There are many vendors of real estate software to choose from today. There are vendors that provide individual solutions for mapping and GIS technology, modeling technology, transaction management, site selection and project management technology and there are several vendors that provide individual applications for facility management and maintenance technology. Firms possessing multiple locations can choose to buy one application at a time selecting the “best of breed” to meet each major set of requirements. For example, it is very common for the construction department of multi-location firms to buy a construction project management system purely to meet that very specific need while the real estate department might choose a lease administration solution and a mapping solution and the facilities group selects capital projects and facilities maintenance applications. The groups buy based on a singularly focused set of requirements pay a fair price and implement their technology.

While “best of breed” buying may seem like a great solution, as time passes four common problems appear.

First common problem: When executives or IT (or both) decide the applications need to be integrated to avoid duplication of data and manual data entry and reentry; since each system likely has an address for each location, the company may have multiple systems of record for the same locations causing confusion and a lack of faith in all systems. And the location is just the beginning of the problem. As these systems are all involved in many common processes related to budgets and schedules, a great deal of data has to be managed across cross-functional workflows that span multiple “best of breed” systems. Integration then requires involvement of multiple vendors who, very often, don’t want the other to see their applications.

To make matters worse some of these applications may be Web-based and hosted outside of the company firewall while others may be internal browser based solutions or client/server applications. Managing multiple integrations to multiple systems, in multiple programming languages across multiple platforms suddenly becomes a spider web of complexity costing much time and money and often ending in failure.

Results: much higher cost, disparate data, multiple systems of record, loss of true real-time data, much longer time to achieve benefits of location performance management and a whole lot of finger pointing between multiple vendors and no one to hold accountable.

Second common problem: Getting staff to use the system and use it effectively. None of these systems benefit the company if they are not used or, worse, if they are used incorrectly. As many staff members and vendors may actually be involved in processes across different areas of your company, they will be asked to use multiple systems (often with different names and addresses for the same locations!). By having multiple applications from different vendors you now have multiple different user interfaces with different navigation, terminology, look and feel and overall use philosophy. As a lifelong designer and architect of software and user interfaces I can tell you no two of us thinks exactly alike (unless you work for MSFT and have no choice).

Users have to go to multiple trainings to learn multiple new systems; and you know how much real estate, construction and facilities folks LOVE to learn new technology!

Results: Having multiple “best of breed” products may result in poor uptake of the system across the enterprise and, in some cases, even when it is used it is not used well providing “dirty” data that may be used to make critical decisions. Training is constant and every change of staff requires months of training on multiple systems.

Ok, so let’s say you get passed the two problems above and now you want to integrate your “best of breed” system into the overall company financial system, often SAP, PeopleSoft, Oracle, JD Edwards, Great Plains, Lawson, etc… It took you three years to get your “best of breed” solutions integrated to each other and the vendors have stopped blaming each other and are now instead all taking 100% of the credit.

Third common problem: You begin the ERP integration only to realize that you will have to build multiple redundant and sometime chained (multi-step integrations involving many applications in a particular order to complete a single process) integrations.

Tracking the total cost of a location development and then maintenance over time to be able to compare to revenue and come up with a real calculation of the value the location is producing requires data from all of your vendors’ systems at different times. The same goes for tracking where and how location revenues are impacted by capital projects or new development or remodels or even dispositions. All of these everyday processes involve different “best of breed” systems at different times in the lifecycle. So, to integrate to an ERP or any other system you will need to expend much investment, much time and, again, endure finger pointing across multiple vendors as to who caused the delay in one of the 50 integration points due to a missed email.

Result: even more cost, more confusion, more finger pointing and years of project management to try and know how much your locations really cost and how long they take to become optimal.

Fourth common problem: The worst problem with combining “best of breed” solutions happens when one or all of the above problems causes a failure in implementation of some or all technology attempted; it is a loss of faith in real estate technology.
Now I am someone who has made my life all about making real estate technology so you would say “of course that is what he thinks is the worst problem”. But, it really is the biggest problem for all as a loss of faith in real estate technology often results in many years of negative feelings about trying a new technology and provides the change-averse crowd with the ideal rebuttal for anyone suggesting a new system investment – “we tried that already and it cost us millions and set us back years; why try it again?” That’s a hard argument to overcome.

Result: years of your competitors gaining or surpassing you as the bitterness from past real estate technology failures weigh on the organizations ability to do it right.

Now here is the part where I tell you how IWMS solutions solve all these problems easily – except that is not true either. While all vendors talk about having the ONE solution to manage all of your location related processes, none of us have one solution that fits everyone. And some IWMS vendors also don’t really have ONE solution anyway; they have a bunch of solutions they bought or licensed from others that they deliver as “one” solution but in reality is simply a “best of breed” solution (that may not actual be best at everything) from a single vendor. In some cases these disparate solutions are tied together by common reporting, dashboard or work flow solutions (also from other vendors) but, under the covers, are actually multiple databases and platforms with multiple programming languages in use across multiple business logic tiers. While this does avoid some of the finger pointing issue, it does not solve the other problems.

