2 Page 2 Executive Summary A business environment that is unyielding in its pursuit of bottom-line savings and process efficiency has driven enterprises to seek greater alignment of real estate and facilities lifecycle management (REFLM) strategies with corporate goals. Enterprises now realize the strategic value of, REFLM as it proves to be a point of advantage in managing an area of significant corporate spend and high complexity. The results are spend and process visibility delivered through collaboration and ease of access and exchange of information. This provides further support to the positive impact that real estate and facilities lifecycle management has on the development and execution of corporate strategy. Research Benchmark Aberdeen s Research Benchmarks provide an indepth and comprehensive look into process, procedure, methodologies, and technologies with best practice identification and actionable recommendations Best-in-Class Performance Aberdeen evaluated the real estate management practices and performance of over 90 enterprises in May and June 2008, using two key performance criteria to distinguish Best-in-Class companies: 1) Rate of occupancy; 2) Rate of space utilization. Best-in-Class enterprises in this study are notable for their superior performance and credit real estate management tools and solutions with contributing to the following benefits: 1.5 to 2.9 times higher rates of savings across key REFLM expenditures than All Others Twice the level of incremental improvement in their capacity to fulfill maintenance requests Competitive Maturity Assessment Best-in-Class performers shared many common characteristics with respect to real estate management. Best-in-Class companies are: 58% more likely to leverage multiple stakeholders for REFLM data collection and aggregation, and strategy development 10% to 33% higher levels of visibility in to REFLM processes and spend, respectively. Required Actions Leverage REFLM technologies Measure performance across all REFLM phases Engage C-level executives in REFLM process Align REFLM and overall corporate strategies
3 Page 3 Table of Contents Executive Summary...2 Best-in-Class Performance...2 Competitive Maturity Assessment...2 Required Actions...2 Chapter One: Benchmarking the Best-in-Class...5 Business Context...5 The Maturity Class Framework...8 The Best-in-Class PACE Model...10 Chapter Two: Benchmarking Requirements for Success...12 Competitive Assessment...13 Capabilities and Enablers...15 Chapter Three: Required Actions...20 All Steps to Success...20 Laggard Steps to Success...20 Industry Average Steps to Success...20 Best-in-Class Steps to Success...21 Appendix A: Research Methodology...23 Appendix B: Related Aberdeen Research...25 Figures Figure 1: Strategic Value of REFLM...5 Figure 2: Top Pressures Driving Focus on REFLM...7 Figure 3: Top Actions to Manage REFLM...7 Figure 4: Rates of Savings for REFLM...9 Figure 5: Facilities Maintenance Request Fulfillment Capacity...9 Figure 6: Challenges to Effective REFLM...11 Figure 7: REFLM Process and Spend Visibility (1 - lowest to 5 - highest)...12 Figure 8: Cross Functional Coordination for REFLM (1 - lowest to 5 - highest)...16 Figure 9: Priority of REFLM Technology Investment (1 - lowest to 5 - highest)...19 Figure 10: Strategies for Improving Energy Management...22 Tables Table 1: Phases in Real Estate and Facilities Lifecycle Management...6 Table 2: REFLM Best-in-Class Status...8 Table 3: The Best-in-Class PACE Framework...10 Table 4: The Competitive Framework...14 Table 5: The PACE Framework Key...24 Table 6: The Competitive Framework Key...24
4 Page 4 Table 7: The Relationship Between PACE and the Competitive Framework...24
5 Page 5 Chapter One: Benchmarking the Best-in-Class Business Context The success of a company is often the result of a well-developed and tightly executed business plan. A critical underlying factor that also contributes to success is the space(s) selected and managed on a day-to-day basis to support all business operations. Spend for real estate and facilities lifecycle management (REFLM) is significant within an enterprise, comprising 15% of the total enterprise spend for companies participating in this research effort. Reflecting the role it plays in affecting a company's monetary outlays and bottom line performance, executives continue to appreciate the role real estate and facilities play in supporting corporate strategies (Figure 1). Fast Facts 82% enterprises ascribe strategic value to REFLM Over half (57%) of enterprises have conducted an internal assessment of real estate and facilities to establish visibility into their REFLM operations Figure 1: Strategic Value of REFLM 49% 33% 11% 6% High Moderate Low No strategic value / contribution Over 80% of enterprises ascribe strategic value to the role of real estate and facilities lifecycle management. The long-term value of looking beyond real estate and facilities spend as sunk costs or simply the cost of being in business is measurable and pays dividends to those organizations willing to believe that their competitive position can be effected by where they do business and how they manage these spaces. REFLM: Closing the Loop In addition to the magnitude of corporate dollars required, real estate and facilities lifecycle management is also highly complex, involving many interrelated processes for effective management (Table 1). "In our business, the facilities and the spaces we're in drive customer interaction so, strategically, it is very important for us to have the right space and manage it properly. ~ Executive Vice President, Facilities Management, Large European Financial Services enterprise
6 Page 6 Table 1: Phases in Real Estate and Facilities Lifecycle Management Phase Name Strategic Master Planning Real Estate Management and Administration Facilities Management Facilities Maintenance and Operations Project Management Asset Management Description Alignment of real estate and facilities management goals with corporate strategies; also includes capital planning and budgeting for real estate and capital maintenance investments. Lease negotiation, administration, and transaction management, including due diligence and site selection; oversight and optimization of portfolio performance. Oversight of space occupancy and utilization, planning / design, moves, hoteling, reservations, etc. Can also be termed as space management Planning of preventive maintenance and fulfillment of requested maintenance (break / fix) activities; includes work order management and execution / fulfillment, janitorial / housekeeping / cleaning, grounds / roads / landscaping, security, maintenance, repair, and operations (MRO) supply management, etc. Oversight and execution of modifications, renovations, and other construction and building activities; includes tracking of transactions, changes, milestones, and work orders. Capital and non-capital projects for real estate and facilitiesbased activities. Inventory, tracking, and management of capital and operational assets Source: Aberdeen Group, May 2008 As the moniker implies, REFLM is a lifecycle of management functions that should be integrated to optimize performance and strategic contribution real estate and facilities under management. Cost and Competition Drives Action No matter the industry, profitability is the expected outcome of any business venture. Yet there are many different factors that can affect the bottom line performance of company. In the case of REFLM, it is rising costs and the need to better manage spend on real estate and facilities (Figure 2).
