This week Finance Monthly interviewed Tom Carroll, head of EMEA corporate research at JLL, which released its 2017 report on global CRE trends just a few weeks ago. Here Tom delves into the future of automation in the CRE sector and discusses the current impact its having on businesses.
Could you introduce the need for more automation to benefit the business processes and real estate needs for corporates?
Robotics and automation are already being adopted widely across the corporate world. Going forward, they are more likely to lead to job transformation as opposed to wholesale replacement of human labor. This shift will free up time for innovative, creative and strategic work.
Automating repetitive, simple tasks in business processes will help increase speed, precision and cost efficiency. From a real estate perspective, this means that the organisation will be reorganised. The work that companies do and the way they do it is changing. As the more process-driven elements of work fall into artificial intelligence, the use of freelancers, consultants and contingent workers sourced via virtual marketplaces is becoming increasingly common too. This means that the companies of the future will be leaner and more dispersed allowing their employees to focus more narrowly on value creation.
How are overall roles set to change within large companies on the back of automation, and what about SMEs?
The companies of the future will be leaner, with remaining employees more narrowly focused on value creation and other activities delegated to specialist providers or intelligent machines. Competing for talent, however, will continue to be a major challenge due to slowing growth in the global labour pool across the next 15 years.
Therefore, developing talent strategies to attract and retain the right kinds of employee is essential. There are two generations of talent that firms particularly need to get to grips with to successfully navigate the changes taking place: digital natives and digital dependents. These groups have the digital skills and understanding of technology that companies need to transform their businesses.
What has so far been the impact of introducing automation in business operations?
McKinsey analyzed 2,000 work activities across 800 occupations and found that just 5% of occupations are likely to be become fully automated based on currently demonstrated technologies. However, individual activities in almost every job can be partially automated. Adapting current technologies could allow half of all activities that people are paid for to be automated, equal to almost $16 trillion in wages.
Overall, the report estimates that 49 percent of the activities that people are paid to do in the global economy have the potential to be automated by adapting currently demonstrated technology. While less than 5 percent of occupations can be fully automated, about 60 percent have at least 30 percent of activities that can technically be automated.
The good news is that automation could raise productivity growth, which would be a boon at a time when productivity rates have been falling. McKinsey estimates it could boost productivity growth globally by 0.8% to 1.4% annually in 2015-2065. That compares with the 0.3% productivity boost afforded by the creation of the steam engine in the period from 1850 to 1910.
What would you say is the biggest benefit, and are there any downsides?
Enhanced productivity and lower costs could be significant benefits for companies. Another of the biggest benefits of integrating automated processes is the fact that employees and companies can specialise and focus on value creation, innovation and growth.
As the shape of the workforce changes. Real estate portfolios will be consolidated, with a greater share of space located in urban hubs which appeal to top talent. The design of office environments will be guided by user experience as the competition for talent grows more intense.
What are the best examples of automation in large businesses? What might these look like in future?
Intelligent software is already automating many back-office roles in fields like accountancy, finance and law. E-discovery software, for instance, can analyse millions of electronic documents and tease out ones that might be relevant for a legal case, even when specific words or phrases are not present.
At JLL, for instance, we have signed a global agreement with Leverton to automate lease administration. Leverton’s machine and deep learning technology enables the identification, extraction and management of key terms and data from corporate documents, such as leases and contracts, in more than 20 languages. JLL will integrate these systems into its own global technology platforms to transform the way lease documents are reviewed, analysed and managed for its clients. This way, our clients will benefit from optimised data management, more efficient processing of documentation, reduced operational risk and a more robust audit trail.
Chicago-based Narrative Science has developed software capable of taking raw statistics and data and converting it into prose. Originally used to convert sports statistics into news stories, it’s now being used by a leading international bank to summarise stock activity for the firm’s brokers – a task which was formerly undertaken by a team of 20 people.
Cognitive artificial intelligence (AI) programmes that can respond to natural language will see human to machine collaboration become part of everyday working life. Watson, IBM’s natural language processing artificial intelligence system which famously defeated two human contestants on US prime time quiz show ‘Jeopardy!’ is now being used in fields like medicine, banking and customer services. Watson can even act as a ‘c-suite advisor’, scanning documents, listening in on meetings and advising on which companies to invest in. Ross Intelligence – an application powered by IBM Watson – can answer legal questions asked in natural language by shifting through huge databases of legal documents.
In a similar capacity, Kenshoo – a natural language processing system that another major international bank has invested in – provides detailed answers to financial questions that are asked in plain English. Applications like these – that can interact with humans through speech – will be called on to support or enhance the work of people.
How do you expect workplace attitudes to change in respect to automated roles?
Workplace attitudes are already shifting, just as people are becoming more comfortable with smart technology and robotics in the home. Automation has already transformed manufacturing processes and what we are seeing is an extension into new industries and job functions.
User experience will take primacy in the design of office environments as the war for talent grows more intense. To meet the expectations of the next generation and boost the productivity of those using the office, a greater variety of spaces will be available to work in. Activity based working – an approach to creating workplaces that provide users with shared access to spaces for individual and collaborative work – will become commonplace in workplace design. High-quality services, from food and beverages to recreation spaces, gyms and space to support wellbeing, will become standard features in core locations.
What does the real estate or financial services company of the future look like in respect to automation?
By 2030, companies will look very different than they do today. They will have diverse real estate portfolios that balance core space requirements with greater amounts of flexible space. Core locations will be concentrated in fewer, yet more dynamic, strategic, locations. More of them will be in developing markets with strong talent pools. Automation and outsourcing will streamline the workforces of large companies and reduce the number of full-time staff they employ. Employees will also benefit from greater automation of basic process driven activities within their day to day roles and technology may even improve the work life balance of employees.