Property technology costs plunge

More efficient IT can save millions

Published in Property Week Sept 2009

Technology costs plunged 30% per head in the last 12 months, according to the 2009 Benchmarking study of the property sector by Remit Consulting. But savings came mainly from staff reductions, with far fewer people needing IT support, rather than from greater efficiency.

The industry still lags well behind other sectors and is making slow progress towards the £1m a year Remit predicts least efficient firms could each save if they matched the leaders. Changes in IT management accounted for only 5% of savings and there is little evidence of increased investment, says the report. But it sees an upside in this disappointing response to recessionary pressures, pointing out that a lot can still be done to boost efficiency.

Finding the right approach may not be easy, however, as the study found huge variations between leaders and laggards. Investors, for instance, spend five times as much per user as advisors but this may be because IT costs absorb a relatively low proportion of their total revenue. Advisors may hold the key, as they get by with far fewer IT staff.

Both groups are dragging their feet over one of the biggest potential savings. The property sector still prefers to buy software, which demands big initial payments and annual maintenance costs rather than pay-as-you-use services. Firms also continue to carry programs and data on their own hardware rather than farm this out to remote hosts in what is called ‘cloud computing’.

‘They may be reluctant to abandon core accounting and management programs because they cost thousands and are only part way through their intended lifespan,’ says Remit partner Andrew Waller. ‘Selection of new programs, retraining and data input is also expensive, often dwarfing the cost of software.’

But he sees little reason for keeping ownership of recent innovations such as document processing and client relationship management. The cost of buying and maintaining hardware can also be reduced by outsourcing services such as email.

Investors are more adventurous than advisors, perhaps because IT is a smaller part of overall costs and they have larger teams to try out new things. ‘Advisors tend to watch every penny,’ says Waller.

Outsourcing is not the panacea often put forward for cutting costs, however. Remit found that investors with the highest costs per user also handed over fewest functions to outsiders. But the pattern broke down among advisors, where low costs were seen at both high and low levels of outsourcing. There is no consistency between firms, let alone the two industry sectors, in amounts spent managing outsourcing partnerships. They also vary where similar levels of services are handed out.

The secret may lie in selection of which services to outsource. The study found that handing over help desk and ‘break/fix’ maintenance could cut costs, whereas outsourcing applications development may actually increase outgoings. Expectation also needs to be controlled, said Waller. ‘Expect too much from a supplier and you may end up charged for extra services. Expect too little and you need internal staff to make up the difference.’

British Council for Offices launces research portal

An online research database has been swamped with inquiries in its first few months. Around 600 reports have been downloaded from the British Council for Offices’ new information portal. Analysis of searches has provided a revealing insight into current concerns in the property industry. The key word ‘occupier’ beats traditional queries such as ‘markets’ and ‘take-up’, while the most popular research is an occupier density study, closely followed by the BCO Specification Guide, which has been updated this month.

The portal is a response to fears that information overload is swamping the property industry. A Google search for ‘offices research’ can produce more than 40,000 items, making it near impossible to keep track of key issues, said BCO chief executive Richard Kauntze. Members can now filter out the background noise to access latest research but also fill gaps in their files with reports going back seven years on topics including sustainability, planning, property management, productivity and relocation.

Outside groups have been invited to upload their work to help provide a central database for the industry. The BCO recognizes the danger of creating another relentless tide of information and is providing quality ratings to distinguish research that has been reviewed. Analysis shows reports by Savills and the RICS are scoring highly.

Features on the research portal include:

* a personalised landing page including details of recently viewed items

* facility to drill down into documents and perform advanced searches

* the results of searches ranked by quality

* the ability to save searches to revisit later

* RSS feeds prompt when new research is published

* functions to rate and comment on publications

Most popular keywords:

1. Occupier

2. Markets

3. Take-up

4. Vacancy Rate

5. Rent

6. Investment

7. Energy

8. Green