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The Relevance of Corporate Real Estate to Enterprise Success

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Given at the CoreNet Global Summit in Chicago, May 1-3, 2011 by:
Moderator: Dr Barry Varcoe, Zurich Financial Services
Facilitator: Dr Martha O’ Mara, Corp. Portfolio Analytics
Speakers: Michael Leone, Regus;
Tanya Penny, Verizon

Published in: Business, Technology
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The Relevance of Corporate Real Estate to Enterprise Success

  1. 1. #12: The Relevance of Corporate Real Estate to Enterprise Success Moderator: Dr Barry Varcoe, Zurich Financial Services Facilitator: Dr Martha O’ Mara, Corp. Portfolio Analytics Speakers: Michael Leone, Regus Tanya Penny, Verizon
  2. 2. Running Order•  Session Introduction•  The Research•  CRE Practice Findings•  Key Findings:   Panel & Audience discussion•  Conclusions
  3. 3. The Research Is there a relationship between the capability of CRE and Enterprise economic performance? CRE Practices Enterprise Economic Maturity Performance Correlation Tests Identified Relationships
  4. 4. The Sample•  Fortune 500 focus•  On-line survey live during October 2010•  40 valid data sets on perceived CRE performance:   3.6 m people supported   221 m (gross) m2   US$72.6bn budget
  5. 5. 20 CRE PracticesTactical•  Supplier management•  Operational and management information•  Space and interior standards•  Governance and compliance•  Customer satisfaction measurement•  Performance measurement•  Budget management•  Extent of outsourcing•  Telework policy
  6. 6. 20 CRE PracticesStrategic•  BU relationship management•  Sustainability•  Portfolio strategy planning•  CRE team diversity•  CRE/HR/IT collaboration•  Use of serviced offices•  Effective staff development•  Continuous improvement and innovation•  Business strategy collaboration•  Capital release strategies•  Alternative workplace strategies
  7. 7. The Sample5 Economic performance measures•  Revenue growth (last 3 years)•  Net sales per employee•  Return on Assets (RoA)•  Return on Equity (RoE)•  Tobins Q
  8. 8. Industry SectorsMarket Sectors
  9. 9. Sample Variance Tests•  Portfolio size•  CRE team size•  CRE&FM operating budget size•  Professional membership•  CRE organization structure•  Industry sector•  Enterprise size (annual revenue)•  Enterprise size (No. of employees) = No significant differences
  10. 10. Organization StructureCRE Organization Structure
  11. 11. BudgetsBudgetary Control / Recharging
  12. 12. Reporting LineCRE Reporting Line
  13. 13. SuppliersUse of Suppliers
  14. 14. TeleworkTelework / TelecommunicationsApplicability
  15. 15. AWS1Alternative Workspace Strategies (Current)
  16. 16. AWS2Alternative Workspace Strategies (Future)
  17. 17. SustainabilitySustainability Practice (Future)
  18. 18. Self View of Executive OpinionCRE View of Executive Opinion
  19. 19. Key Findings… Maturity and CorrelationsCRE Practice Maturity
  20. 20. Industry MaturityComparative Industry Maturity
  21. 21. Key Findings6 CRE Practices correlated toEnterprise Success Measures•  Correlation vs Causality CRE Practices ? Enterprise Economic Maturity Performance
  22. 22. Discussion Topic 1Supplier Management…Correlates positively to both RoA and RoEDiscussion points:•  What do you think the key aspects of good supplier management are?•  Is it the CRE’s or Suppliers that are making a difference (note: the extent of outsourcing did not show a correlation)?•  Only ¼ of respondents have international/integrated solution supplier relationships – does this mean there is a lot more potential to add value?
  23. 23. Discussion Topic 2Operational and Management Information…Correlates positively to both RoA and RoEDiscussion points:•  What is it about the MI that makes the difference?•  What are the key challenges in getting good MI?
  24. 24. Discussion Topic 3Close CRE/HR/IT Relationship…Correlates positively to both RoA and RoEDiscussion points:•  As an industry we have been talking about this for quite a long time, but have we really done much?•  Who can take the credit for this – CRE, HR or IT?•  What are the main relationship areas that are key?•  What are the big potential gains in the future by doing more of this?
  25. 25. Discussion Topic 4Use of Serviced Offices…Correlates positively to both 3 year growth,RoA and Tobins QDiscussion points:•  Use of serviced offices was the least ‘mature’ CRE practice…•  Why would this correlate? Is it more a case that growing enterprises are more likely to use Serviced Offices?•  Do Serviced Offices offer potential value in situations other than growth strategies?
  26. 26. Discussion Topic 5Continuous Improvement & Innovation…Correlates positively to RoADiscussion points:•  Which direction is the ‘causality’ likely to be?•  What continuous improvement practices are really effective?•  What are the main sources of innovation?•  Do we invest enough as an industry in research and innovation?
  27. 27. Discussion Topic 6Use of Capital Release Strategies…Correlates negatively to both 3 year growthand Tobins QDiscussion points:•  What are the likely causes of this?•  Is this likely to be a passing phenomena of recessionary times or more sustained?•  Should we stop this sort of activity until we better understand what it is really doing?
  28. 28. Correlations vs MaturityCRE Correlation Practices vs Maturity
  29. 29. Discussion Topic 7 Tactical Strategic•  Space and interior standards •  BU relationship management•  Governance and compliance •  Sustainability•  Customer satisfaction •  Portfolio strategy planning measurement •  CRE team diversity•  Performance measurement •  Effective staff development•  Budget management •  Business strategy collaboration•  Extent of outsourcing •  Alternative workplace strategies•  Telework policyDiscussion points:•  Any surprises amongst those that did not show any relationship?•  Which practices may make a difference as they advance further?
  30. 30. Correlations Correlation Summary 3 Year Net Sales /CRE Practice RoA RoE Tobins Q Growth EmployeeSupplier ManagementManagement InformationCRE/HR/IT/CollaborationServiced OfficesContinuous Improvement& InnovationCapital release strategy
  31. 31. Conclusions… Is there a relationship between the capability of CRE and Enterprise economic performance? Yes… in parts! Does CRE make a difference? Probably What are the consequences? Good; Bad; Good
  32. 32. #12: The Relevance of Corporate Real Estate to Enterprise Success Moderator: Dr Barry Varcoe, Zurich Financial Services Facilitator: Dr Martha O’ Mara, Corp. Portfolio Analytics Speakers: Michael Leone, Regus Tanya Penny, Verizon

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