There are two key lessons to take away from this Blog:
1. “Best of Breed” application selection may seem cheaper and easier in the short term but it almost always costs far more and diminishes the competitive advantage of your real estate technology over time.
2. Even the “fully integrated”, “single source of truth” IWMS solutions are not always really one solution from one vendor!

As always ASK QUESTIONS of your IWMS like:
1. How many databases does your IWMS use?
2. Does it require multiple web servers?
3. Is it JAVA, .NET, VB or all of the above?
4. How many different code bases are involved?
5. How many development teams do you have and how do you separate their duties?
6. How many other companies and solutions are part of your IWMS solution?

Shameless Plug

Lx IWMS Location Performance Management solution is a single solution, from a single vendor, using a single code base and database. We developed all of our own code and, with the exception of our recent partnership with Buxton, deliver 100% of our solution on our servers, using our code that we created and manage. Integration across the lifecycle is built-in since the entire application was developed on the same code base by the same development team since May of 2000. Integrating to ERP’s is something we do on nearly every project and, in fact, have created a built-in (same code base and database) solution for web-based and local data integration using flat files or web services called the Lx Messenger. Even clients can use this utility that comes with Lx IWMS to build real-time or scheduled integrations to any other system.

With that said, we, like all other vendors, don’t do everything better than everyone else (but don’t tell our Board of Directors that). A customer at now defunct Circuit City in 2004 said something to me that stuck – he said (I am paraphrasing as it was along time ago and I may not remember the exact words) they selected us because we got an A, A- or B+ in every category they required.

Even though there were “best of breed” solutions that were “A’s” or “A+’s” in some areas, he realized that those slight differences in features did not come close to overcoming the value of buying one solution from one vendor that did everything.

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Previous IWMS related Blogs

What is IWMS anyway?
IWMS? It’s Location! Location! Location!
The Power of Location Management
IWMS – Why so expensive?

It is a big step for many companies to implement an IWMS and to simply establish a single source of all location data. It can advance a companies effectiveness substantially with that first step of IWMS use. Once this has been done successfully though, users of IWMS systems start to come up with ideas of how the system can be used to further improve their internal processes and evaluate success. By having all the data in one place, hopefully organized by location, users can begin to apply decision tools to make better decisions.

Without doubt, one of the most important decisions that can be supported by a location-centric IWMS is site selection and lease renewal. For most companies with large portfolios of revenue generating real estate, the selection of the right site is the key to their success and deciding whether to keep a lease or move to a better site is just as important.

To make that decision a manager of real estate needs to evaluate a number of factors; most importantly current or projected revenue and expected cost. A real estate manager with an ROI estimate that they can trust can quickly and effectively make good decisions that can lead to successful sites.

However most IWMS solutions don’t really provide the appropriate data to produce a trustable ROI. To do this effectively an IWMS must have sales prediction that is accurate and complete, thorough cost predictions.

Some IWMS solutions that serve companies with revenue generating locations effectively may include the ability to integrate a prediction engine or an in-house model to produce trustable sales prediction. These models are very often developed in-house over years of trial and error, often in the form of complex MS Excel financial models. Sometimes the models have been produced by a vendor that specializes in producing highly accurate sales prediction models that customers can integrate into user friendly mapping tools like Buxton’s Scout. Either way, Location-centric IWMS solutions can usually utilize the results of a sales prediction model though, in some cases, this can be a very expensive integration.

An accurate and trustworthy prediction of total cost is even tougher to get into an IWMS. Once again time-tested models of cost typically are developed in-house using MS Excel or come from a vendor like Lucernex’s Lx LseMod solution.

Building and maintaining the sales prediction model and the cost model can be a difficult proposition. Without a professional software organization applying tested development and quality assurance procedures maintaining integrity in a model can be very difficult. To make matters worse, a mistake in what is typically a very complex cost model may not get discovered until an audit at which time it is way too late. Lucernex has been called on numerous times to provide our Lx LseMod Corporate Lease Analysis product after some disaster caused by a “minor” error in a model that resulted in years of inaccurate reporting.

For several years now we have seen this same issue play out in organizations looking at IWMS solutions or just after implementing our IWMS. The power of having that trustworthy ROI is enormous and an obvious value to any location-centric real estate organization so Lucernex and other IWMS vendors would often try to move the clients sales and cost modeling tools inside our IWMS or integrate the results into the IWMS for reporting or dashboard views.

