How to Navigate the Limitations and Challenges of Spreadsheets
For nearly 40 years, commercial real estate (CRE) firms have relied on Excel to manage most aspects of their business. But in a rapidly changing market, the status quo of spreadsheets may no longer be enough. As asset and property managers find it difficult to keep a real-time pulse on the business and make timely and informed decisions, technology is becoming the go-to solution for aggregated data and actionable insights.
In our webinar Excel Gymnastics in CRE: Escaping the Limitations and Challenges of Spreadsheets, we partnered with Max Bresner of BRIK\W/ELL and Robyn Harrington of Manchester Capital to discuss the limitations of Excel and how firms can leverage CRE tech to navigate market shifts.
The Challenges of Spreadsheets for Asset Management
First, let’s dispel the myth that spreadsheets are bad and should be abolished completely. Spreadsheets are affordable, flexible tools that often require little to no user training. Plus, they are powerful enough to handle complex tasks like forecasting or statistical modeling. Overall, Excel is a great tool in the right hands and with enough expertise.
However, today’s business needs and goals have exposed certain limitations and challenges with Excel, including human error, poor data quality, and limited collaboration. The commercial real estate industry is increasingly aware that spreadsheets are not always the best asset management tool and that traditional processes could slow down their growth. As such, CRE professionals are beginning to explore other options, including technology solutions.
Continue reading to learn about challenges of spreadsheets for asset management.
Manual Processes Vs. Automated Processes
Manual Processes – Manual processes are usually time-consuming tasks that can lead to serious mistakes when performed incorrectly. Because no one is perfect, manually inputting every value and formula in a multi-celled spreadsheet without error is nearly impossible. In fact, human error is responsible for the majority of spreadsheet inaccuracies. And various studies have reported that 9 out of 10 spreadsheets contain at least one mistake.
Automated Processes – Whether building financial models, analyzing asset management, underwriting, or reviewing a lease, commercial real estate processes involve tasks that are ripe for automation. Traditionally, these tasks require manual data entry which can be time-consuming. In fact, 60% of workers estimate they could save 6 or more hours per week by automating data entry.
Essentially, automation saves time and ensures more precise data input than manually keying in data.
Data Security and Version Control
Data security is one of the top concerns for firms because of the large amount of sensitive information that they store. Ideally, your internal processes should allow users to easily access, manage, and share data, all while minimizing risks through full visibility and centralized management of your information. However, Excel’s limitations make data security difficult to implement and maintain. And since 95% of cybersecurity breaches are caused by human error, firms that use spreadsheets for asset management rather than a secure CRE tech solution are exposed to an even greater risk of cyber attacks.
Version control, the process by which the changes of a document or file are recorded, tracked, and managed for consistency, is one data security challenge that spreadsheets complicate. During our conversation, Max shared his experience with weekly version control issues caused by duplicate copies and unsaved changes due to multiple users using one spreadsheet simultaneously. Because spreadsheets are not designed to be a system of record, lack of version control means there’s no guarantee for consistency across data sources.
Collaboration
Excel was not designed to be a collaborative tool. The program has file sharing constraints that prevent users from consistently working off of the most current data set. Further, when teams from multiple offices in different time zones and regions must work together, using spreadsheets becomes even more challenging. Often, workers experience the frustration of waiting for another team member to share data housed in another siloed spreadsheet. And when collaborating across time zones, response times could be prolonged.
The Benefits and Advantages of CRE Tech
Technology has completely shifted how commercial real estate firms operate. Solutions like Lobby CRE allow commercial real estate owners and operators to establish standardized and repeatable processes that reduce manual errors and save time.
CRE tech benefits include:
- Single source of truth
- Data accessibility
- Reliable data analysis
- Scalability
- Collaboration & transparency
The benefits and advantages of technology helps forward-thinking firms get ahead.
Strategies for Navigating Market Shifts
The commercial real estate market offers an attractive investment opportunity because of its consistent returns, passive income, and growth potential. But, when cyclical market shifts occur, it can be difficult to navigate changes in the market. The industry’s access to larger, more robust data has created opportunities to uncover new opportunities and successfully overcome changes in the market.
Identify Opportunities and Leverage Actionable Insights
Forward-thinking firms realize the importance of extracting and leveraging data to more quickly identify patterns and opportunities to better and more accurately predict future scenarios. Leveraging asset and portfolio management software to extract data and insights allows firms to gain an economic, situational, and/or market advantage. As a result, executing faster on change and identifying portfolio opportunities becomes more manageable.
Reallocate Resources to Value-Add Activities
The right asset management technology helps firms eliminate manual activities so that they can focus their time and resources on more value-add activities. Those firms willing to embrace technology understand the benefits that can be attained, including time-savings, streamlined processes, increased focus on revenue-generating activities, and competitive edges.
Identify Risks
There are many risks and factors that can impact a portfolio’s performance. These risks include inflation, unemployment, interest rates, and so on. To identify and minimize risks, firms can leverage data to better determine market trends and anticipate change. Alert-based trigger tools, like those offered in the Lobby CRE platform, can help you keep your pulse on key metric changes, like when NOI declines or notice to vacate increases.
As you seek to overcome the limitations and challenges of spreadsheets, having an open-mind for tech adoption and an understanding of how to leverage the benefits and advantages of CRE tech to navigate market shifts is key. Watch the Excel Gymnastics in CRE on-demand webinar to view the full conversation.
