• Dzeneta Schitton

D-DARKS modular solutions for the Real Estate industry

Updated: Jan 21

1. Introduction


Starting with a pure predictive analytics solution D-DARKS is making an additional turn in order to design overall digital solutions for real estate companies while helping them achieve ESG Governance goals.


In the past two years we were engaged in designing predictive analytics models, custom made for the real estate industry, taking into account all of its specifics and opportunities this kind of data driven forecasting could bring to companies.


However, talking to the industry, we have realised that a very big part of the industry is yet fighting to digitalise their management & business processes, while still relying on the "old way" of doing business. To be able to think about more advanced predictive analytics methods, they are missing a well functioning underlying digital system as a basis.


Here we noticed two kinds of companies - those which have already started the digitalisation and digital transformation processes, but "stuck in the process" for years, and the smaller ones which do not have enough resources or time to start these efforts on their own.


In 2022 we cannot anymore talk about keeping the old systems of doing business in the real estate industry. While we are in the middle of ESG efforts, introducing smart buildings and data driven predictive maintenance, we cannot anymore keep the management systems as they were fifty years ago. We need to focus on introducing a digital governance mode to real estate companies.



2. The problems real estate companies experience during digitalisation/digital transformation


Realising this, we started to study the basic problems of real estate companies, which did start digitalisation and digital transformation processes and what is slowing them down in switching into digital governance mode.


  1. Digitalising ineffective business processes

  2. Data collection: collecting too much of overwhelming data (and often duplicated)

  3. Data analytics: collected data is poorly and insufficiently analysed

  4. Data results: results are part of complicated systems with very complex user interfaces

  5. Inflexibility in implementing new and/or special circumstances


The result is that companies cannot use all the relevant data efficiently, which would help them to steer the company successfully using digital tools. Apart from this, companies have to dedicate whole teams and departments to those projects which usually take years and bind a lot of company resources.


3. Our considerations in creating the solution


So, we have spent the past months thinking these problems through and coming up with a solution which will help companies of all sizes, but especially SME, real estate funds and asset management companies to get their agile and lean digital governance approach.


Our main focus is to:

  • make the process fast: we want to offer the timing of implementation within weeks/months (depending on the size of the company and modules to be included)

  • adjustable to any needs - the system relies on module-blocks (such as internal market valuation, cash flow, debt financing and similar) which can be built on top of each other in a very fast and flexible way

  • lean approach when it comes to data collection, data analytics and providing results

  • one interactive interface focused on user experience


In designing these solutions we have followed the considerations that real estate companies

  • have more of a traditional management approach

  • might have specific requirements when it comes to data storage

  • do not necessary have enough information about possibilities digitalisation and digital transformation is able to offer in everyday business


4. D-DARKS digital solution for the Real Estate industry


1. Flexible SaaS digital governance solution


The solution is based on SaaS concept - software as a service - which would unite every task a company sees relevant for its business in one interactive interface, available 24/7.


The system is by default a cloud based solution, with high level security, when it comes to data transfer, but can also be implemented in a local digital environment, in case a company does not wish to transfer the data to the cloud. Although we are aware that there is still a lot of miss-conception about cloud solution, we primarily recommend a cloud solution as the best scalable option for any company.


2. Market and portfolio on one screen


We are connecting market and portfolio data in one place, while setting up analytics in order to help to provide an automated and interactive tool, to be used in everyday business in a simple way.


We do not use raw market data but the data are analysed beforehand with custom made market risk clusters algorithms, which are detecting associations between different markets, asset classes and economic events. These findings are further applied to the portfolio uncovering aggregated risks within different key parameters.



5. Overall business solution : consulting, business analytics, predictive analytics


  • Consulting


As we are focused on implementing an efficient solution in the fastest way possible, we are very aware of possible "information traps" and inefficiencies, which may occur. Therefore, we are also offering the possibility for consulting services before getting into the digitalisation respectively digital transformation processes.


Often companies with their non-digital background have problems making a lean management approach when the time for digitalisation comes. Data collection processes can include a lot of overwhelming data and processes which are slowing down the procedure while causing the company to run inefficiently.


One of our main incentives when it comes to efficiency and fast delivery, is as well valid for the consulting services - we take a task force approach which is to deliver results in the shortest time possible.


  • Business analytics


Digitalisation process includes digitalising everything which is considered to have a crucial impact on the business processes of the company. As we focus on results: What do you want to have as an outcome...?


Lean management brings lean business analytics, which offers everything you need to know about your company and what you consider as important - but not more than that.


Business analytics offers information in real time, about present developments in your interest areas, based on a data driven approach.


Flexible and scaleable!

 

What happens in the case your company did not undergo the business consulting process and there is a need for digitalisation?


Business analytics can be introduced in any case - in this case we just make a joint strategy about important key parameters and insights you want to have, so the business analytics and overall digitalisation efforts represent kind of digital restructuring respectively taking into account only the necessary information and results.

