KPMG published its Global PropTech Survey 2019 last week with the title: Is your digital future in the right hands?
Interesting question: is it referring to the people real estate firms have appointed to lead their digital transformation? Or is it talking about the tech companies that real estate is entrusting with its future?
Either way, the report is packed with vital insights into real estate’s progress with adoption of technology.
Some of the data, however, must be absorbed with a certain sense of scepticism, due mainly to potential confirmation bias.
When a report such as this one is published, I am always compelled to read it. It’s not that often that the real estate industry is given a strong, quantifiable voice in the debate around real estate, PropTech, and digital transformation, so survey-based reports offer an essential glimpse.
I’m not going to dive deep into the narrative of this report - though I encourage you to have a read, maybe with a coffee, maybe something stronger - but I do want to go through some of the headline statistics that it offers.
Let’s start with a big one. 58% of the real estate companies surveyed state that they have a digital strategy in place, up from 52% last year.
Upward trends are always good to see, but 58% is still a pretty dismal figure. It suggests that little over 40% of real estate firms still don’t have a digital strategy. If true, there are a lot of people in need of a serious period of self-reflection.
I suspect, however, that some of those negative respondents are unaware that their firm has a digital strategy. I suspect this only because I find it hard to imagine that so many real estate firms have zero digital interests whatsoever.
My suspicions are backed-up, and also somewhat confused, by this next statistic: “95% of real estate companies have someone responsible for leading digital transformation and innovation.”
My question is, if 95% of companies have someone responsible for digital transformation, but only 58% have a digital strategy in place, then what are the remaining 50-odd% of those people responsible actually doing every day?
I am only semi-joking with that question, but even without the apparent statistical contradiction, the 95% figure on its own is highly questionable. It seems far too high, in my opinion.
While I certainly don’t believe so many firms can still have zero digital plan (a series of scheduled social media posts could be classed as a digital strategy!), I find it equally hard to believe that 95% have appointed an innovation lead.
I would guess that this statistic is a result of confirmation bias. Real estate companies are far more likely to respond to surveys like this one if they are actively embracing digital transformation. Those who aren’t are far less likely to contribute. Thus, the resulting feedback is skewed.
Barriers to transformation
Responding to questions about barriers to further transformation, 40% cite unclear ROI, 40% cite lack of priority, 34% cite a lack of a designated person to take the lead (I know, don’t get me started), and 27% cite a lack of in-house talent.
Aside from even more confusing, conflicted stats around digital lead personnel, I’m inclined to agree with these reasons.
Yes, return on investment could be better communicated to those responsible for driving change. This, in fact, is largely a result of the lack of in-house talent also cited. If you don’t have people on your team who know about technology, you have no-one who is able to clearly communicate its value.
It could be argued that unclear ROI is also a result of the fact that 65% of those people assigned as digital lead are not coming from a technology background.
I would argue that this shouldn’t matter, though. If your new lead is coming to the position from a real estate background, that’s great - they understand the needs of the company and they understand how everything currently does or doesn’t work.
If they are good at their job, they will make a priority of reaching out to collaborators who do know about the technology side of things.
Good digital leaders can also come from other industries. If that industry is further ahead on its digital transformation, finance for example, they bring with them valuable advanced insight.
PropTech companies also bear some responsibility for unclear ROI; many times it has been questioned whether they are failing when it comes to explaining their purpose and value to the real estate industry.
The 40% who say further transformation lacks priority need to take a long, hard look in the mirror.
Finally, the statistic which I think highlights an important next phase for the real estate industry is around data:
“Digital strategies rarely incorporate data management or a data strategy. Only 25% of respondents have a well-established data strategy that enables the capture and analysis of the right datasets. A third have no data strategy at all.”
I have been quite harsh on those who have responded negatively to some of these questions, but here I have more understanding.
While the industry’s adoption of technology has moved in the right direction over recent years, its understanding of data has not. This is likely down to a lack of education.
Education around PropTech as a whole has been good and well-received. But data is an extraordinarily complex thing to fully understand.
Sure, good PropTech companies make it easy for users to comprehend and analyse the meaning of the niche datasets they provide, but real estate firms need to be given more information about exactly how and why the concept of data is so vital and valuable.
This includes building data (generated by IoT, enabling digital twins), space usage data (increasing energy efficiency, improving user-experience), sentiment data (marketing, improved product development), personal data (understanding user groups, their wants and needs), geospatial data (vital for location, tracking, and even development planning), and so on.
The list is endless and real estate needs to be taught how it all works and what it all means. I hope the coming months and years will see a real drive in the technology industry to better inform real estate about data. It has immeasurable potential, but also potentially disastrous downsides if handled poorly.
On that last point, which obviously refers to data security, 7/10 real estate firms state that they are confident in the cyber-security readiness of their organisation. I would encourage them to look again.
If, for whatever ungodly reason, someone wants to break down your cyber security, chances are they will be able to.
Unless you have the utmost confidence that your digital defences are the best they can possibly be, seek advice. We all saw what happened to the Labour Party yesterday.
That’s all for my very top-level look at this report. As is always the case with these things, the insights are valuable, but shouldn’t be taken as gospel. Question everything!