The celebrated rise and precipitous fall of dot-coms in commercial real estate and other industries has been well documented. So many companies folded, in fact, that the names could fill a trivia book. However, lost in all the discussion about how and why the tech bubble burst is the fact that technology is gradually transforming our industry in important ways across all disciplines.
In this soft economy, professionals charged with the day-to-day responsibility of completing tasks better, faster and cheaper are searching for practical solutions. That's right, it's back to the basics. Consider the dilemma of today's major lenders. Incredibly, many of them still have to re-enter borrower information as many as eight to 15 times as a loan application wends its way through various checkpoints. Each time that data is entered, not only does it create an opportunity for error, but it's time-consuming as well. Pressured to cut costs and minimize headcount, lenders have begun to develop a more systematic approach to loan originations.
Lending firms are investing millions of dollars to expedite the underwriting process. Among the lenders making strategic investments in process technology solutions are Wells Fargo, JP Morgan-Chase, GMAC and GE Capital, to name a few.
Such a practical approach to technology is a far cry from the magic-wand theory so pervasive in the late 1990s, says James Simpson, chief strategic officer and founder of Birmingham, Mich.-based e-Cognita Technologies, which specializes in document automation software. “Today's user asks, ‘What does this new technology do for me?’”
While commercial real estate generally lags other industries in adopting technology, publicly traded companies such as Equity Office Properties Trust, Duke Realty and Jones Lang LaSalle are helping to close the gap. Two stories that appear in this month's issue, one on outsourcing and the other on capital expenditures, illustrate how owners and managers of large portfolios differentiate themselves in the marketplace by leveraging technology. Collectively, these pieces reveal an emerging pattern: Those companies with the best technology platforms are typically the leaders in their field.
Because REITs are required to have strong internal reporting systems in place, technology takes on a heightened importance. “REITs have the tyranny of the numbers facing them,” says Simpson.“While markets can turn south and valuations can go down, operating efficiencies have to go up at every turn. They are accountable.”
Simpson advises any company that is weighing its technology needs to first develop a comprehensive internal database that has the ability to communicate with other databases. It sounds simple, but most companies struggle to achieve that goal, he says. “The idea is to get everyone on the same page technologically.”
He advises clients to invest in technology that solves an immediate problem, otherwise it's not worth the time and expense. “The easiest thing to do is buy technology,” says Simpson. “The hardest thing to do is to get your organization to embrace it and really show a return on investment.”
On a different note, I'm pleased to announce that veteran media marketing executive Rich Santos is now publisher of NREI. Rich has worked in the publishing and marketing industries for more than 30 years, and will oversee the strategic direction of our magazine. Look for Rich to be visible at industry events where he'll be happy to hear your views on the real estate landscape and how we can better serve readers and advertisers. You can reach him at [email protected] or call at (212) 462-3586.