 

  • Predictive analytics


Once digitalisation is running and your business is available to you on one screen and 24/7, we can build advanced predictive analytics models on the top of it. Our predictive analytics approach uses custom made algorithms to provide you with early risk warning systems (in accordance with the latest EU legislation) as well as to enable decision makers to do data driven strategic decision making.


Each single module made available through digitalisation and business analytics can be upgraded by predictive analytics modules.



6. THE BASIC CONCEPT: market and portfolio on one screen


The combination of portfolio and market data in one interface is designed to offer, first of all, very smooth user experience with a minimalistic interface, offering only the information you need and when you need it.


Having market and portfolio on one screen does not mean only combining the raw data, but the data which is pre-analysed with advanced risk algorithms. With our Market Risk Radar tool we are uncovering associations between single local markets and therefore exposing risk clusters. This enables us to project the market behaviour and its impact on your portfolio in an aggregated form.


This means that you get an overview of your portfolio and your investments on one screen, reflecting the market developments in all of their complexity - as mentioned, this approach can include business analytics (reflecting stage of the industry now) but also advanced predictive analytics.


The access can be enabled to as many team members as wanted - as well as restricted to certain groups of people.



7. Building block models for scalability and flexibility


One of the basic problems real estate companies are facing is this long lasting process of digitalisation and digital transformation while at the same time disregarding many of the mentioned considerations. Therefore it is understandable that there are companies still relying on the "old systems" and avoiding to get into the process all together.


The question is: What is the solution?


How to offer solutions which are giving companies results fast while including all of their interests?


How to offer flexibility without having to custom-make every single solution which would without a doubt cause the same delays companies have now...?


Taking into account these requirements, we designed a solution which will offer flexibility and an efficient implementation for real estate investment companies, funds and asset management companies.



8. Cloud or internal solution?


Cloud technology is reaching very satisfying levels taking into account practicality, scalability and cyber security - the latter one is often misunderstood and underrated. Cloud solutions are a choice of many global companies which are taking their security issues very serious and we see no reason for real estate companies not to go the same way.


However, in case there is still resistance to this technology, D-DARKS solutions can be implemented also internally and keep the portfolio data within a company, without bigger delays and complications.



9. How does it work?


We have designed single digital modules. You can imagine them as buildable cubes - every module is in fact one single key performance metrics you need to run your company. Here are some examples:


INTERNAL MARKET VALUATION MODULE: This module is focusing on giving you and your company overview over the value of your portfolio on automated and/or interactive basis (depending which valuation methods you are using) by combining market data and your portfolio data. Our custom made algorithms are offering the advanced market risk analytics for the market data and provide business and predictive analytics approaches.


CASH FLOW MODULE: Focusing on operative, financing and investment CASH FLOW -

Breaking down the Cash Flow stream of your company into these three pillars in order to have a stable overview of what is going on. Given the fact that Cash Flow results are dependent on the future development of market parameters, D-DARKS offers to incorporate predictive analytics components, primarily with respect to market simulations, in order to minimise the uncertainty in this area.


DEBT FINANCING MODULE Focusing on the overview of your funding structure.

Different funding structures have a varying impact on the profit & loss of a company. A detailed breakdown of single funding aspects can help to identify potential risks in this sector. Implementing predictive analytic modules allows for predicting the impact of future funding parameters on the overall situation of a company.


EQUITY YIELD MODULE Focusing on the earnings ratio of a company.

Depending on the funding structure, the earnings potential of the company's equity is derived. Also here, it can be implemented only as a business analytics component or be incorporated from a predictive point of view, which can enormously improve the strategic steering possibilities of a company.


The mentioned modules are the most common examples companies use in everyday business. In case the company has any other requirements additional modules can be added in a fast and efficient way.


These modules are not to be seen in an isolated way. Whichever cubes are engaged, they are interwoven in an aggregated management information system.



10. Conclusion


D-DARKS solution was designed to fill the gap digitalisation and digital transformation processes in the real estate industry caused for most of the companies - for those which are still running on lists and old systems as well as for those which started with some procedures but are experiencing difficulties.


Coming from the real estate industry we are very well informed what the basic problems are, not only now but also what was a problem 10 or 20 years ago and still persists. These problems are now multiplied by the efforts to digitalise processes which would probably need restructuring before that.


Taking this into account and talking intensively with the industry, we came up with a solution where companies can, depending on the stage and size, in a matter of weeks/months have a very flexible digital system answering to all of the challenges they have as well as being able to seamlessly adjust to their ever evolving needs.


D-DARKS solution has the potential to represent a game changer in digitalisation and digital transformation efforts in the real estate industry, by allowing companies to go through the process fast and efficient, while keeping ahead of the competition.


This solution backs up the core of the digital governance efforts, coming as a part of global ESG initiatives enabling companies to show a good governance, transparency and sustainability. Besides governance, it reflects also the environmental issues, as it enables a digital access to all of the markets and portfolios of the company, therefore decreasing the need for people to travel often and negatively impact the carbon print.