How to Budget For Workplace Technology
A standout star among the trends looming on the 2022 horizon is digital transformation. Gartner predicts an 8.4% increase in IT spending globally from where it was in 2020 – equaling a projected $4.1 trillion in 2021.
This same report predicts that workplace technology growth will more frequently come from business departments outside of IT and in the future be a revenue driver rather than an overhead expense.
Integrating new technology still requires investments – monetary investments in software solutions, as well as time investments in planning, training, and strategic implementation. One of the biggest challenges companies face is how to determine the ROI of investing in new workplace technology.
How to evaluate your workplace technology needs
Insurance company MAPFRE USA went through a technology overhaul in 2020. In an interview with McKinsey, Executive Vice President of Information Technology Enrique Laso said updating the company’s technology stack was necessary to increase efficiency. The insurer operates in multiple states and had a disjointed network of systems and solutions that needed to be consolidated.
The project posed risks such as complexity in data migration, business disruption during roll out and implementation, and budget considerations; however, Laso said the research, development, and integration process gave his team an opportunity to grow in their competencies and skill sets, setting them up for easier technology changes in the future.
“Once we’re through this transitional period, I believe the efficiencies gained will be higher than what we expected,” Laso said. “It’s also much easier and quicker to launch new products or enable new functionality with the updated system than it was in the past.”
In considering any new technology, look at the following factors to gauge the return on investment:
- What functionality do you need?
- What are the potential risks?
- How will it streamline existing systems and processes?
- How does it make your people more effective and efficient?
- Do we need an on-premise system or cloud-based software?
Demonstrating the value of an investment is imperative to gaining executive buy-in. Here are a few factors to consider.
Functionality that expands as you grow
There are plenty of facility management solutions on the market today that are designed to achieve a single purpose. This includes service request software and basic asset tracking solutions. These solutions are ideal for smaller organizations or one-person maintenance departments. If all you need is a single solution, you can expect to spend considerably less.
However, for growing organizations, single-point solutions usually aren’t sufficient for long. And having a dozen different solutions that don’t integrate makes it difficult to report on facility management KPIs.
This is especially true if you have more than one location. All these disparate systems slow down your processes and decisions. They also come with licensing fees and other costs.
Moving to an integrated facility management solution that serves many purposes often leads to immediate cost savings and greater efficiency simply by eliminating redundancies.
Outside of the traditional risks such as budget overruns, delays, and finding the best quality, two huge risks are business disruption and data migration.
MAPFRE USA approached these concerns by compiling a technology stack that was completely self-contained and independent of their existing system. This allowed them to build and test the new systems groups outside of the daily business operations. They also used this process to develop an attitude and plan of transformation readiness: a focused change-management and training effort.
Streamlining existing systems
When you choose a software vendor that includes a suite of integrated solutions, you can achieve savings faster.
You eliminate the need to integrate with multiple third-party systems to ensure technological support. For example, if you deploy a highly cost-effective single-point solution for room reservation, it needs to integrate with other systems to be effective, including space management software and facility management software. An IWMS brings all these functions together in the same platform.
Laso said selecting the right products was the first big task in creating the new stack because they were upgrading all systems, not just the core platform. In the buy-versus-build decision process, they tried to buy existing systems whenever possible.
“We were very selective about the areas in which we were going to build a system,” Laso said. “We put a lot of emphasis on the integration layer because we know how important it is. If you don’t get the integration layer right from the beginning, it can create significant problems. If you’re able to do it right, it’s a big advantage and becomes a key asset for the future.”
Assisting efficiency and effectiveness
Adding value to the way your people function in their jobs is a key component of good software. When making a change, any facilities management decision maker should ask themselves, “Why do we need this?”
“Before the project was launched, during the approval and brainstorming process, we conducted several workshops to try to anticipate what the results of this project would be,” Laso said. “We weren’t necessarily looking for just a financial ROI, but since we were transforming the business processes and enabling new digital capabilities, there was an expectation that the business would benefit from the effort. We had conversations about the types of synergies or efficiencies we would be gaining and the new capabilities we would develop.”
Choosing between on-premise versus cloud-based software
Some organizations prefer to have full control of their data and systems and host their software on premise, while others prefer to avoid large upfront capital costs and pay a monthly subscription fee with a cloud-based software solution.
As you make this decision, consider:
- Whether you have the budget for the substantial upfront costs of an on-premise solution, including hardware, data backup and a dedicated IT team
- What data security protocol your provider has in place if you’re using a cloud-based solution
- How often you will need to update your solution, considering it may take months to plan and deploy those updates
- What other existing solutions you need to integrate with your on-premise or SaaS software
The iOFFICE + SpaceIQ offer both on-premise and cloud-based (software-as-a-service) solutions. Many organizations are moving toward cloud-based solutions because they are easier to scale as your company grows. You can easily add functionality or users simply by increasing the cost of your monthly subscription.
Cloud-based solutions are also easier to integrate with other technology.
A March 2021 study from JLL surveyed decision makers who influence facilities and/or corporate real estate organizations. Of those surveyed, 42% plan to invest in occupancy sensors and analytics; 36% plan to invest in touchless/contactless technologies; 31% plan to invest in asset management software; and 26% plan to invest in maintenance software.
With a cloud-based IWMS, the asset management and maintenance software solutions are already designed to integrate with these technologies. This adds a layer of data and insight you can use to make smarter business decisions, such as deciding to adopt office hoteling if you notice your average daily occupancy is less than 50%.
How to build a business case for workplace technology solutions
While it’s important to keep all these factors in mind as you budget, you also need to consider how quickly you expect to see a return on investment.
Depending on how your organization uses the software, it could pay for itself in a matter of months. As you project your ROI, consider:
- How much you’ll save by eliminating licensing fees for other solutions
- What facility management processes you can automate, and how much time you’ll save by doing so
- Your annual real estate costs, and how much you can save by optimizing space management
- Your annual maintenance budget, and how you can reduce those costs with a more proactive approach
- The average cost of equipment downtime for your most expensive assets (based on your last outage) and how much you’ll save by eliminating that cost
This past year has brought about many shifts in the workplace, highlighting the need for digital transformation and more advanced, integrated technology.
There has never been a better time to reimagine your workplace, starting with your processes and solutions. If you’re serious about improving your space management strategy, our workplace technology assessment can help. When you answer a few simple questions, you’ll get a comprehensive report with your score and detailed recommendations.
Take the first step toward reimagining your workplace. Take our assessment today.