After our first trend analysis in May 2009 (which immediately became one of the most popular posts on iwmsnews.com) we have seen an dramatic increase of questions filling our mailboxes. This to us is a clear indication most readers are concerned with the trends in the IWMS market today.
In this months’ trend analysis I’ll try to answer some of the reader questions while analyzing the trends in our industry. Iwmsnews.com has permission to publish these questions however, our readers want to remain anonymous.
1. Credit Crunch in the United States, Europe and Asia
Most questions in this category have been centered around the impact of the Credit Crunch on businesses globally.
One of those questions was:
I am working at a large bank in London UK. Although the first signs of recovery are reported in the United States my company is “preparing for the worst” and has cancelled our IWMS budget. What is your opinion about this?
This phenomenon is compared best with blockbuster movies. Blockbuster movies almost always open in the US first, after which the rest of the world can see the movie in theaters. The same is pretty much valid for the Credit Crunch as we experience it at the moment in our industry.
Although the first signs of recovery seem to appear in the United States, the EMEA region has not yet hit the bottom. There is a broad consensus amongst financial experts that no recovery is to be expected before Q1 of 2010. A few experts even expect the Crunch to last until Q4 of 2010, but in my opinion this is too dramatic.
The reason that your budget is cancelled probabably has to do with cost reductions. As you have indicated your company is “preparing for the worst” and within the IWMS the tendency is to cancel all non-core business projects immediately. Unfortunately there is not much to do about this managerial decision in your company. However, you could refer to some of the articles here on iwmsnews.com that are particularly about this subject.
To me (and others including Bernard Hoefsmit, Rich Peacock) it is extremely important to build a solid business case for IWMS implementation. You should try to convince senior management that an investment in IWMS is an investment in cost reduction.
2. Sustainability as a Cost Reduction Program
Sustainability is here to stay. We have seen a shift over the last couple of months in which sustainability has become an integral part of everyday business of Facilities Management and Real Estate Departments. As a result we have received some Request for Proposals (RFP’s) that have devoted entire sections to sustainability.
One of the questions I received by e-mail was about LEED.
LEED is an internationally recognized certification system that measures how well a building or community performs across all the metrics that matter most: energy savings, water efficiency, CO2 emissions reduction, improved indoor environmental quality, and stewardship of resources and sensitivity to their impacts. (Source: US Green Building Council http://www.usgbc.org/DisplayPage.aspx?CMSPageID=1988 )
The reader question was:
“I hear about sustainability and LEED all the time, but my manager thinks sustainability is too expensive. Can you advice?”
This misunderstanding is actually quite common amongst US managers. They think sustainability is expensive.
Initiatives such as LEED, BREEAM and OSCRE indicate that the need for standardization of building and environment is becoming increasingly popular in our community, but these initiatives cannot make it to the board room by itself. Although a green image seems appealing to some organizations, convincing senior management to invest in IWMS needs additional ammunition; cost reduction.
If senior managers acknowledge that through IWMS you can save money (e.g. by optimizing your space usage, cancellation of non-performing contracts, etc.) while simultaneously enhancing your GREEN performance they will see the latent need for a sustainable building. Cost reduction will remain the absolute driver in these financial harsh times.
3. Corporate Real Estate Shifts Towards Commercial Real Estate
In last month’s analysis I already stated that Corporate Real Estate is becoming the most important vertical within the IWMS arena. In addition to that, I also see a shift from Corporate Real Estate to Commercial Real Estate. In an ever increasing number of RFP’s I see terminology that until recently only was used by Commercial Real Estate organizations.
This is a clear indication that the Corporate Real Estate Departments are redefining their perception on Real Estate from an administrative function to a strategic priority.
As George Bouris (Deloitte) indicates:
“Our experience has shown that managing real estate and related physical assets are perceived as an administrative function rather than a strategic priority that affects shareholder value.
We believe these assets should be given consideration in decisions related to business restructuring, mergers and acquisition activity, offshoring, talent policies, and tax obligations, just to name a few.”
What George Bouris suggests, perfectly aligns with our analysis of the RFP’s.
Environmental sustainability is not just about saving the planet and creating societal value. It provides real business opportunity to reduce costs and insulate against rising energy prices.
Buildings account for a staggering 48% of energy consumption and greenhouse gas emissions, making them the largest environmental culprit. They provide an opportunity for executives who manage these assets to drive higher financial returns for their organizations.
Today, executives struggle to create and implement an environmental sustainability strategy that achieves these benefits because they lack systems to collect, process and analyze energy consumption and emissions data of facility assets and operations. Executives unable to gather this information struggle to identify cost-effective environmental opportunities to reduce the impact and cost of facilities assets on the environment.
Enterprise sustainability solutions provide the critical tools and information to manage facility assets and operations and to reduce overall energy consumption, emissions and financial costs of buildings.
John Clark
Director, Climate Change Solutions
http://www.tririga.com