Space as an Asset

Space is often the largest under-utilized asset for businesses and therefore is not a focus for cost saving initiatives. When the facility manager views the physical space as a strategic asset s/he is able to deliver more value to their organization through better operational effectiveness.

To maximize asset value, the facility manager should focus on cost effectiveness. In this post, we analyze how one can achieve cost efficiency and how IBM TRIRIGA can deliver cost saving opportunities.

Three cost saving opportunities

1. Cost Reduction
To reduce space cost you have two options: maximize the capacity of the existing space or increase the space utilization. Maximize the facility capacity by re-configuring the existing space.  Or you can increase the utility levels by analyzing the existing space occupancy percentage throughout the day and begin initiatives to increase utilization.

For instance, telecommuting to work has becoming increasingly popular in the U.S with a 2015 Gallup poll stating that at least 37% of workers are participating.[i] Take advantage of a distributed workforce by transitioning to an agile work environment of shared spaces to reduce the cost per square foot per person. Such measures not only increase the utilization of your physical facilities but also accelerate the configuration of your workplace.

2. Cost Avoidance
Facility managers continue to grapple with shrinking capital budgets and an aging infrastructure. While new capital investments can be cost prohibitive, analyzing leases for termination or renewal based on criteria such as age profile, operational costs, and project backlog may present cost reduction opportunities.

Facility managers need to arm themselves with data to not only increase returns from real estate-related decisions but also improve their ability to respond to change. Cost optimization measures can help save millions of dollars by postponing new facility investments or informed leasing decisions.

3. Cost Recovery
Charging facility costs pro-rata to various business units based on their usage ratio provides an incentive to business units to contribute to space usage optimization. Cost recovery techniques such as internal chargebacks and indirect cost recovery will motivate businesses to work towards space efficiency.

How can IBM TRIRIGA help?

As the industry’s leading IWMS software, IBM TRIRIGA can help with your cost efficiency measures:

  1. Strategic facility planning reveals gaps between business demands and space availability and analyzes, ranks and recommends best fit facilities planning scenarios
  2. Scenario planning provides decision making support providing real-time visibility of current performance and models various future scenarios.
  3. Move management manages requests and execution with automatic capture and space allocation charge-backs to internal departments
  4. Shared workspace usage tracks and eliminates inefficiencies associated with common-use space
  5. Lease administration tracking and accounting tracks individual leases, notifies significant dates, and streamlines the lease renewal process and regulatory (FASB/IFRS) compliance.
  6. Capital project management Identifies capital program funding priorities and project risks, provides financial benefit and environmental impact analysis, and supports advanced project execution and control.
  7. Demand and Preventive Maintenance tracks and evaluates building and asset deficiencies and helps identify opportunities to extend the life cycle of building assets.

For more information on how ValuD can help you to optimize your facility inventory, contact our IBM TRIRIGA experts at sales@valudconsulting.com.

[i] http://www.gallup.com/poll/184649/telecommuting-work-climbs.aspx

IWMS in higher education

“The future of the student experience is personal,” declares Glenda Morgan of Gartner Research.[i] Morgan goes on to say that a “…personalized, integrated and coherent student experience will become a key differentiator for higher education institutions…” and it is crucial that CIOs create the infrastructure to make it possible.

Educational institutions must deal with rapidly evolving technology and student demands while controlling their costs. Campus facilities, their biggest assets, drive significant costs.  Adopting a total cost of ownership (TCO) policy is vital. Other challenges include:

  1. Aging Infrastructure: To avoid the risk of building failure, you must know the age profile of the campus space. This will help you to set maintenance priority levels (based on various criteria including age, criticality etc.) and establish renovation versus replacement strategies.
  2. Alternative modes of learning: Whether it is online courses, reading resources, podcasts or other e-learning methodologies, technological changes are making modern classrooms redundant, so you must plan accordingly.
  3. Disparate systems: Using disparate systems to manage campus facilities results in multiple islands of information and takes away from the big picture. A “single version of truth” is necessary for effective management of campus facilities.
  4. Shrinking Capital Investments: As educational institutions continue to grapple with shrinking budgets and limited capital, selecting the right assets and timing your investments will be key to managing facilities risk.
  5. Increasing project backlog: Aging infrastructures coupled with low levels of capital contribute to increased project backlog. Track and document backlog – building components, HVAC, plumbing or electrical – for informed decisions on repair versus replace opportunities.
  6. Increased operational expenses: Being proactive in carrying out preventive maintenance activities may be the right approach with limited operational budgets. However, use technology and data to make the right calls to increase productivity and meet the demands of campus customers.
  7. Energy Efficiency: “Going green” not only helps in energy conservation but also decreases your utility bill providing you with more funds to be redirected for other facility enhancement activities.

