Qube Global Software Archives - Facilities Management Forum | Forum Events Ltd
Posts Tagged :

Qube Global Software

Steve Fox

GUEST BLOG: From service providers to business enablers – The elevated position of the FM department

Steven Fox, Corporate Real Estate Solutions, Qube Global Software

Facilities managers (FMs) today have more responsibilities than ever before. The rapid development of technology available at their fingertips has triggered a transformation in the complexity of the FM departments’ role within the corporate framework. Added to this is the increasing importance placed on providing a safe, cohesive and optimised work environment to achieving business success. In the past decade or so, we’ve witnessed FMs upgrade from mere service providers to bona fide business enablers.

Yet they still do not have a seat at the boardroom table. And with FMs capability to directly influence C-suite decision-making, is now the time? The view of FM as simply a nuts and bolts necessity, rather than a strategic benefit, is perhaps to blame for this. Confusion as to where FMs sit in the business could also be to blame – who the FM reports to depends on the respective management structure; in some cases, the facilities manager will report to the HR director. Support services such as IT, HR and procurement are all there to enable the company to carry out its core function. Yet, they tend to work in silos – and don’t really acknowledge the operational importance of FM at all. By leveraging technology, FM is fast becoming indispensable to the C-suite by helping organisations move towards ever-increasing levels of efficiency.

The role of metrics in informing C-suite decision making

A strategic FM strategy can pay dividends for an organisation in more ways than one, and with property and asset management software solutions such as Qube Horizon, FMs can provide top management with relevant real-time, past and projected information to help streamline business strategy.

It is essential that FMs link their goals to the wider business by assisting in achieving corporate objectives, collaborating with other business units, and maintaining a comprehensive FM solution to benchmark and measure corporate performance. By tracking key metrics, FMs will have the means of reaffirming or assisting decisions made in the boardroom.

Below are a couple of scenarios in which FMs can provide influential data for benchmarking purposes, as well as key metrics that will give a complete overview of an organisations’ portfolio; thus providing the opportunity for the FM department to elevate their position in the organisation by informing on business decisions.

Measuring employee satisfaction

An important facet of FM is ensuring employees are happy and comfortable in their working environment. Property tech now has employee survey capabilities, which are a great way to not only increase the understanding of issues that are important to your staff, but also to deal with them in a timely manner. Say for example, employee dissatisfaction has been flagged in a specific building. The FM department has access to data that could help identify if there is anything in the built environment that could be negatively impacting the workplace. FM’s can filter their help desk data down to a specific building, then use embedded reporting gadgets to identify if there are any reoccurring issues raised by multiple employees. If reoccurring issues were identified and related to temperature for example, further analysis could be performed just on HVAC assets in the property. Asset performance and operating costs can be compared with other HVAC assets of similar type or make in the portfolio, and deduce if any asset is performing outside of normal trend. Corrective maintenance, asset replacement or even the changing of an underperforming contractor can then be initiated depending on the underlying issue identified. Not only can the FM deal with the problem in real-time, they can also use collated data to pre-empt any other issues before they occur and rectify before they’re escalated to senior staff. Quick, evidence based changes can be made that directly improve the work environment, meeting corporate objectives of maintaining an effective workspace for its employees.

Group-wide cost saving

In addition to optimising the work environment, FMs have a key role to play in maximising assets and establishing cost-effective working processes. For instance, building and leasing decisions are traditionally the remit of the property manager through consultation with the business and its current and projected requirements. However, FM’s can also play an important role here. When deciding to renew or terminate an expiring lease, FM’s have a large volume of data that could help inform upon the best course of action. On a basic level, this can include an overview of utility bills and energy performance, but also more in-depth analysis of space utilisation levels or details of imminent end of life asset’s and the estimated costs of their replacement. All of this paints a picture, on whether renewing the lease and maintaining the property are higher than the costs of moving to a modern building on the market, the FM can offer advice accordingly.

Future planning

Whether a leasing decision is imminent or not, FM’s can assist with formulating the business budget by projecting the total costs of future occupation. Prop tech software such as Horizon can create detailed expenditure forecast reports filtered by property, region, type and so on, which can also take into account projected inflationary increases year on year. These expenditure forecasts can include anticipated planned maintenance and asset replacement costs, but also provide analysis on what make of assets can be procured and maintained cheapest. The report format is easy for senior management to digest, who can factor that information in when tailoring future budgets.

