With few companies boasting immunity to the effects of the FASB lease accounting changes scheduled for publication at the end of 2015, this year’s survey results reveal still anemic improvements in companies’ confidence in their real estate data. No significant increase in data confidence has been seen in the last two years, during which time we had expected that more companies would have focused on initiatives to get their data ready for the lease accounting changes. To see yearly averages, view our full report.
The Diagnosis – Significant Survey Findings
In addition to the disappointing results for real estate information confidence, other categories have similarly flat-lined:
- Companies who agree they are prepared for the FASB lease accounting changes declined for the third straight year to 24%, which means that an overwhelming 76% of respondents believe they are not prepared and most of these just don’t know if they are or not.
- Four the fourth consecutive year, respondents said their top two priorities are modifying internal business processes and validating the accuracy of their real estate information.
- Trends indicate companies are moving back to utilizing a centralized internal staff for managing their real estate information, with 64% of respondents this year indicating this organizational preference; up from 55% last year.
- Survey results reflecting progress to implement advanced real estate information management process reported dramatic changes this year, with initial stages doubling from the 24% last year.
- In spite of ailing confidence in the real estate information, companies still report they use their data to “make strategic real estate decisions that help increase the overall company profitability”.
- Survey respondents indicated again this year that they “cannot easily consolidate all information needed due to information being maintained in multiple separate systems and departments”.
Get ALL the data I need into ONE single resource!
Prevalent throughout the survey this year is the plea for systems integrations. This ability has far-reaching ramifications for companies who understand the importance and value of their real estate and the role their portfolios play in achieving strategic objectives.
When systems are not integrated, respondents commented about the negative impact this causes to their day-to-day tactical work. Some of these included inabilities to pay rents, lack of data transparency, work redundancy, lack of standardized processes and adverse amount of time required to create ad-hoc reports.
Systems integrations are not a cure-all, but if you consider that situations such as lack of data confidence and reporting complexities are symptomatic of stand-alone, non-integrated business systems, then stable and seamless systems integrations can help alleviate much of the day-to-day paid currently being experienced by real estate professionals.
Top two inhibitors preventing better real estate management processes
The top two inhibitors preventing companies from establishing better real estate information management process remain unchanged for the third consecutive year. Lack of budget has been the top inhibitor for the first two years of this survey – in 2010 and 2011 – but has fallen rapidly as companies saw the economic recovery take hold. Still, internal challenges are back up at 51% of respondents indicating they have trouble overcoming existing organizational structure and process to make headway at implementing advanced methods. To view corresponding data, click here.
The Prognosis – Survey Summary
A lot of work lies ahead for teams who work with real estate data every day – to increase the quality of all that data and to do it quickly to prepare for the FASB lease accounting changes due to be published in Q4 of 2015. Teams still struggle to compile all the information they need for executive reports due to the lack of integrations with other business systems. It is no wonder, then, that the number of companies that are not prepared for FASB has reached an all-time high at 76%.
Time is running short and we could be seeing signs that organizations are starting to implement advanced processes and technology with aggressive deadlines. The FASB lease accounting changes are undoubtedly a big driver to this flurry of activity, but we fear so many companies are late in getting started.
Next year’s survey results will be compelling indeed as we see if and how the then-published FASB lease accounting standard forces renewed strength in real estate information confidence.
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