The Big Short 2.0
Belatedly I watched the film ‘The Big Short’ with my family – Eleanor (21), Danny (18) and my wife Mandy (none of your business).
If you’ve seen it, you will appreciate it helps the viewer by taking time to creatively explain some of the technical subject matter of the film – which was welcomed by me as I was really struggling to explain what were the circumstances that brought about the Global Financial Crisis (GFC) – Sub Prime, COD’s, Bonds and AAA Mortgages…to a couple of millennials.
The film followed the fortunes of some self-confessed geeks and disrupters who spotted that the housing market in the US was built on foundations of questionable practices and ultimately greed.
It showed them make commitments in various ways to trade against the market and in doing so experience the incredulity of their stakeholders and have to pay out on liabilities and penalties until the market started to turn. They became the ‘John the Baptists’ of the 2007 US Property Economy and had to go to extreme lengths to persuade institutions that all the evidence and data was right – even when the market was still acting like it wasn’t (i.e. vested interests were extending the state of denial).
And just before their heads were chopped off……their salvation came……. but at a huge price to the homeowners, pensions, jobs, global economy (be careful what you wish for).
Some of you will have already spotted the analogy to Proptech…
I’ve spent 25+ years developing and managing IT for the Built Environment and I’ve often been called a geek, disrupter and trendsetter, which has never bothered me, apart from a purchase of some tartan trousers in the 1990s.
I am passionate about how the Built Environment sector should be led more by technology and data, and have witnessed this in the way my organisation, CDS, is moving the world in this direction, one line of code at a time.
In all of the recent conferences I have attended (some Proptech, some Workplace related), I have heard a consistent message that technology will never replace the agent/surveyor/consultant. However, with what I’m seeing within the sector I’m really struggling to accept this and think that tech and data could certainly get to an 80%, or even 90%, replacement figure (within a decade). The movement towards automation is unstoppable.
Human intuition, experiential knowledge, customer understanding and managing the transaction itself are cited as the reasons for why warm bodies will still be needed to advise. Hhhhmmmm…I (we) know that 90% of that need can/could/is being modelled and delivered in systems as we speak. Denial #1.
The other message that is loud and clear from conference is that there are still large parts of the sector using both Excel and paper as their main data repository. In fact, the figure was just under 50% in a recent survey by i-FM website and Service Works Group (SWG). Macro riddled excel spreadsheets only available on one person’s laptop that runs an entire process/department or is THE way to report intelligence to your client/customer within an organisation is a serious risk – not just to that organisation – but to the advancement of our industry.
Are these organisations confident that they can continue to compete with organisations who will be working in a much smarter and effective way? Competitors, who secure business through their lower cost base and flexibility. One thing is certain, vested interests are negatively affecting the advancement of the Industry. Old school thinking, lack of understanding or investment constraints, organisations will be set adrift if they don’t start to adopt a more systemic data and technology-led approach. Denial #2.
The other 50% of organisations will be using the Enterprise class application suites that have been prevalent in the market since the Third Industrial Revolution and have evolved over time to adapt to new technologies. Very commendable, given my mini rant about Excel above. However, these vendors and systems have maintained complex licensing arrangements and favour the vendor not the customer i.e. flexibility comes at a price or is resisted/impossible without breaking support contracts or proprietary data structures. The era of Proptech should accelerate us towards agile, zero inertia, democratised and open solutions that favour the customer and their customers too. Denial #3.
Finally, I want to support those working on sector standards – be it data, infrastructure or security. However, I do feel that the delays establishing data standards will be overtaken by the way that new technology can negate the need for ensuring data is fully matched. Machine learning and pattern recognition will win out and overtake those working on the standards and those who exploit the lack of standards to their own advantage (i.e. builders estimate “that’s gonna cost you”). Denial #4.
I’m not claiming to be Brad Pitt, Ryan Gosling or Christian Bale, (which may be worth a poll within the community as to who is) – perhaps more a background extra. Sometimes it feels like I’m roaming the wilderness extolling the virtues of property solutions (sorry I’m swapping my analogies) but I CAN see the signs that the proptech sector is on the brink of becoming a new norm – and that’s a big responsibility for us all – so we must keep going.
Author: Michael Stephens, Head of Asset Intelligence at CDS Digital