COVID-19 & the Accelerated Need for More Digitisation
Working from home may have been a novelty for many during the COVID-19 lockdown, especially during the summer, but for companies forced to switch to online working, it was a serious challenge – and one which they addressed with varying degrees of success.
Those companies that had invested sufficiently in digital technologies were much better equipped to deal with remote working and closed offices. But the crisis also exposed any lamentable lack of investment by companies in such technology. This was true for companies across several industry sectors. But to highlight some of the common key issues, Drooms surveyed* professionals in Europe’s real estate industry, which is certainly a good case study for a sector known for its historical reluctance to ditch paper-based processes.
We wanted to examine how the pandemic had impacted the adoption of digitisation in the European real estate market. Our results showed that while the pandemic did have some impact here, the extent of it was more limited than we expected.
Just over two in five (41%) of our respondents said that the European property market had only been moderately influenced by digitisation over the six months to September this year. Although a minority, this was still the most common response. Around one in four (24%) believed that digitisation had had a major impact on the sector, with 28% saying it was ‘slight’ and 4% said ‘not at all.”
However, more than two in five (43%) of our respondents also said digitisation would increase the efficiency of businesses processes, and a further 30% expect that it could dramatically reduce costs while 27% said it could create significant competitive advantages.
Although traditionally seen as a technological laggard, the real estate industry does appear to have adopted digitisation to some extent. The highest proportion of respondents (37%) said they had digitised between 50% and 74% of their processes but only 1% said they had achieved complete digitisation of all processes. But no respondents said they had no digitisation in place or had no plans to introduce it in future.
Our respondents were clear about what they saw as the key weaknesses in the technology currently applied in European real estate.
While poor network resilience and security have historically been key drivers of real estate companies’ reluctance to entrust customer-facing processes to new technology, these appear to have diminished in importance. The most common weakness highlighted by our respondents was the lack of integration between different systems and platforms used in the sector, which was cited by 44% of respondents. Almost one third (29%) also said that another key challenge is the lack of applications that are available to replace the paper-based processes that still pervade. But 11% still believed that poor network resilience is the biggest problem, while 10% point to inadequate security.
Key themes going forward
More than a third (36%) of our respondents believed that remote working will be the most important theme for the real estate market in future. The next most common theme cited by our respondents (28%) was the expected arrival of more integrated technology that will improve efficiencies across the whole real estate value chain.
These responses were entirely unsurprising. For some time, we have seen firms calling for greater connectivity in their business processes. But this greater connectivity requires the practical use of interfaces between software solutions.
At Drooms, we are facilitating this by opening up our application programming interface (API) so that our virtual data room (VDR) platform can connect to other systems, enabling asset managers to save both time and workload effort, and reduce costs.
Virtual Data Rooms
VDRs bring tremendous efficiency and an array of functionalities to M&As, IPOs and non-performing loan and real estate transactions as well as management of assets throughout their lifecycle. Launched around 20 years ago, they served as online versions of the physical spaces where confidential or sensitive information was held for review by authorised parties. They now provide a secure, online platform for accessing confidential documents and handling business processes with a range of added functionalities.
Although not as significant as might have been expected, the coronavirus pandemic has had an impact on the digitisation of the commercial property market. The industry has largely performed well despite the challenges, which is no doubt due to robust online systems having been put in place.
What our research does underline however is that companies do need to continue implementing digital solutions to achieve greater efficiencies, lower costs and higher productivity. To achieve this, firms should rigorously review their business processes to assess what can and should be meaningfully digitised to enhance business performance.
For the challenges will only continue as technology evolves. The pandemic has created a huge shift in how organisations manage their operations and this has exposed a substantial need to re-think data transfer needs.
Security and the speed of transfer have become key priorities to ensure the smooth running of remote working teams and IT departments must lay the groundwork to ensure large documents can be made available at any location via a structured storage platform to help teams continue working digitally and seamlessly.
*The study was a quantitative survey using an online questionnaire consisting of seven questions. Customers and interested parties in Europe were invited to take part in September 2020 via email. A total of 538 real estate experts responded. The full survey can be accessed here: https://bit.ly/383EHYV.