7 Page 7 Figure 2: Top Pressures Driving Focus on REFLM Rising REFLM costs Improve or maintain competitive position in market Better manage and prioritize capital spending 29% 31% 38% "In an environment of lower budgets, there is a need to manage growing costs. The real estate budget is one of the three largest for us so we need to balance priorities, But this is difficult without a strategic master plan, which we don't have. Rising costs of facilities maintenance costs Improve workplace productivity 23% 28% ~ Finance Manager, Large Financial Services Enterprise While costs are necessarily the key focus for enterprises, especially in consideration of the complexity and magnitude of this area of corporate spend, the influence and strategic significance of effective real estate and facilities management on the competitive positioning of companies is also recognized. Yet companies have not let themselves become paralyzed by the onerous task of managing the different phases of the real estate and facilities management lifecycle; they have approached REFLM with actions as diverse as the cycle itself (Figure 3). Figure 3: Top Actions to Manage REFLM Conduct an inventory and assessment of current real estate and facilities 57% Establish a formal strategic planning process 49% Increase stakeholder collaboration for REFLM data and strategies Merge real estate and facilities management groups Leverage technology for REFLM Provide educational / professional development opportunities 40% 38% 36% 31% The strategies employed include ensuring that they have the proper information from which to start, addressing key organizational processes,
8 Page 8 and promoting a culture of learning. All these actions are linked together by acceptance and leveraging of technology to as part of their REFLM process strategy. The Maturity Class Framework Top performing enterprises effectively manage the phases of the real estate and facilities management lifecycle by employing key technologies and processes to optimize the strategic contribution of REFLM. Aberdeen used two key performance criteria to distinguish the Best-in-Class from Industry Average and Laggard organizations: Rate of occupancy Rate of space utilization Table 2: REFLM Best-in-Class Status Definition of Maturity Class Best-in-Class: Top 20% of aggregate performance scorers Mean Class Performance 96% rate of occupancy 96% rate of space utilization Industry Average: Middle 50% of aggregate performance scorers Laggard: Bottom 30% of aggregate performance scorers 85% rate of occupancy 88% rate of space utilization 42% rate of occupancy 35% rate of space utilization Best-in-Class enterprises demonstrate that a strategic advantage that positively impacts business can be established through real estate and facilities management. Effectively matching key technologies with welldefined and efficient processes has led to superior levels of occupancy and space utilization, which reflect the organization's ability to properly plan for and use their real estate and facilities. In addition to more effective use of space, Best-in-Class enterprises further distinguish themselves at addressing the key issue of rising costs by establishing higher savings rates across a series of REFLM performance metrics (Figure 4).
9 Page 9 Figure 4: Rates of Savings for REFLM 7.0% 5.2% 5.6% 5.8% 2.7% 3.0% 4.0% 2.4% Best-in-Class All Others Total cost of occupancy Cost per square foot leased Maintenance cost per square foot Cost per employee to move By delivering higher savings as a result of their REFLM strategies and use of technology, the Best-in-Class are able to free up funds for other strategic initiatives within the enterprise or to reinvest into REFLM programs. Operationally, Best-in-Class enterprises maintained their superior performance in the ability to fulfill maintenance requests; their incremental improvement of 50% also doubled that of the 25% that their competitors realized (Figure 5). Figure 5: Facilities Maintenance Request Fulfillment Capacity Best-in-Class All Others Fulfilled before technology Fulfilled after technology The overall time to complete these maintenance requests was also positively impacted as, on average, a 50% reduction in the number of days to fulfill maintenance work orders was experienced across all competitive sets.
10 Page 10 The Best-in-Class PACE Model Following through with a lifecycle approach managing real estate and facilities to achieve corporate goals requires a combination of strategic actions, organizational capabilities, and enabling technologies that can be summarized as follows: Table 3: The Best-in-Class PACE Framework Pressures Actions Capabilities Enablers Rising REFLM costs Improve or maintain competitive position in market Conduct inventory & assessment of real estate and facilities Establish formal strategic planning process Merge real estate and facilities management groups Leverage REFLM technology Internal management of REFLM processes Real estate and information accessible and exchanged between corporate real estate and facility management groups Collaborative relationship structure between real estate and facility management groups Ability to measure REFLM performance Central system of record for real estate portfolio and facilities / space under management, including transactions Central repository for all real estate and facilities management-related documents Budget forecasting and scenario analysis tools Online tracking of project completion / milestones and budget status Automated alerts for key dates
11 Page 11 Aberdeen Insights REFLM Hurdles As with any business function that impacts both the strategic positioning and fiscal well-being of an enterprise, specific challenges emerge that forestall effective management (Figure 6). Figure 6: Challenges to Effective REFLM Coordinating REFLM strategies with corporate goals Balancing budgets Communicating value of REFLM 29% 37% 47% "There are a number of challenges we face: cost escalation, people, globalization. We know that with an automated real estate management solution, our company will be able to reduce costs and centralize operations, as well as reduce repetitive tasks and standardize processes unique to the real estate and facilities management lifecycle. ~ Shashank Agarwall, Manager, Large Technology Manufacturing company Change management 27% Aging buildings 21% While enterprises have clearly recognized the strategic value of REFLM (see Figure 1), there remain significant challenges to aligning REFLM strategies with corporate goals to optimize the contribution of REFLM as a competitive differentiator. The flames of this struggle are further fanned by the difficulty noted in communicating the value of real estate and facilities management to enterprise leadership. As with any other corporate program, executive support is critical for driving performance.
