Digital Transformation in Real Estate
Updated: Nov 7, 2018
By: The Workcentric Team
Digital Transformation (also known as DX) has been a major topic of discussion in the business world for the past few years. Some have claimed that it’s a buzz word used by technology companies and consulting firms to sell more, but we at Workcentric believes that DX is much more than that. We believe that most companies fail to see what DX truly means, that’s why they dismiss it as meaningless jargon.
Digital Transformation is about merging business strategy with technology to redefine customer experiences, which in turn redefines business operations. This may entail a combination of innovations in product/service offerings, operations, and even the business model. What most companies get wrong is the notion that DX is an IT department-led automation initiative. However, at the heart of DX is a strategic move, which is then complemented by technological solutions. This means that DX should not be driven by the CIO/CTO, but by the entire C-suite led by the CEO.
The need for DX was brought to life by the rise of startup companies that caused major disruption in various industries. AirBnB shook up the hotel industry, Amazon replaced retail giants, and Netflix is on its way to make traditional TV broadcasting irrelevant. These companies, armed with innovations in both business and technology, challenged traditionally “offline” incumbents. And now, these incumbents are pressed to keep up with the newcomers to maintain market leadership. This phenomenon is present in almost every industry, including the real estate sector.
In the real estate sector, most of the startup companies are coming from three areas: technology-enabled brokerage, coworking space rentals, and contracting. Here are some examples:
Rentberry(www.rentberry.com) is an long-term rental platform from the US that manages every step of the rental process, from hosting open houses to allowing tenants to submit their applications, credit reports and custom offers, to e-signing rental agreements and online rental payment. Meanwhile, Reali(www.reali.com) takes the hassle out of buying and selling real estate, promising buyers a full cash back refund of the standard buyer’s commission. Reali takes a flat fee per transaction and the seller’s commissions are also at a flat rate. Reali is able to make lower transaction costs by leveraging on technologies that replace traditionally offline activities that require an agent to be physically present (like ocular inspections).
WeWork(www.wework.com) is an American company and a success story in the real estate startup space that provides shared workspaces and services for professionals as well as companies of all sizes. WeWork has more than 5,000 employees in over 280 locations, covering 77 cities in 23 countries. Although its core business model is conceptually not technology-based, it has since moved to provide technology solutions. In September 2018, it spent $100M to buy Teem, a leading software and analytics provider that gives enterprises the tools, data, insights, and analytics to help them optimize their spaces.
ChromaWay(www.chromaway.com) has created a new private blockchain paradigm with its consortium database Postchain and a complementary smart contract middleware called Esplix. These two solutions have uses in various activities like contracting workflows, mortgage origination, servicing and closing processes, and digital title management. Among its notable projects are the Swedish land registry and the government of Andhra Pradesh. Partner companies include Intelleqt in India and Evry in Sweden and Taiwan, who build and sell solutions built on top of ChromaWay.
One special mention is Lemonade Insurance Companywhich is disrupting the home insurance sector. Headquartered in New York City, it provides homeowners and renters insurance policies for homes, apartments/condominiums, and co-ops. The company uses artificial intelligence (AI) and chatbots to create insurance policies and handle claims for its users without human intervention from insurance brokers. It is available on desktop and mobile (through its iOS and Android applications). Lemonade’s business model also caters to social good, where underwriting profits go to nonprofits of the customers’ choice.
While these companies are disrupting various (and seemingly disjointed) aspects of the real estate sector, and your company might not be ready yet to jump into a DX journey, it is still important to be familiar with them for two reasons: First, although they may not be in direct competition with your own company right now, their fast growth and the sheer size of investment money coming into them may give them the ability to encroach your space. Second, these companies might actually provide a solution to one area of your business that needs improvement. Although there are many options for more traditional ERP/CRM/Accounting software, these startups are providing industry-specific solutions like broker/commission management. Buying from them instead of building your own system might make sense based on your budgetary requirements and time constraints. And third, these startups can provide you with inspiration to innovate within your company. Whether it’s how they have carved out a new market that is previously unheard of, or created new processes that would make everyone’s life much easier, these startups have done their homework in terms of addressing existing (and highly relevant) challenges. Learning from their experiences gives you the right mindset as well as a base knowledge of solutions that work in order to jumpstart your company’s DX journey.
Digital Transformation is a very complex process, but it doesn’t mean it cannot be done. By identifying your business goals, having a deep understanding of your customers, and clearly defining an innovation roadmap, you will be able to transform your organization over time. It helps if you have a trusted partner that can understand and address both your strategy and technology needs, and that’s what Workcentric is here for. We’ve also developed a set of sales and finance solutions for the real estate sector to fast-track DX efforts.
To know more about Workcentric, visit www.workcentric.com.ph