How can an IWMS solution help
An Integrated Workplace Management System (IWMS) software like IBM TRIRIGA can help deal with the above challenges and can also result in cost savings in the long run.  Implement IBM TRIRIGA in your campus to:

  • Acquire a holistic view of facility assets and a “single point of truth” for facilities information and performance indicators
  • Identify underperforming locations, resources and processes
  • Monitor building conditions and use business analytics to analyze and make informed decisions on repair versus replacement opportunities
  • Streamline user access to shared assets, equipment and spaces to optimize their usage
  • Detect minor changes in asset performance and proactively schedule maintenance to reduce risks of expensive repairs and unscheduled downtime
  • Track and manage energy use and environmental performance to reduce energy costs and achieve energy sustainability goals
  • Provide transparent and auditable data to all stakeholders

With multiple, successful implementations in the higher education sector, ValuD’s team of IBM TRIRIGA experts understand the challenges specific to campuses and will guide you through every step of the IBM TRIRIGA implementation process. Reach out to us at sales@valudconsulting.com and start seeing the benefit today.

[i] https://www.gartner.com/doc/3691317?ref=AnalystProfile&srcId=1-4554397745

IWMS in Retail

Did you know:

  • Store leases comprise 10% of total business costs in the retail industry
  • The number of online shoppers will increase from 1.5 billion in 2016 to 2 billion by 2019
  • At least a 100 million customers are expected to shop in augmented reality by 2020

Source: Gartner

The number of facilities an organization owns lands in the top five expenses across industries.  Nowhere is this seen more than in the retail sector, where leasing is the preferred method to increase store locations. Traditional brick and mortar retailers’ bottom line is negatively impacted by rising occupancy costs, decreasing footfalls, and declining sales.  But there are more challenges to combat.

Retailers’ Challenges:

  1. Emergence of alternate retail forms: The advent of other forms of retailing (online and mobile) promoted by companies like Amazon, eBay and the like over the past decade have resulted in a marked change in the shopping style of customers. Immersive technologies like augmented reality have also served to enhance the user experience by allowing consumers to explore product features without ever having to step into an actual store. The need of the hour for retailers is to find the right mix of these various shopping channels (in-store, online and mobile) to maximize their revenue.
  2. Inefficient and disparate processes: Retailers tend to use disparate point solutions to manage the various aspects of their store life cycle processes – whether using spreadsheets, accounting or lease management software. Also, leases tend to be de-centralized and managed by different business units often resulting in inefficient, redundant and under-utilized real estate assets.
  3. New leasing regulations: The new FASB/IASB leasing standards call for a drastic overhaul in the way leases are shown in the financial statements. With financial ratios like debt-equity ratio, ROCE, and ROA affected, the financial health of the retailer will come under intense scrutiny.
  4. Environmental Sustainability: A US Energy Information Administration study has noted that buildings are responsible for nearly half of US CO2 emissions.[1] It has become essential for retailers to establish an energy and environmental strategy to demonstrate their leadership in environmental sustainability.

Retail facility managers are faced with the onerous task of identifying and rectifying inefficiencies, achieving regulatory compliance and environmental sustainability goals, while dealing with increasing occupancy costs. This is where an integrated workplace management system (IWMS) like IBM TRIRIGA can help. An IWMS solution provides a single, comprehensive system to manage your retail store assets across locations and geographies. It delivers seamless, predefined integration of all the various processes and helps you to manage the full facility life cycle of your real estate investments.

