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Enabling Work Across the Broader Enterprise Corporate Real Estate Accommodates Evolving Business Dynamic
October, 2008
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KEY TERMS, VALUES & SUPPORTS
Corporate Social Responsibility/Sustainability
Corporate behaviour that demonstrates open and transparent business practices based on ethical values and respect for employees, communities and the environment.
Asset Management & Portfolio Optimization
The process of continually assessing risk, demand, supply and financial structure of the enterprise's resources, resulting in specific actions that either minimize risk or maximize return on resource in alignment with unique needs for the company.
The Changing Nature of Work/Workplace
The main depiction of how work will be done in 2010 is the social network. Social networks are about relationships, teamwork and community; they are a set of interconnected nodes or points. Work will be accomplished in a wide range of locations and on the go.
Strategic Role of Place/Location Strategy
Refers to both physical and virtual workspace for the networked enterprise. Location strategies are molded around global business dynamics of a global workplace. It involves the interdependence of resources, infrastructure and constraints.
Enterprise Leadership/Strategic Competencies
Leadership is the process of influencing others to achieve the group or organization's goals. In the networked world, it is about motivating and influencing participants in the organization's internal and external networks to achieve the vision, mission and goals of the enterprise.
Solutions Delivery (Service Delivery)
A broad reaching function that encompasses everything from tactical services to strategy planning for a company. It includes work performed by parties internal or external to the corporation that contributes to the benefit of clients, customers or stakeholders and furnishes or supplies the various constituents with something needed or required that produce promised, desired or expected results.
Integrated Resources Infrastructure Solutions (IRIS)
A shared services model for administrative services management and delivery in which real estate, technology and other elements of the infrastructure will be seamlessly integrated to provide workers with the tools and environments they need to develop and deploy products faster and more efficiently.
Technology & the Web
The accessing of information via the Worldwide Web, the platforms and applications around it and the devices through which it is accessed, as well as telecommunications technology. It is an integral part of the workplace of 2010 and beyond.
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Rapidly emerging issues like climate change, energy management and carbon footprint reduction have changed the direction of corporate real estate at a pace not foreseen just a few years ago. The inaugural State of the Industry Report, 2007/2008, from the international association of leading corporate real estate and workplace executives, CoreNet Global, takes themes and projections derived from a 2004 CoreNet Global research project and tracks the progress toward and derivation from those earlier assumptions about the industry's goals and its performance in the wider social and economic context. The following is an excerpt from the report - Editor.
By Richard Kadzis
In 2004, CoreNet Global set out to test numerous hypotheses or 'big bets" about the state of the corporate real estate industry (CRE) in 2010 by interviewing industry leaders and experts in various fields, as well as key players in government and academia. The resulting Corporate Real Estate 2010 report (CoRE 2010) benchmarked the CRE and workplace industry against external macroeconomic and societal factors.
CoRE 2010 centered on how overarching economic, demographic, technological and other forces influence the multinational corporate enterprise and corporate real estate. It identified four key value dimensions: corporate social responsibility/sustainability; workplace; portfolio optimization; and location strategies. It also earmarked four related value drivers: solutions delivery; technology and the web; integrated resource infrastructure solutions (IRIS); and enterprise leadership. (See sidebar)
For CRE and workplace executives today, the macro backdrop has never been as dynamic, the opportunities more extensive or the challenges so complex. Climate change, rising oil prices, war, terror, market turmoil, threat of pandemic and other risks are redefining life on an individual and societal level. Yet, world economic growth is at a historic high point, thanks to globalization's pervasiveness. Geographic and political boundaries are blurring with the pronouncement of cross-investment, knowledge work, e-commerce and other forms of rampant change.
RESPONDING TO CHANGE
The characteristics of today's fast changing business environment also extend to escalating risk and the resulting need for greater degrees of flexibility, transparency and corporate social responsibility or sustainability. CoRE 2010 foresaw sustainability and corporate social responsibility as key drivers, but did not anticipate the weight or velocity of related issues like climate change, energy management and carbon footprint reduction that rose with unprecedented speed on the corporate agenda in 2007.
* In North America, rising energy costs have become a fundamental driver of business.
* The dramatic increase in this focus by corporations in North America is a significant change in 2007, both economically and for corporate real estate.
* In Europe, reduction of carbon footprint is a prime business driver in a government- regulated environment.
* In Asia, access to the construction supply chain and building materials is a major factor in a fast-growth region.
The demographic business drivers envisioned by CoRE 2010 are also exceeding forecast, although there was evidence of a talent issue in the economic boom years of the late 1990s preceding CoRE 2010. Mainly because of a shortage in talent in the global economy, demographic issues have since risen on the importance scale faster than anticipated.
The growing gap for technical level talent globally and the underlying demand created by ongoing outsourcing of core functions is now a business driver, not only for CRE but also across the enterprise. It also signals a currently inadequate industry pipeline to meet demand for outsourced jobs like facilities and transaction management.
WORKPLACE MANAGEMENT
The use of alternative workplace strategies is becoming more prevalent. The innovations of the 1990s are increasingly best practices being adopted on a much wider scale. Meanwhile, new best practices continue to emerge.
The 2007 survey of corporate real estate executives found a remote work adoption rate of 20% - on track to the 25% forecasted for 2010. Nearly two-thirds of those surveyed had stopped providing assigned workspace to at least 10% of their workforces.
The survey also found that nearly half of CRE departments are already supporting home working initiatives. This supports the point that the other half is expecting to obtain and use technology (video conferencing, wireless, laptops, PDAs, broadband, etc.) to enable remote work.
The old view of space entitlement or "if I can't see them, they aren't working" is dissipating. Companies are increasingly loosening the reins from the sheer weight of the cost of occupying space, if not for other reasons ultimately leading to the attainment of agility and competitive advantage.
As technology's steady advance enables more mobility and flexibility, companies will have options other than building or leasing new space. Workplaces practices also lend themselves to performance measurement, and while most companies today typically still measure efficiency in terms of cost, the ability to measure effectiveness - mainly through revenue, satisfaction and productivity - will one day complete the evolution toward CRE as the enterprise source for key performance indicators, especially in the workplace management context.
STANDARDS SUPPORT PERFORMANCE MEASUREMENT
Technology continues to progress rapidly, in some ways even faster than envisioned, particularly with bandwidth, security access, mobility and information sharing. The CRE technology function is framed around enabling work and CRE management.
Technology and the Web are key reasons why the nature of work is changing, and how CRE departments are able to optimize the globally integrated real estate portfolio and supply chain. Information technology (IT) is a multifaceted dimension of the CoRE 2010 predictive body of research that now surrounds:
* Mobile and flexible work;
* Building technology and smart buildings; and
* Portfolio analytics.
Software and data standards are the drivers of portfolio analytics, or the integrated data and information systems that are tied to performance measurement. The development of data standards to attain interoperability across the industry's many disparate IT systems and tools was still lagging in 2007, however.
This also underlies the ability of CRE to deliver performance metrics that filter up to the senior management levels of business units. Metrics are being used for key performance indicators that shape and adjust workplace strategies. They are also increasingly enhancing the management of portfolio assets.
CoreNet Global created then spun off the Open Standards Consortium for Real Estate, or OSCRE, to promote industry standards in 2004. While most OSCRE standards were developed in 2007, industry-wide adoption is still a work in progress. Vested service provider interest in the fragmented CRE supply chain is thought to be one reason. Another could be that the demand side of the industry isn't applying enough pressure on the supply side to conform to standards and integration.
Richard Kadzis is Director, Special Projects, with CoreNet Global. For more information see the web site at www.corenetglobal.org.
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