5 Key Issues with PropTech Implementation

One of the key differentiators of Round Hill Ventures is the way we work with our LPs and real estate partners. Due to our relationship with Round Hill Capital, we understand real estate intimately and understand how difficult it is to implement innovation and technologies in real estate firms. RHV’s Strategic Engagement team talks with real estate players constantly and has a pulse on where innovation is in the real estate industry and below are the five biggest struggles in implementing PropTech.

1. Lack of Resources — both human and financial

Companies often underestimate the amount of people resources needed to implement a new technology, whether it be a new software or a new hardware. According to an E&Y survey, 53% of real estate owners think they do not have the in-house talent to adopt technology successfully. In the same way a new employee is introduced and slowly rolled into a team, technology should be allotted the same thoughtfulness on how best to integrate and interact with people on the team. All technology will need a period of proper planning and training, trial and error with feedback from key figures, and time allocated for people to adopt the technology before it is rolled into their day-to-day responsibilities.

The financial resource needed to implement PropTech solutions are often one of the biggest hindrances as well. Often, there aren’t clear short-term or immediate ROIs are on certain innovations, so business decide to go against them. The price of innovation should be seen as an investment on the technology’s potential, not a cost to ensure businesses aren’t left behind in the long run. This can be solved with a clear PropTech or innovation budget to allow innovation teams to move more quickly and not be so afraid of upfront costs.

2. Lack of willingness from top and bottom

For PropTech to be adopted in real estate companies, there needs to be a clear mandate from the top on the important of innovation and urgency to move quickly. The culture of innovation needs to be set from the very top to ensure it is a top priority for the whole firm. Additionally, innovation goals and KPIs should be tied into all levels of management to ensure it is top of mind for everyone.

Just as important, buy-in for technologies needs to exist even at the bottom levels. Many end users of PropTech solutions are the day-to-day team on the ground at buildings. Their input is key on the usability and ease of integration of PropTech solutions.

3. Different speeds of operations

With Facebook’s now famous “Move fast and break things” motto often a seen as the war cry of Silicon Valley, it is no surprise that the speed at which things move and change is much faster in start-ups. Trial and error, learnings from quick failures, and agile iterations are key ways of working in start-ups to quickly roll out updates and new features. On the flip side, real estate is often slow moving. A building takes years from design to completion and small errors are costly so ensuring things are as close to perfect and to plan is key. Once a system is implemented in a building, it is difficult to remove and switch to a new system. These two cultures inherently butt heads and are not compatible. Therefore, it is key that PropTech solutions have lasting power and are well-thought out. Hardware solutions need to be easy to implement and flexible enough in their software updates that changes can happen without needing new installations very often. Technologies need to work for a longer time-horizon and be clearly innovative for years to come.

4. Difficult to implement

While people who choose to work at start-ups are often early adopters and technology savvy, that is not the case in real estate. PropTech solutions need to be easy to implement and integrate easily with existing backend providers. Often in PropTech, real estate companies are looking for end-to-end solutions instead of piecemeal and siloed solutions. They want one comprehensive solution that solves multiple related issues in building or even an entire development. Almost 60% of real estate companies said new systems do not integrate easily, according to the E&Y survey. Implementation needs to be top of mind for PropTech providers to ensure their solutions will be adopted.

5. Find solutions that work for your company

With many PropTech solutions in the market, it is also key to find the right solution for a certain company. Solutions that work for one firm might not work for another firm. Two key ways to start thinking about the right PropTech solutions for a specific company is to begin with low hanging fruit before tackling deep tech and to understand what role technology plays in the company and with various teams.

These five issues need to be addressed to ensure technology can be adopted at scale. 43% of PropTechs reported to E&Y that they have struggled to get widespread adoption of their tools across a client’s business. That high number is due to a lack of understanding what real estate companies are struggling with from an internal culture, to resourcing, to implementation. If these five issues are solved, the implementation of PropTech solutions will be much smoother and more successful.

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