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Cloud-Enabled Real Estate: 5 Reasons for an Evolution in Thinking
Thursday, May 03 2012 | 10:42 AM
|Technology is an integral part of our lives. No one can dispute this fact any longer. From the personal tech of smart phones and tablets to the business applications, systems and VoIP technologies that businesses need, there is no escaping the integrated relationship between technology and society. Internet connectivity, data center access and Cloud services are key to ensuring that operations as small as one person to thousands get their work done. Every business requires basic services such as connectivity, security, co-location and even IT support from day one. Until now, the tenants of commercial properties have had to seek these services externally, through separate vendors, contracts and service providers, while seeking a balance between budgetary constraints and increasing needs. Which begs the question: why aren't the commercial properties which house these tenants providing these necessary services?
Cloud-Enabled Real Estate (CRE) is about integrating connectivity as a fundamental component of a building and incorporating the redundancy, security and scalability needed to truly make it viable. By removing the barriers to the Cloud and creating a robust technology framework, tenants can gain access to services and systems they already need and use, such as VoIP, video conferencing, telepresence, internet connectivity, cloud computing services, server co-location and more, and the developer/managers can reap the rewards. Here are five reasons why cloud-enabling commercial properties is fundamental to the health and future of Real Estate:
- Tenants Want It: Yes, they do. In fact, they are demanding it. Imagine being a tenant to a building and being able to move to your new space, and have immediate, turnkey access to the bandwidth your business needs, as well as the technology services that your enterprise depends on. The ability to scale up and scale down (1MBps to nearly 500GBps), along with exceptional security is a key driver for companies seeking their next office space. If a building can offer these options at an exceptional cost, the choice is clear. It's hard to find another business model where the customers are already there, ready and waiting with money in hand for you to simply deliver what they want.
- New Sources of Revenue: The Cloud's model is based on multi-tenancy. So is the commercial real estate model. Leveraging the economies of scale to drive down costs, while improving the service delivery is a proven business model. It is less expensive for a new building to incorporate the needed technology and connectivity as part of its design and build, or even retrofit it, than it is for any single tenant to go at it alone. By offering tenants the technology services they want and need, buildings will be able to tap into new revenue streams that have traditionally been outside their reach. Further, by partnering intelligently with the right service providers (Cloud, Managed Services, professional services, et al.), the revenue verticals that can be tapped with minimal investment are bound only by imagination. By making the right partnerships and offsetting the responsibility through knowledgeable IT firms, the tenant will get the myriad services they need and the building ownership/management will see new revenue streams, while still focusing on their core business and market. This partnership has been a key to the success of technology companies and there is no reason to believe that the model will not work with commercial real estate as well.
- Tenant Attraction / Tenant Loyalty: Like any industry, if a commercial building can be one of the first that offers the services that a market needs, it will attract a loyal base. When the value-proposition for a company is between spending thousands on building an IT infrastructure, the hassle of getting the connectivity they need and even the basic technical staff to run their technology operations, and getting all those things immediately, seamlessly and cost-effectively, the choice is clear. Plus, through offering a better service experience, the tenant loyalty for longer terms is nearly a guarantee. Once you've experienced a higher level of service and technology, it is hard to go back… have you tried leaving your mobile phone at home for a few days? The same is true. Once tenants move into a Connected property, they will not see how they can do without it. Additionally, companies with multiple sites will also want to have the same services in all the locations they lease, so the potential for multi-national developers and building manages is huge.
- Prestige: Let's face it, Technology is cool. In a competitive industry, where the types of companies that occupy your building is nearly as important as the occupancy rate, being seen as a leader and understanding the needs of your tenants can bring prestige and recognition. This prestige and recognition creates a self-perpetuating cycle of attracting new tenants and delivering loyalty as the Developer/Manager reaps the benefits of understanding and leveraging this industry-disrupting force. Time to change the motto from “Location, Location, Location” to “Location, Technology, Connectivity”.
- Future-Proofing your building: Developing a new building takes a tremendous investment. This capital must be offset by high rates of occupancy, reduction in maintenance and supporting costs and new lines of revenue from service offerings. At the pace at which technology moves, an investment in IT may seem counter-intuitive, but it is in fact, a very safe investment. Specifically, an investment in a framework that enables pure connectivity to the internet and its services is the safest way to ensure that your building will not become obsolete. In the era of the Cloud, the important aspect of a commercial property is enabling that access to the Cloud. Network technologies are some of the most mature and proven technologies available, and there is rarely a need for a complete overhaul (if the initial design is correct). So an investment in connectivity makes a building more relevant 10 or even 20 years from now, than it is today.
It is easy to make the case for Cloud-Connected Real Estate. The value proposition favors all parties involved and it's hard to see why such a concept, as revolutionary as it seems, is nothing more than evolutionary… even for one of the most conservative, stable and most cautious industries in the world.
Allen Firouz – CEO Venturian
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