourish.

(AI) will allow people to do what they do well – meet clients, visit the assets they manage and talk to tenants rather than doing manual and mundane tasks. It’s going to be a powerful tool to make their jobs easier, basically, and to add more value.

– Denis Leane, Cygnet West.

Joanna also noted that without utilising new tools and techniques, moving the dial on ESG will be hard, particularly in achieving granular measurement in tricky areas like “social.”

Peter agreed and said he has been inspired by his peers working in real estate sustainability. “They’re much more collegial and willing to share information, whereas I feel that in technology and other areas, we’re all competing and wanting to be first to market to put our hand up and say, ‘Hey, we’re better than everyone else’. So I think we could (all) really benefit from that sense of collaboration.”

For more insights and practical experiences across digital transformation in real estate, download a complimentary copy of the report. You can also watch the full recording of the session here.