The importance of the real estate industry is frequently underestimated. Its annual sales in Europe are around the Euro 750 billion mark. Institutional investors, such as pension funds or open-ended real estate funds, have assets of over Euro 300 billion and in Germany alone experts estimate the real estate assets of the DAX-listed companies at over Euro 115 billion. The land and property industry makes up 12.7 percent of gross domestic product.
Industry on the move
Although the real estate industry deals in immobile assets, today it is characterized more than ever by mobility. The industry is facing more and more new challenges over the coming years, including demographic and social changes, Basel II, the switchover of accounting systems to international standards, or the increasing electronic integration of partners into business processes, to name just a few examples. The industry is in a state of flux. While living space was a rare commodity a decade ago, empty dwellings are an increasingly common feature of structurally weak areas. Tenants are also placing ever higher demands on their living space and landlords. They are calling for additional services, such as social benefits (housing designed for older people), or telecommunications and energy management.
Efficient processes within the company and intelligent networking with business partners are needed to meet these tasks head on. IT solutions are required that provide effective support for these processes. The software must also be able to cope with the future requirements of the industry. The objective is to exploit potential savings both now and in future and to develop and manage new business models in order to maximize yields. These processes should be supported by innovative applications designed, for example, to reduce incidental rental expenses or to cost-effectively modernize the fabric of the buildings. Similarly, the software solution must provide comprehensive reporting that provides the basis for companies to make sound business decisions and demonstrates the impact of these decisions.
Blue Eagle flies with SAP
As part of a development cooperation with SAP, Aareon developed an IT solution tailored specifically to the real estate industry. The result is the Blue Eagle software solution, which is based on the mySAP ERP 2004 platform (since version BE 1.0). This integrates the SAP Real Estate Management application with the industry-specific Real Estate flexible (RE-FX) module. The cooperation with SAP, which seeks to develop and market a new software generation for the real estate industry, began in January 2002. As an SAP Business Partner, Aareon has the status of an ISV (Independent Software Vendor).
Blue Eagle was launched in January 2004. The first release of the solution was mainly geared towards the needs of the commercial real estate industry thanks to industry-specific add-ons from Aareon. The second release, which was completed at the beginning of 2005, saw these functions extended to residential real estate. Experts at Aareon enhanced the SAP functions with add-ons and adapted the user interfaces to the requirements of the industry.
Aareon AG supplies large corporations but also small, midsize and large housing companies. DB Real Estate Management GmbH in Eschborn, for example, has begun using SAP and Blue Eagle to manage its properties. The real estate companies that are already using Blue Eagle 2.0 include Munich and Upper Bavarian Postal and Telegraphic Workers’ Cooperative Building Association. The example of EBIM, City of Neubrandenburg Independent Real Estate Management, demonstrates Blue Eagle’s diversity. This company uses the solution to manage a range of municipal properties including schools, business parks, historical city fortifications, green, aquatic, and leisure areas, and streets.
Add-ons and template
The functional scope is enhanced by additional software components, the add-ons. These support the task of managing the realty or membership of housing cooperatives, for instance. They integrate loan management and payment transactions or help with order processing in the field of technical real estate management. The latter enables the client to manage his or her building and modernization projects, to structure maintenance processes more efficiently using checking criteria, and to detail services and schedules with greater precision.
Country-specific add-ons are supported in order to enable the various sites of internationally active companies to work together within the same application. They take account of national laws and provisions, sales tax rates, currencies, and also date and time formats. Local adaptations have already been implemented for France and Italy and pilot projects have been prepared. They are slated to hit the market in 2006.
The default settings of the template developed by Aareon – a process and user model – ensures that clients receive a customized system ‘direct from the factory’. It optimizes and structures the scope of SAP services for the real estate industry. For instance, the template enables real estate-oriented financial accounting and enables charts of accounts and master data to be set up and maintained.
ASP, in-house and hosting
Blue Eagle can be managed on the basis of application service providing (ASP), or as an in-house or hosted solution. With the ASP option, the customer rents the software and the application is operated in Aareon AG’s data center. The customer receives comprehensive data center services, including maintenance, ongoing development, and application management. With in-house operation, the software is implemented on the customer’s system. The hosting model combines the characteristics of ASP and the in-house application. Aareon handles the operation and the user has sole use of the system platform.