IWMS in Retail
An IWMS software solution streamlines your business processes and provides a “single source of truth” of all your real estate assets and operations. Implement the IWMS system in your store to:

  • Identify underperforming locations, resources and processes
  • Track and manage your lease portfolio and achieve compliance with FASB/IASB standards
  • Gain better control over lease inventory saving millions in penalties, fees and missed lease breaks
  • Perform transaction and project management activities – Market planning, retail site selection and critical path scheduling
  • Estimate space usage, occupancy rate, and identify underutilized space and associated cost
  • Integrate payment processes – track your rent receipts/payments, perform payment reconciliations
  • Execute repair and maintenance of your facility – work order management, planned maintenance, contractor management and SLA’s
  • Use pre-defined logs and performance metrics to benchmark each store against preset environmental targets and standards.
  • Carry out business intelligence activities

How can IBM TRIRIGA IWMS help
IBM TRIRIGA provides a robust platform to manage the entire store lifecycle process and takes your real estate operational processes and workflow to the next level. It provides financial analysis and evaluation of your real estate transactions by evaluating and comparing site locations across geographies.  IBM TRIRIGA is a single technology platform and database repository with automated process workflows, prebuilt performance metrics, and environmental and energy management functionality.  The solution drives a three-fold value proposition to improve financial, operational, and environmental performance.

Use IBM TRIRIGA for:

  • Consolidating historical RE databases and spreadsheets into one integrated system
  • Improving lease accounting and administration
  • Capital program planning
  • Retail site selection
  • Performance analysis
  • Business Intelligence

With over 12 implementations in the retail industry, ValuD’s team of IBM TRIRIGA experts understand your specific retail challenges and will guide you through every step of the IBM TRIRIGA implementation process. Reach out to us at sales@valudconsulting.com and start seeing the benefit today.

[1] http://architecture2030.org/buildings_problem_why/

Implementing TRIRIGA lease management tool to meet FASB/IASB compliance

The new FASB/IASB leasing standards have created ripples in the facilities industry with companies scrambling to achieve compliance before the 2019 deadline. Unfortunately, many of the organizations who fall under this statute do not have a streamlined lease administration process. Manual spreadsheets, inefficient and disparate accounting systems have made the transition challenging. Accounting and consulting firms have leveraged their technical expertise to guide companies in their path forward.

One such global audit, tax and advisory firm elected to develop and market a hosted lease management tool to aid their clients in achieving FASB/IASB compliance. They wanted the tool to be user-friendly with project management and tracking abilities, maintain internal controls, and provide financial reporting and business intelligence capabilities. The firm selected IBM TRIRIGA for its extensive out-of-the-box capabilities but wanted to add validations like specifications for when to review assumptions and to ensure accountability of balance sheet accuracy.

The firm wanted to leverage the enhanced functionalities of the IBM TRIRIGA Real Estate Manager and selected ValuD as their strategic partner for implementation and development. ValuD partnered with the accounting firm to identify gaps in accounting features and suggested business process improvement measures. Quick links in the portal pages provided record and report ready access. Custom reports were created to enhance the ‘business intelligence’ value of the tool. The internal control process was enhanced with an automated workflow approval process (rather than a dollar threshold or exception based) thus providing an audit trail.

With the statutory requirements not yet in place, the leasing tool had to be adaptable to include future enhancements and had be deployed seamlessly to the firm’s customers. As a result, a hosted delivery model was chosen to ensure customers were on the latest release. ValuD built the tool allowing configuration flexibility that accommodated varying business processes for the firm’s client base. Most importantly, the tool provided structure to leasing projects by aggregating lease information from various sources (legacy systems and databases) and facilitated accurate report generation.

The Lease Accounting tool was one of the first to be launched in the market exclusively for leasing standard compliance. The firm attracted new clients which created a new revenue stream. The firm’s clients achieved statutory compliance, gained better control over their lease portfolio and process efficiency, and improved security with the hosted model.

By putting our TRIRIGA expertise into the ultimate test of custom tool creation, our lease accounting experts have been able to further demonstrate ValuD’s expertise at all things TRIRIGA- a fact that was acknowledged by the accounting firm who commented,” If we weren’t going to build in-house, we wanted a partner that would practice the same high-level of development rigor we use, …We found that in ValuD. Their people have deep technical knowledge of the TRIRIGA application, and they take that expertise the extra mile.” For more information on how ValuD can help with your facility management needs, contact us at sales@valudconsulting.com.