Get your head in the cloud! Not the most common of phrases, but you might be hearing it more and more if you’re in real estate. Commercial real estate (CRE) companies are turning to the cloud to manage all sorts of data, from basic email systems to complex custom applications, in order to increase efficiency and ultimately make more money.
In the next three years, a Cisco study projects that 83 percent of all data center traffic will be based in the cloud. This jump in cloud adoption is projected to continue to fuel the demand for data centers. Last year the top three cloud infrastructure providers, Amazon.com, Microsoft Corp. and Alphabet Inc., spent a combined $31.5 billion on data centers, 22 percent more than what they spent in 2015, according to Bisnow.
We’ve stated the obvious. It’s not breaking news that CRE companies are moving to the cloud. Let’s tell you something that you don’t know by taking a look at what this really means for companies like you. At our recent trip to San Diego for the 2017 Realcomm conference in June, we sat in on a panel that shared three CRE companies’ real-world experiences migrating to the cloud. Here’s what we think it means for you.
Starwood Retail Partners: Complex Applications on the Cloud? No Problem.
For those of you who aren’t familiar, Starwood Retail Partners is a flourishing new company founded in 2012 that acquires, redevelops, leases, manages, markets, operates, and invests in a portfolio of retail shopping centers. Because it’s new, it was able to start on the cloud from the very beginning. Through Okta, a single sign-on (SSO) product, all employees at Starwood Retail Partners can seamlessly access the company’s many systems sitting on the cloud and cloud-native apps like SalesForce, Nexus, and FileStar. They have no on-premises servers, no data center, no VPN, no LAN (local area network). The only software system they have yet to migrate to the cloud is JD Edwards (an ERP similar to Yardi or MRI), which is currently hosted on cloud server. As a result, the primary function of its IT department is vendor management. Everything seems to be running smoothly for this fast-growing company, making cloud-based services look quite appealing.
Takeaway: Commercial real estate companies don’t necessarily have to have on-premise servers even if they are using complex applications. Starwood Retail Partners is a great example of a growing company that you would expect to have onsite servers due to its size, but they are nearly 100 percent on the cloud. Another key takeaway is that if you have the ability to start on the cloud rather than migrate over to it, do it. It’s just easier.
Liberty Property Trust: It’s Simpler for Startups
Liberty Property Trust is not a startup. It’s an $8.5 billion real estate investment trust which owns 98 million square feet of industrial and office space throughout the United States and the United Kingdom. To date, Liberty Property Trust is about 25 percent on the cloud, first moving its mailboxes to Microsoft Office 365 as well as a highly-customized Microsoft Dynamics CRM to the cloud. The company shared that it hit a speedbump, though, when it performed a required upgrade to Microsoft Dynamics after it was on the cloud. Many of the CRM’s customizations broke in the upgrade, resulting in frustration and time wasted on reconfiguring the custom capabilities.
Takeaway: With an existing on-premise environment, cloud migration can become more cumbersome—especially if you have lot of customizations. Starwood Retail Partners, as a startup, was lucky enough to begin in the cloud so they faced little friction. Conversely, companies like Liberty Property Trust that need to migrate from an on-premise environment may experience some hiccups. That said, Liberty Property Trust expressed that it is still committed to make the switch because of the cloud’s many benefits.
Related Companies: Quick, Easy Migration with More Effort For Complex & Custom Systems
Related Companies, a New York City real estate firm, is about 80 percent on the cloud now, including systems and software like Yardi, Sales Force, and email. This multi-terabyte data migration took a quick eight weeks, leaving only its heavily-customized JD Edwards and SharePoint software to be moved over.
Takeaway: Here’s a great example of an established company’s success story. The migration of the more straightforward systems was quick and painless, while the migration of the complex, custom systems are being tackled now. Our point: It can be done! Complex applications may take a bit more time to and effort to migrate over, but have faith that it can be done!
As you can see, moving to the cloud can be a challenging undertaking for some and a smooth ride for others. It truly depends on your company, it’s systems, and their customizations. Regardless, it’s clear that CRE companies are making the switch for a reason. They see the benefit of the cloud and are willing to work hard to achieve them.