The problem with this strategy is three fold:
1. it can get very expensive. Replacing a client-modeling tool usually means some amount of customization even for highly configurable tools. Integrating it is often just as expensive as few IWMS providers have tools to effectively integrate Excel models,
2. Even if you effectively integrate an Excel model you often lose the real time value of the data,
3. Once you introduce integration, especially with a desktop tool like Excel, or you introduce customization, you have an interface to maintain over time, which is both expensive and risky.

At Lucernex we struggled with the best solution for this problem for years in our attempt to provide a trustworthy ROI model for each site under consideration inside our Location Performance Management IWMS. We tried a number of different methods including all of those listed above. About 9 months ago we endeavored to take a huge step forward in solving this problem, which led to our purchase of Least Cost Solutions (maker of LseMod ). LseMod has been the leading tool in corporate real estate since 1995 for every type of real estate portfolio manager out there whether its retail, industrial, corporate, education, hospitality, healthcare, finance and banking or economic development. However, buying LseMod did not solve the problem either because it too is an MS Excel financial modeling tool. So we had the expert modeling tool but had not really improved the process by much as it was a separate desktop based tool that required integration just like a client Excel modeling tool.

In the second quarter of 2010 we will have finally solved this problem. We have successfully integrated Lx LseMod into our IWMS Lease Analysis module as a server side application with the integrity and flexibility of both products intact. Furthermore, in developing this technology we figured out how to launch any client Ms Excel model as a web ready, server-based application inside our IWMS. This will mean clients will now be able to use their time tested financial modeling tools or our Lx LseMod tools inside their Lx IWMS to produce real-time, trustworthy and thorough cost prediction including GAAP and SOX impact and a host of other critical factors.

So we have solved the cost side of the ROI prediction puzzle. In my next Blog I will tell you how we are solving the Sales prediction side and taking another great stride towards putting the “Performance” in Location Performance Management.

Get Lucernex Blogs sent straight to Outlook or iMail or any other RSS Reader!
Click here to subscribe

Previous IWMS related Blogs

What is IWMS anyway?
IWMS? It’s Location! Location! Location!
The Power of Location Management
IWMS – Why so expensive?

My last blog discussed the very loose definition of IWMS and how it tries to describe a wide array of very different vendors. In this blog I will discuss one type of IWMS, Location Management Software, and what the different end users may need to focus on when selecting a Location Management IWMS.

What are the three things that matter in real estate – Location, Location, Location. This old adage about real estate applies to commercial real estate technology as well. The location is what real estate is all about whether you are a 2000 store retailer, a 30 building corporation, a large hotel company or a multi-building campus – everything you do in relation to your real estate is based on a location. And, managing the performance of each location to perform optimally is the ultimate goal for each location whether it’s optimizing revenue or minimizing cost.

Each industry is going to have different methods to achieve these goals based on their business goals. A retailer may focus on same store revenue growth or new store development, a hotelier will focus on REVPAR growth while a corporate occupier (owner of leased) is likely to focus on space management, cost control per location (or employee) or implementation of technology to achieve savings.

The tools each of these different users needs is therefore as different as the decision makers selecting those tools. Not surprisingly, the different types of real estate portfolio owners have organized themselves differently to reflect both their differing business processes and the importance they place on the different areas of functionality.

A retailer or hotelier, for example, will have less need for a CAFM system and more need for demographics and sales prediction. Facilities management is important to this audience but real estate selection is the business driver and therefore the decision maker is typically a real estate executive when it comes to selecting technology or other tools.

A corporate real estate department will have far more use for CAFM and no need for sales prediction. While the real estate function is important, the decision for non-retail corporate companies will typically be driven by the Facilities Management group.

According to a 2009 IWMS Connect article, this difference across many organizations is starting to blur as these roles are beginning to converge into a more “workplace” driven function.

However no matter what type of user you are, all the data you collect, work flows you manage, reports you generate, schedules you manage, work orders you cut or demographics you run are all centered around a location. Shouldn’t the technology you choose to manage it center on the location as well?

By centering on the Location you can:

• Track all entities within your Portfolio or aggregate information to track your entire Portfolio
• Track all Center information including Leases
• Track all Facilities and equipment on a Campus
• Track each tax Parcel within the Location
• Track multiple planned Locations by market in multiple Programs
• Manage all collected data for multiple Sites of interest for every planned Location
• Manage as many Construction Projects as you want on one or more tax Parcels of the same or different Prototypes
• Maintain as many Facilities as you would like across one or more Programs
• Track all Spaces in each Facility, how they are used and the associated Leases.
• Run as many Capital Projects as you need
• Administer multiple Leases and subleases on a group of Facilities or on individual Facilities
• Track all real estate related Contracts for Equipment, Land, Services, etc….
• Maintain as many Franchisees information as required in the same or across multiple Facilities
• Track all Lease income and expenses on any Facilities or Location

Shameless plug