The exciting opportunities of analytics in corporate real estate

September 25, 2014 / By  

Last month my washing machine broke down, forcing me to shop around for a replacement. At the risk of sounding ancient, I was baffled by the options available and how technologically advanced even household appliances are these days. Apparently ‘smart’ washing machines are the new norm. They can be remotely controlled via your smartphone, and also seem quite intelligent, knowing more about themselves than the 2 inch thick manual would ever tell me. Basically, the washing machine ‘talks’ to the manufacturer by sending a constant stream of performance data to its servers in real time. It receives information, automatically optimising its performance, which increases its lifespan and reduces annoying breakdowns for owners.

This is just one example of ‘the internet of things’ (data derived from embedded systems) and data analytics. In our first paper Data-centric CRE – A competitive imperative , we discussed this fast developing era of ‘big data’ and how it will shape the corporate real estate (CRE) industry in the near term.  The first step is to collect robust, comprehensive data. However, the application of analytics is where the magic really happens.

Analytics can detect hidden correlations and patterns in data, predict future trends and deliver previously inaccessible insight. The increasingly sophisticated use of analytics has led to powerful shifts in the way companies make decisions, innovate, set strategies and gain an edge over competitors. According to a recent Bain & Company study, early adopters of big data analytics have gained a significant lead over other companies (Figure 1).

The application of analytics in business usually falls into one of two categories: identifying operational inefficiencies or highlighting strategic opportunities.

In CRE, there is a wide array of opportunities to drive operational efficiencies through analytics. For example, using detailed data on system and facility performance, predictive analytics can forecast asset failures and create risk-adjusted models that lead to more efficient building management, reduced downtime and lower operating costs, among other benefits.

But according to MIT Sloan research, ‘analytical innovators’ (those at the forefront of using analytics to create a competitive advantage) are now more likely to use data and analytics to generate insights and identify strategic opportunities, as opposed to focusing solely on operational issues.

In CRE, there is a significant opportunity to apply analytics in portfolio and location strategy. Companies can use algorithms to assess how factors such as the quality of amenities and proximity to transport options make a location attractive to employees. This generates a detailed statistical picture of the surrounding environment. By comparing such an analysis with previous location decisions, and benchmarking this against indicators such as employee satisfaction scores, a model can be created that underwrites the success of different location choices.

Such analyses have always been at the heart of CRE activities. However, CRE executives can use sophisticated analytics tools and techniques to extract higher quality and more meaningful insights from the sea of raw data.

To find out more, please download the second piece in our data and analytics thought leadership series: Beyond data:  The opportunity for analytics in CRE, which discusses how CRE teams can embrace data and analytics to transform data into actionable insights.

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