12 Page 12 Chapter Two: Benchmarking Requirements for Success Real estate and facilities lifecycle management touches every part of an organization and can affect each person in the company. To address their deficiencies, companies must have a complete understanding of their REFLM operations. To this point, visibility remains an objective that many enterprises are not able to obtain (Figure 7). Figure 7: REFLM Process and Spend Visibility (1 - lowest to 5 - highest) Strategic Master Planning Real Estate Management & Administration Fast Facts Best-in-Class enterprises are 1.4 to 2.0 times more likely to engage multiple stakeholders to collect and aggregate REFLM data, and develop REFLM strategies Best-in-Class organizations enjoy visibility into REFLM processes and spend that is rated 10% to 33% higher than Average and Laggards Facilities Management Facilities Maintenance and Operations Project Management Asset Management Spend Process On average, only 11% and 15% of enterprises indicated that they had a high level of visibility (designated as a rating of 5) into processes or spend, respectively, across the phases of the real estate and facilities management lifecycle. Such shockingly low levels further reveal the barriers to success faced by companies in managing the real estate and facilities lifecycle. They have little insight into which processes need to be attended to and / or have the most strategic impact; and they remain unaware of the costs and spend into area of high dollar volume. "Even though we're rather decentralized, we have pretty high level of visibility, especially at the executive level. Collaboration is pretty strong though, which helps with the challenge of getting good data." ~Sara Oseasohn, Finance Manager, Harvard Real Estate Services
13 Page 13 Case Study Big Spaces, Big Opportunities A large, multi-national manufacturing company with over $14 billion in annual revenue and more than 94,000 employees, leverages a combination of technology, collaborative strategies, and process improvements to effectively manage the company's 30 million square fee of real estate and facilities worldwide. Strategically, REFLM is viewed in the context of where they re located now, where they need to be in the future, and how these decisions affect the economics of the organization. A true lifecycle approach is being developed to eventually address all real estate and facilities challenges. Using their solution, they are able to drive visibility into REFLM operations to the highest levels; "We are 'right there' for communication with senior management," stated the Director of Corporate Real Estate. The CFO and SVP of Operations regularly receive reports, quarterly meetings are held with the Controller, and strategy meetings are routinely held. Additionally, the Director of Corporate Real Estate is part of the Mergers, Acquisitions, and Divestitures team, where he has input into space-related strategies and how to align them with corporate growth initiatives. The solution in use also allows for analysis of different scenarios to use in capital planning decisions, enables mapping of all corporate spaces, including the condition of their infrastructure, and houses all real estate-related documents. A stronger push to bolster facility maintenance capabilities has also been initiated, highlighted by the initiation of a "Facilities Council" that will look into and develop strategies around facilities maintenance. A key focus is on cost avoidance; early assessments indicate that by addressing facility maintenance issues in two different facilities at this time, they will be able to save $3 million in future expenses. An additional focus is on energy consumption and conservation, where targeted programs to reduce lighting use in one corporate space resulted in $1 million of energy savings and water conservation in another led to $250,000 in utility cost savings and reduction in water consumption in the millions of gallons over the year. Competitive Assessment Aberdeen Group analyzed the aggregated metrics of surveyed companies to determine whether their performance ranked as Best-in-Class, Industry Average, or Laggard. In addition to having common performance levels, each class also shared characteristics in five key categories: (1) process (the approaches they take to execute their daily operations); (2) organization - the structure, skills, and capabilities of the organization, as well as the alignment of processes and actions with the strategic direction of the enterprise; (3) knowledge management - the accessibility and visibility of data and information, including the ability to leverage it across the enterprise; (4) technology - the level of automation and functionalities of tools leveraged to enhance process execution and delivery of information;
14 Page 14 and (5) performance management - the ability of the organization to measure their results to improve their business across key performance indicators such as rate of occupancy and utilization, cost savings, and operational efficiencies. Table 4 shows some of the processes, capabilities, technologies, and strategies employed by Best-in-Class, Average, and Laggard companies within the competitive framework. Table 4: The Competitive Framework Process Best-in-Class Average Laggards Engage multiple organizational stakeholders to access real estate and facilities management data and to develop strategies 57% 40% 29% Internal group manages REFLM sub-processes Organization Knowledge Technology 80% 74% 61% C-level (CEO, COO, CFO) reporting directly from REFLM groups 64% 50% 43% Self-rated visibility into processes across all REFLM phases (1 lowest to 5 highest) Self-rated visibility into spend across REFLM phases (1 lowest to 5 highest) Key functionalities of REFLM solutions
15 Page 15 Best-in-Class Average Laggards 69% central system of record for REFLM transactions 54% central repository for REFLM documents 54% automated notification and alerts of key dates 51% budget forecasting and scenario analysis tools 46% online tracking of project completion and budget status 59% central system of record for REFLM transactions 47% central repository for REFLM documents 46% automated notification and alerts of key dates 46% budget forecasting and scenario analysis tools 27% online tracking of project completion and budget status 43% central system of record for REFLM transactions 36% central repository for REFLM documents 29% automated notification and alerts of key dates 18% budget forecasting and scenario analysis tools 25% online tracking of project completion and budget status Measure KPIs across all stages of real estate and facilities management lifecycle Performance 70% 60% 42% Ability to benchmark REFLM sources internally 36% 34% 24% Capabilities and Enablers Competitive pressures force companies to seek out strategic advantages across all business functions and processes. Real estate and facilities lifecycle management provides yet another avenue through which enterprises can make their mark. Best-in-Class enterprises have most readily capitalized on the benefits of effective REFLM programs. Some of those advantages across Aberdeen's competitive framework include: Process Best-in-Class enterprises are 60% more likely than All Others to engage key stakeholders across the organization to aggregate and collect data, and also develop REFLM strategies. Such processes are a necessity considering that, traditionally, oversight of data and tactical management of different REFLM activities has been dispersed across corporate real estate, facilities management, project management, and engineering groups. The ultimate effect is improved collaboration and accessibility to data (Figure 8). By improving the technology and strategies around our real estate management, overall it s going to help us provide a better service to our customers. As usage of a REFLM solution increases and processes become standardized, it will enable organizational growth. ~ Human Resources Manager, Canadian Public Sector