Effective facilities management evidently plays a crucial role in assisting organisations in accomplishing their corporate objectives both short and long-term. Taking advantage of their unparalleled access to real-time business data and capitalising on the opportunities to demonstrate FM’s value, the sector will continue to be uplifted to a whole new level in the eyes of other industries and practitioners.

Steve Fox

GUEST BLOG: Paradigm Shift – IFRS 16 and the built environment

Steven Fox, Corporate Real Estate Solutions, Qube Global Software

Attempts at cross-border convergence of accounting standards is hardly new, in fact there have been efforts to achieve this feat since at least the late 1940s when increased international flows of capital necessitated greater financial clarity.

Initially, efforts focused on harmonisation – reducing the inconsistencies between different reporting methods – but nowadays there is a greater focus on methodical cohesion to assure comparability between a given set of figures.

And with good reason, this approach has seen significant uptake across the globe, with the majority of developed nations using a now standardised set of reporting rules known as International Financial Reporting Standards (IFRS).

And while there has been considerable success since the introduction of IFRS, there continues to be amendments made to the foundations of the standard in order to achieve greater financial transparency between trading nations and businesses – particularly in the wake of the latest financial crisis. The new amendment, IFRS 16, will bring all lease obligations and related financial information onto the balance sheet for the first time – a paradigm shift for reporting.

Indeed, this is far from a minor change, the International Accounting Standards Body (IASB) estimates that the new standard will cause two trillion dollars’ worth of assets reappearing on the balance sheet. Irrespective of this, however, the amendment is ultimately being introduced for the right reasons. As IASB chairman, Hans Hoogervorst remarks, these new requirements will “[…] bring lease accounting into the 21st century, ending the guesswork involved when calculating a company’s often-substantial lease obligation [and] providing much-needed transparency on companies’ lease assets and liabilities”.

Why is this important for the built environment? Well, both existing and new leases will now be reported for the first time, meaning first and foremost that any business with a leasing strategy or extensive portfolio of leased assets will need to begin laying the groundwork in order to be fully compliant come January 2019. A considerable task, no matter what size your business.

Secondly, IFRS 16 by its very nature will significantly impact listed companies of all types and their profit projections, so the need for absolute clarity on the topic is paramount if leaders wish to placate shareholders. Thirdly, as a result of this new requirement, the real estate and wider built environment will likely begin to assume responsibility for financial reporting. So what do decision makers need to know?

Spreading the word

The main point of difference between IAS 17, the current regulation, and IFRS 16 is that finance and operating leases will both subsequently appear on the balance sheet. Under the new standard, operating leases will also report depreciation and interest separately. IAS 17 makes it difficult for financial statement users to clearly see the effect of operating leases and therefore obstructs useful comparisons with other companies. Essentially, under the current standard you cannot distinguish between those who lease and those who buy. IFRS 16 will fundamentally change this. Come January 2019, it will no longer be acceptable for leased assets to lurk in the shadows, undeniably throwing certain revenue projections into question.

Asset turnover, operating expenditure, and equity will all be negatively impacted, whereas liabilities, reported debt, and recorded assets will increase dramatically. Clearly, this change will necessitate the need for frank conversations between real estate professionals, the C-suite, and wider company shareholders. With the goalposts moving under IFRS 16 (particularly metrics such as EBITDA), KPIs could essentially become unachievable, therefore decision makers will need to begin the process of acclimatising shareholders to these changes as soon as possible.

Moving over

In terms of transition, executives have two options: modified retrospective or fully retrospective. It is generally understood that fully retrospective accounting offers a more meticulous comparison of an organisation between old and new standards, but it also demands that two simultaneous reports be drafted, inevitably costing more in time and money. The complexity of transition cannot be understated, and it is generally agreed that specialist software will be required to make the process a success.

This seems an opportune moment for decision makers to consider how web-based applications like Qube Global Software’s IWMS solution, Horizon, can help prepare and maintain all pertinent financial information, thus alleviating much of the labour-intensive work required in order to be fully compliant come January 2019.

Embracing collaborative reporting

Accountancy has always been the reserve of the finance department, but IFRS 16 will undoubtedly create a ‘new normal’. The new standard primarily implicates land and built assets (in addition to plant, machinery and equipment), therefore real estate professionals, and indeed other departments, will need to start involving themselves in achieving full compliance and maintenance of financial accuracy. Essentially, accountancy will begin formulate part of many professional’s remit, mostly as a matter of necessity. With trillions finding its way back onto the balance sheet, no one department will be able to orchestrate this slew of financial data, so a cross-department collaboration will be vital. The easiest way of achieving this will likely be through utilisation of technology that assists with organisation and comparison of data.