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Real estate represents a significant cost and a major asset, and yet few organizations see it as a generator of value.
In this paper, Accenture argues that developing a holistic real estate strategy can help companies both protect and create value as they strive to achieve high performance in the wake of economic instability.
Real estate represents one of the biggest costs for any organization, usually just behind labor, and can represent its biggest asset. And yet many—perhaps even most—companies do not take a holistic view of their real estate portfolio.
Such a holistic view could certainly help to reduce costs, but that is only one opportunity. Executives can build a broader value proposition by gaining greater visibility into the real estate portfolio and greater control over what may be a highly dispersed group of properties. By integrating real estate strategies with broader business objectives they can generate real benefits.
Moving to a perspective that emphasizes value-creation over location is especially important given the shift in working habits. Alternative workplace strategies are spreading across both the public and private sectors as workers become more mobile, and outcomes are prioritized over mere attendance during working hours.
Organizations need to integrate the right combination of processes, technologies and behavioral changes to develop an environment able to adapt to changing business needs.
Real estate strategy is aligned to four areas of potential value.
Efficiency. This goes beyond obtaining space at the right cost. Organizations must determine the right amount and type of space they need to support an evolving workforce.
Effectiveness. An effective real estate function puts the day-to-day management of operations in the hands of a few trusted outsourcing providers and places strategic decisions with a small core of senior leaders, reporting to one senior executive.
Engagement. The right work environment can enhance a company’s brand and help attract and retain talented employees.
Environment. Rationalizing real estate where redundancy or underutilization exists can help improve sustainability performance.
Once a holistic strategy has been developed, implementation hinges on two principles:
Performance should be monitored, tracked and analyzed using a single set of metrics.
Closed-loop performance management processes should ensure that decision making is based on facts, people are held accountable for results and learning is shared throughout the organization.
More organizations are recognizing that their real estate portfolio may be leveraged both to protect and create value.
August 25, 2011
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