16 Page 16 Figure 8: Cross Functional Coordination for REFLM (1 - lowest to 5 - highest) Level of collaboration Accessibility / exchange of key data & information Best-in-Class All Others The Best-in-Class engage multiple stakeholders more frequently, and also demonstrate a stronger ability to coordinate and exchange data across different REFLM functional management groups to drive better performance. Organization The Best-in-Class are 8% to 36% more likely to rely on an internal group to manage different REFLM sub-processes. By centralizing management internally instead of relying on third-party providers, a common point of contact and leadership is provided to the rest of the company. This also serves to provide a unifying voice from which any policy changes or process modifications would be delivered. Additionally, leveraging internal management sources reduces the inherent need to establish additional relationship management structures and processes to facilitate an effective outsourcing relationship. Knowledge Management Visibility into processes and spend across all REFLM phases are 7% to 29% higher in Best-in-Class organizations than in All Others. Visibility dictates the ability of an enterprise to actively monitor performance and assess areas of the real estate and facilities management lifecycle that require attention. As visibility wanes, companies have less control and lose management capabilities, potentially jeopardizing the competitive advantage that is supported by Best-in-Class REFLM performance. Technology To enhance capabilities for REFLM, organizations are increasingly looking to technology tools and services to generate process efficiencies, savings, and
17 Page 17 strengthen the strategic alignment between REFLM and company-wide goals. Deployment of process automation tools has been shown time and again to drive efficiencies and deliver savings. Bolstering Best-in-Class performance is the decision to leverage technology as part of the strategic plan to improve REFLM. Such a strategy occurs 26% more frequently among the Best-in- Class than in Average and Laggard organizations, with specific functionalities being utilized to distinguish performance: A central system of record is 17% to 60% more likely to be utilized by Best-in-Class enterprises. This enables all data and transaction information across the entire real estate and facilities management lifecycle to be centrally stored within a source that is readily accessible. Centralizing data also improves the ability to audit transactions and provides a solution that can be referred to for benchmark information, impacting future costs through improved visibility. Best-in-Class organizations use a centralized, online repository for REFLM documents 26% more frequently than their peers. Such capability within a system facilitates auditing, provides a specific location of reference for such items as lease or mortgage agreements, archived work order records, maintenance records for assets, capital project plans, and strategic planning documents. Leveraging budget forecasting and scenario analysis functionality is 46% more likely to occur in Best-in-Class companies. This allows for greater visibility and decision-making capabilities across the multiple phases in the real estate and facilities management lifecycle, ensuring that the significant corporate spend for REFLM is justified, will benefit the overall operations, and not drain financial resources of the business. The Best-in-Class are 70% to 100% more likely to leverage online functionality for project completion and budget status. This more distinct visibility into an aspect of REFLM that is highly variable (due to the wide variety of capital construction projects that an organization may engage in) involves many moving parts. Different participants and tasks must be coordinated (i.e. contractors, electricians, plumbers, IT, HVAC, etc.) as part of the construction process, which is critical for ensuring completeness and accuracy of projects. Additionally, Best-in-Class companies are over 50% more likely to use automated workflow functionality for development, design, and approval of capital projects. Performance Management Measurement is the key to evaluating performance. Although companies measure a wide range of key performance indicators (KPIs), Best-in-Class enterprises are 30% more likely to measure REFLM performance across the entire lifecycle. This drives their advantage in visibility and allows accurate information about program management to be collected, analyzed, and
18 Page 18 distributed throughout the organization, laying the foundation for pro-active improvement of REFLM programs. The concept of "you can't see what you don't measure" is aptly applied to REFLM. Driving the Best-in-Class advantage in occupancy and utilization is that fact that they are 5% to 20% more likely to include such measure their performance for either of these. Additionally, Best-in-Class companies are up to 68% more likely to measure more complex REFLM performance in such areas as total cost of occupancy, costs per employee move, utility / energy consumption, and hours of operation / down time of space managed, among others. The result has also led to the Best-in-Class being able to leverage data collected across all REFLM phases to deliver savings that are 1.5 to 2.9 times higher than All Others.
19 Page 19 REFLM Technology: Is There a Focus? The Best-in-Class demonstrate a higher acceptance of and propensity to leverage REFLM technologies than the Average and Laggard competitive sets across all phases of the real estate and facilities management lifecycle (Figure 9). Figure 9: Priority of REFLM Technology Investment (1 - lowest to 5 - highest) Real Estate Management & Administration Project Management Asset Management Facilities Management Facilities Maintenance and Operations Strategic master planning Best-in-Class All Others A real estate and facilities lifecycle management solution will help us to achieve faster construction cycle times and reduce project estimation error. We are hopeful that it will allow us to better deal with the challenges of remote area construction management. ~ Business Process Management Director, Government Agency The gap between priorities for investment in specific REFLM technologies is modest from top to bottom, highlighting the holistic view that companies take when selecting a REFLM solutions. The importance of an integrated lifecycle approach to real estate and facilities management is readily apparent; value is being delivered across each stage of the REFLM process through automation and tools currently invested in reflect this goal. Yet there remain subtle and distinct differences. Real estate management and administration can be viewed as the tactical starting point of the REFLM activity, but project management activities are present throughout. Construction projects, whether they are large-scale capital developments or smaller contracting projects, affect the view and outlook of all REFLM phases and their position in the technology investment pecking order reflects the importance placed on it by enterprises.
20 Page 20 Chapter Three: Required Actions Whether a company is trying to move its performance in real estate and facilities lifecycle management from Laggard to Industry Average, or Industry Average to Best-in-Class, the following actions will help spur the necessary performance improvements: All Steps to Success Measure performance across the entire real estate and facilities management lifecycle. Deploying automated tools to facilitate management of the real estate and facilities lifecycle enables a company to improve REFLM performance. However, in order to optimize program performance, companies must develop the ability to measure performance across the phases of REFLM and establish benchmark targets for improvement. The Best-in-Class are 67% more likely to measure enterprise wide performance across all REFLM activities and stages. Laggard Steps to Success Conduct an assessment of real estate and facilities across the enterprise. Measurement of REFLM performance is futile if it is not known what spaces are being managed. Best-in-Class enterprises are 28% more likely to conduct an inventory of their real estate and facilities under management, including evaluations of condition. This establishes a baseline of knowledge so that performance measurement can be fully leveraged to benchmark cost savings and process efficiencies. Leverage an internal group to manage REFLM subprocesses. The Best-in-Class are 8% to 36% more likely to rely on an internal group to manage different. By centralizing management internally instead of relying on third-party providers, a common point of contact and leadership is provided to the rest of the company. This also serves to provide a unifying voice from which any policy changes or process modifications would be delivered. Additionally, leveraging internal management sources reduces the inherent need to establish additional relationship management structures and processes to facilitate an effective outsourcing relationship. Fast Facts Measure performance across the entire real estate and facilities management lifecycle, which occurs 67% more frequently in Best-in- Class companies Conduct an assessment of real estate and facilities across the enterprise to establish a baseline of knowledge against which REFLM performance can be measured Involve C-level executives in the REFLM process to add weight to the value of REFLM and improve support for REFLM initiatives Coordinate REFLM strategy with overall corporate strategy to ensure alignment and ensure strategic value is leveraged Industry Average Steps to Success Involve C-level executives (CEO, COO, CFO) in REFLM. The Best-in-Class are 28% more likely to involve the C-level suite of executives as direct reports for REFLM. Such an organizational capability ensures visibility by the highest levels of corporate
21 Page 21 leadership who are ultimately held responsible for company performance. Access and involvement of these enterprise leaders engenders a desire to drive value from REFLM and facilitates support for program transformation. Leverage REFLM to support strategic position of the enterprise. Average organizations are 13% less likely than the Best-in-Class to ascribe high or even moderate value to the importance of REFLM in the development and execution of corporate strategy. Despite representing, on average, 15% of enterprise spend, Average organizations have not modified their view of REFLM as a strategic differentiator to match that of the Best-in-Class. This hinders Average companies from improving REFLM performance, particularly because they are unable to communicate the true value of doing so. Best-in-Class Steps to Success Align the strategies of real estate and facilities management with overall corporate goals. It is onerous task trying to integrate the wide-ranging strategies for effective REFLM with the expansive and aggressive goals of the overall company. Best-in-Class enterprises are 40% less likely to be challenged by this coordination of strategies, contributing to their competitive advantage and bolstering performance. Provide educational and professional development opportunities for REFLM staff. Well defined processes, executive involvement, and technology all contribute to Best-in- Class performance; but it is the people who are charged with managing the real estate and facilities lifecycle on a daily basis who make the difference. By investing in REFLM staff and encouraging professional growth, companies allow these groups to perform their jobs better and drive performance improvements. Best-in-Class enterprises are 27% more likely to focus on staff education and professional development as a key strategy. Growing the Green Building
22 Page 22 Growing the Green Building As corporate social responsibility initiatives continue to be developed, they also impact REFLM. Sustainability and green buildings, rated 3.7 out of 5 in terms of importance to the real estate and facilities management lifecycle as a prevalent concern. While no companies surveyed have yet constructed or retrofitted buildings and spaces to achieve "green certification," there are numerous strategies being employed to address energy efficiency (Figure 10). Figure 10: Strategies for Improving Energy Management Adjustment of HVAC controls Utilized energy efficient lighting 68% 67% Informal education and / or seminars for staff Utilized light sensors 51% 58% Utilized consultants to identify energy efficiency opportunities Installed or adjusted automated timer to turn lights on / off Negotiated energy contracts with suppliers Upgraded an automated building management and control system 37% 34% 33% 33% The current tact being used by companies is to incorporate green elements into their existing spaces, which is the avenue taken by 53% of respondents. The full impact remains to be seen, but companies are cautiously optimistic, noting a 1% expected decrease in energy consumption over the next year as a result of their green REFLM strategies.
23 Page 23 Appendix A: Research Methodology In May and June 2008, Aberdeen examined the use, experience, and intentions of utilizing solutions for real estate and facilities lifecycle management of more than 90 enterprises in a diverse set of industries. Aberdeen supplemented this online survey effort with telephone interviews with select survey respondents, gathering additional information on procurement outsourcing strategies, experiences, and results. Responding enterprises included the following: Job title: The majority of the research sample included respondents with the following job titles: C-level executive (17%), vice presidents (12%), director (17%), manager (29%), consultants and other (25%). Job function: Corporate real estate and facilities (41%), business development (15%), procurement (15%), business process management (7%), information technology (3%), finance (2%), other (17%). Industry: Financial services (14%), construction / architecture (7%), insurance/legal/real Estate (6%), high technology (6%), and a distribution across 37 other industries. Geography: 66% of the research respondents were from North America, 21% were from Europe, Middle East and Africa, 8% were from Asia-Pacific, and 5% from South / Central American and the Caribbean. Company size: 41% of respondents were from large enterprises (annual revenues above US $1 billion); 22% were from midsize enterprises (annual revenues between $50 million and $1 billion); and 37% of respondents were from small businesses (annual revenues of $50 million or less). Solution providers recognized as sponsors of this report were solicited after the fact and had no substantive influence on the direction of this benchmark report. Their sponsorship has made it possible for Aberdeen Group to make these findings available to readers at no charge.
24 Page 24 Table 5: The PACE Framework Key Overview Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions, capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. These terms are defined as follows: Pressures external forces that impact an organization s market position, competitiveness, or business operations (e.g., economic, political and regulatory, technology, changing customer preferences, competitive) Actions the strategic approaches that an organization takes in response to industry pressures (e.g., align the corporate business model to leverage industry opportunities, such as product / service strategy, target markets, financial strategy, go-to-market, and sales strategy) Capabilities the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products / services, ecosystem partners, financing) Enablers the key functionality of technology solutions required to support the organization s enabling business practices (e.g., development platform, applications, network connectivity, user interface, training and support, partner interfaces, data cleansing, and management) Table 6: The Competitive Framework Key Overview The Aberdeen Competitive Framework defines enterprises as falling into one of the following three levels of practices and performance: Best-in-Class (20%) Practices that are the best currently being employed and are significantly superior to the Industry Average, and result in the top industry performance. Industry Average (50%) Practices that represent the average or norm, and result in average industry performance. Laggards (30%) Practices that are significantly behind the average of the industry, and result in below average performance. In the following categories: Process What is the scope of process standardization? What is the efficiency and effectiveness of this process? Organization How is your company currently organized to manage and optimize this particular process? Knowledge What visibility do you have into key data and intelligence required to manage this process? Technology What level of automation have you used to support this process? How is this automation integrated and aligned? Performance What do you measure? How frequently? What s your actual performance? Table 7: The Relationship Between PACE and the Competitive Framework PACE and the Competitive Framework How They Interact Aberdeen research indicates that companies that identify the most influential pressures and take the most transformational and effective actions are most likely to achieve superior performance. The level of competitive performance that a company achieves is strongly determined by the PACE choices that they make and how well they execute those decisions.
25 Page 25 Appendix B: Related Aberdeen Research Related Aberdeen research that forms a companion or reference to this report includes: Visibility: The Crux of Real Estate Management, January 2008 Real Estate and Facilities Lifecycle Management, June 2007 Accruent Gets FAMIS, March 2008 REFLM: How Did I Get Here? A Look at Process Visibility; July 2007 REFLM: Whose Perception is Reality?; August 2007 Information on these and any other Aberdeen publications can be found at Author: William Browning III, Research Analyst, Global Supply Management, Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte- Hanks (Information Opportunity Insight Engagement Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen or call (617) , or to learn more about Harte-Hanks, call (800) or go to This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc a
Benchmarking VoIP Performance Management March 2008 Page 2 Executive Summary Aberdeen surveyed 159 organizations to identify best practices for managing Voice over Internet Protocol (VoIP). This report
Small to Midsize Enterprises Profiting from Innovation March 2007 Executive Summary S mall to midsize enterprises (SMEs) are actively pursuing product development improvements to deliver more innovative
thyu Engineering Change Management 2.0: Better Business Decisions from Intelligent Change Management September 2007 Page 2 Executive Summary Managing engineering change has always been hard, and is a regular
Onboarding 2013 A New Look at New Hires April 2013 Madeline Laurano Page 2 Executive Summary The first impression an organization makes is often the most critical not only with customers and key stakeholders
Human Capital Management Trends 2013 It s a Brave New World January 2013 Mollie Lombardi and Madeline Laurano Page 2 Executive Summary Human capital management is a key business initiative. Without insight
Page 2 Executive Summary Talent acquisition has evolved from a tactical, back-office process to a strategic endeavor that directly impacts organizational growth. Organizations struggling to identify and
Application Performance in Complex and Hybrid Environments January 2012 Jim Rapoza ~ Underwritten, in Part, by ~ Page 2 Executive Summary Companies that do not rise to the challenges of ensuring performance
Roadmap for Growth and June 2007 Page 2 Executive Summary New Aberdeen research reveals that customer data quality is a sales and marketing leadership issue. In surveying over 400 organizations, Aberdeen
Lead Prioritization and Scoring The Path to Higher Conversion May 2008 Page 2 Executive Summary This report identifies best practices in lead scoring and prioritization by analyzing the processes, capabilities,
A View into the Best-in-Class Strategic Meetings Management Program June 2011 Christopher J. Dwyer Page 2 Executive Summary The modern organization s planning, execution and management of strategic meetings
2010 Project Management Report Standardized Best Practices and Technology Adoption in the AEC Industry January 2010 Cindy Jutras Page 2 Executive Summary A difficult economy and global competition leave
Customer Analytics Segmentation Beyond Demographics August 2008 Ian Michiels Page 2 Executive Summary This report isolates best practices in customer analytics and customer segmentation. The report articulates
Project Management in Software Development Taking the Complexity Out of June 2012 Nick Castellina, Nuris Ismail Project Management in Software Development: Taking the Complexity Out of In a survey conducted
Smart Machines Lead to Smarter Service: Remote Intelligence Signals Profitable Resolution The emergence of machine-to-machine (M2M) enabled equipment is driving a large growth of Field Service-based data
The Next Generation of Manufacturing Systems January 2008 Page 2 Executive Summary The Manufacturing Execution System (MES) has outlived its original definition. Faced with dynamic market changes and competitive
To ERP or Not to ERP: It Isn't Even a Question Enterprise Resource Planning (ERP) software is designed to be the system of record for operating and managing a business. Growing up out of the Manufacturing
The Impact of Payment Automation on Bottom-line Savings In the current recessionary environment, finance professionals have intensified their focus on working capital as well as improving the bottomline
The Product Portfolio Management Benchmark Report Achieving Maximum Product Value August, 2006 The Product Portfolio Management Benchmark Report Executive Summary Issue at Hand AberdeenGroup benchmarks
Performance Management in the Midmarket January 2010 David Hatch, Max Gladstone Page 2 Executive Summary Executives and line-of-business management in mid-sized businesses are increasingly feeling pressure
Disaster Avoidance and Disaster Recovery: May 2010 Dick Csaplar Page 2 Executive Summary In May of 2010 Aberdeen surveyed over 100 organizations that had a formal Disaster Recovery (DR) program to learn
Maintenance, Repair, and Operations (MRO) in Asset Intensive Industries February 2013 Nuris Ismail, Reid Paquin Maintenance, Repair, and Operations (MRO) in Asset Intensive Industries The impact Maintenance,
Of MICE (Meetings, Incentives, Conferences, and Exhibitions) and Spend February 2008 ThisreportissponsoredbyExperient.Experientisthesourceformanaging efective,succesfulmeetings.ourexperience,technology,buyingpower
Measuring Marketing Performance: The BI Roadmap to Information Nirvana October 2007 ~ Underwritten, in Part, by ~ Page 2 Executive Summary This report is a roadmap for marketing and business executives
Avaya Users Deploy Best-in-Class Practices to Improve Contact Center Between March and July of 2012, Aberdeen surveyed 478 customer care executives regarding their contact center activities. Findings from
A Guide for Implementing Best-in-Class Time and Attendance Strategies In July and August, Aberdeen Group surveyed more than 300 organizations in order to determine Best-in-Class practices in managing core
Global Manufacturing Operations Management August 2008 Page 2 Page 3 Executive Summary Executives face numerous challenges in managing global manufacturing operations and successfully collaborating across
Maximizing Return on Assets and Emerging Trends June 2008 ~ Underwritten, in Part, by ~ Page 2 Executive Summary Aberdeen Group's latest research in Enterprise Asset Management (EAM) reveals that Best-in-Class
S&OP's Impact on Global Supply Chain Transformation The top three pressures driving companies to focus on supply chain transformation today are cost containment (66% of over 800 companies survey in December
December, 2011 SaaS and Cloud ERP Trends, Observations, and Performance 2011 Over the past five years, Aberdeen has been measuring the willingness of organizations to consider Software as a Service (SaaS)
Sourcing Gets Smart Revamping Strategies, Rethinking Technology April 2012 Madeline Laurano Sourcing Gets Smart: Revamping Strategies, Rethinking Technology Sourcing is the foundation of any successful
ENSURING TIMELY AND ACCURATE FINANCIAL PLANS, BUDGETS, AND FORECASTS THROUGH AUTOMATION April, 2015 Nick Castellina, Research Director, Business Planning and Execution Report Highlights p3 p5 p7 p8 Best-in-Class
Emerging Green Intelligence: Business Analytics and Corporate Sustainability Background and Methodology In April 2009, BusinessWeek Research Services (BWRS) launched a research program to determine the
Employee Engagement Drives Client Satisfaction and Employee Success in In professional services, business success is achieved through employee success. Organizations that prioritize top talent gain competitive
Asset Management: Using Analytics to Drive Predictive Maintenance As seen in Aberdeen's December 2012 report, Asset Management: Building the Business Case for the Executive, lingering uncertainty around
The State of Strategic Sourcing Building a Context for the Next Decade April 2011 Christopher J. Dwyer, Constantine G. Limberakis Page 2 Executive Summary Strategic sourcing, for as long as this function
ITSM IT Transforms Itself into a August 2007 Page 2 Executive Summary This report is a roadmap for IT organizations that desire to shift from a focus on technology and internal needs to how it services
ERP in Wholesale and Distribution Extending the Enterprise to Extend Profits October 2012 Nick Castellina ERP in Wholesale and Distribution: Extending the Enterprise to Extend Profits Enterprise Resource
Predictive Analytics The Right Tool for Tough Times February 2010 David White Page 2 Executive Summary Enterprises are under pressure to predict the future behavior of customers and potential customers,
Engineering Change: The Key to Cost Reduction for Competitive The automotive industry has seen significant change over the last couple of decades, but looking to the future, there will be even more significant
The State of Travel and Entertainment Expense Management February 2010 Christopher J. Dwyer Page 2 Executive Summary Business travel has long been a critical component for achieving corporate goals; business
Is it in the Cards? December 2007 Page 2 Executive Summary This research benchmark provides insight and recommendations for all organizations that are looking to integrate their logical security infrastructure
Streamlining Sales and Use Tax Management June 2011 William Jan Page 2 Executive Summary Being exposed to government tax audits and having to deal with fines and penalties are issues that companies fear.
Embedded BI Boosting Analytical Adoption and Engagement March 2012 Michael Lock Embedded BI: Boosting Analytical Adoption and Engagement In today's business climate, the challenge of effective decision-making
Why Printed Circuit Board Design Matters to the Executive: How PCBs Are a February 2010 Michelle Boucher Page 2 Executive Summary In today's competitive market place, companies are looking for new ways
The Travel and Expense Management Guide for 2014 Trends for the Future March 2014 Louis Berard The Travel and Expense Management Guide for 2014: Trends for the Future In December 2013 and January 2014,
March 2011 Kevin Prouty ~ Underwritten, in Part, by ~ Page 2 Executive Summary Complex manufacturers face both similar and at the same time different challenges compared to other manufacturers. Complex
Spend Analysis: The Nexus of Spend Management November 2011 Constantine G. Limberakis Page 2 Executive Summary Due in part to the number of solutions that contain spend information in organizations today,
Operational KPIs and Performance Management Are Your Daily Decisions Based on Fact? August 2008 Page 2 Executive Summary Businesses thrive or fail based on their ability to identify, define, track, and
Driving Operations through Better, Faster Decision Making Driving Operations through Better, Faster Decision Making Operations faces increasing pressure from all sides. Picky customers know that your competitors
Sales Effectiveness: Getting Sales Back July 2007 Page 2 Executive Summary The pressures of longer sales cycles and declining sales productivity are forcing Best-in-Class companies to streamline and automate
Lead Nurturing The Secret to Successful Lead Generation November 2008 Ian Michiels Page 2 Executive Summary This report outlines the essential role lead nurturing will play in weathering the economic downturn.
Expense Management for a New Decade March 2011 Christopher J. Dwyer ~ Underwritten, in Part, by ~ Page 2 Executive Summary Expense management has reached a pinnacle of strategic importance and criticality
The Convergence of Field Service and Asset Bridging the Gap June 2007 Page 2 Executive Summary A berdeen s research shows that 72% of field service organizations and 67% of and Repair (MRO) functions view
Travel & Entertainment Technologies and Services Overcoming Obstacles Through Data Insight May 2007 ~ Underwritten in part by ~ Page 2 Executive Summary As reported in previous Aberdeen reports, Travel
Predictive Analytics The Right Tool for Tough Times February 2010 David White Page 2 Executive Summary Enterprises are under pressure to predict the future behavior of customers and potential customers,
Manufacturing the way we see it One Manufacturer : Harmonization Strategies for Global Companies How to Align Enterprise Architecture with Corporate Strategy Recently we have seen many global manufacturers
The Evolution of the Contemporary Contingent Workforce May 2011 Christopher J. Dwyer ~ Underwritten, in Part, by ~ Page 2 Executive Summary The contemporary contingent workforce has undergone an evolution
STAYING AHEAD OF THE CURVE WITH AGILE FINANCIAL PLANNING, BUDGETING, AND FORECASTING September, 2014 Nick Castellina, Research Director, Business Planning and Execution Report Highlights p3 p4 p5 p6 43%
Fixing First-Time Fix: Repairing Field Service Efficiency to Enhance Customer First-time fix is one of the most vital metrics in gauging field service performance. While workforce utilization, productivity,
Business Performance Management Beth T. Smith Vice President, IBM Business Performance Management Agenda Business performance management market Business performance management from IBM Why IBM for business
Controlling Wireless Expenses Has Logic Gone Out the Window? September 2010 Hyoun Park Page 2 Executive Summary This report presents best practices in wireless expense management with a focus on in-house
Workforce Management: Controlling Costs, Delivering Results Organizations today must balance the need to run an efficient and costeffective operation while remaining agile and flexible to meet both customer
Talent Assessment Strategies A Decision Guide for Organizational March 2010 Mollie Lombardi, Jayson Saba Page 2 Executive Summary Organizations today are continually looking for ways to make better decisions
AberdeenGroup Procurement in New Product Development: Ensuring Profit from Innovation Business Value Research Series March 2006 Executive Summary P roduct innovation is a team sport. Product strategists
From the Shadows to the Forefront AP Automation and the Strategic Vision October 2013 Ankita Tyagi From the Shadows to the Forefront: AP Automation and the Strategic Vision The payments department is essentially
Think Your Organization Is Too Small for ERP? Think Again Even today the myth persists that only large businesses should consider implementing Enterprise Resource Planning (ERP). The truth of the matter
ERP Selection Finding the Right Fit October 2012 Nick Castellina, Peter Krensky Finding a needle in a haystack is hard, but the task pales in comparison to finding a specific needle in a pile of needles.
Thought Leadership White Paper Introduction Contracts form the foundation of all businesses and every business relationship. They define every aspect of a business s activities procurement, sales, marketing,
Data Sheet Cisco Optimization s Optimize Your Solution using Cisco Expertise and Leading Practices Optimizing Your Business Architecture Today, enabling business innovation and agility is about being able
The Future of Accounts Payable Five Top Transformative Changes Coming to AP What lies ahead for Accounts Payable and Shared Services? In these highly volatile and challenging economic times, can AP leverage
IBM Software Industry Solutions Industry/Product Identifier Contract management's effect on in house counsel Impacting contract visibility, analysis and compliance Emptoris Contract Management Solutions
2015 2015 South African Cloud Based Solutions to the Contact Centre Product Leadership Award Contents Background and Company Performance... 3 Industry Challenges... 3 Implementation Excellence... 4 Product
Clarity Infrastructure Management helps network operators to plan and document the change to their networks clarity.com 2 Clarity Simplifying Operations Cost effective and timely network rollouts or upgrades
A Knowledge-Driven Consulting White Paper 2009 Corporation Six Key Trends Changing Supply Chain Management Today Choosing the optimal strategy for your business Contents Demand Planning.........................................
Build Connections Enabling a business in manufacturing Building High-Value Connections with Partners and Suppliers Build Connections Is your supply chain responsive, adaptive, agile, and efficient? How
Boosting Enterprise Application Performance in Distributed Environments April 2012 Jim Rapoza ~ Underwritten, in Part, by ~ Boosting Enterprise Application Performance in Distributed Environments Modern