Integrated SAP Solution for Real Estate Portfolio Management

Feature Article | May 17, 2005 by admin

Bavarian pension organization

Bavarian pension organization

The BVK (Bayerische Versorgungskammer – Bavarian pension organization) manages the funds of a total of twelve professional and local authority pension organizations. As a trustee for these bodies and one of the largest owners of real estate in Bavaria, the BVK manages a real estate portfolio of around 12,200 homes and approximately 1,000 commercial premises which belong to the individual pension organizations.

Real estate portfolio management

Real estate portfolio management demands a precise definition of what the ideal portfolio mix of a pension body should be depending on the balance between risk and return. Targeted sales and new acquisitions can be used to turn these requirements into reality. In 2000, the BVK introduced an electronic solution for its real estate portfolio management. The first step that the BVK had to take was to carry out a rating process for all the premises and sites belonging to the pension organizations. Those with a good rating were incorporated by the BVK into its target portfolio of real estate to be kept in the long term. Premises with a rating that had room for improvement were to be overhauled for the target portfolio or subsequent sale. All the rest were sold.
The BVK aims to provide its customers, the individual pension organizations, with a good return at an acceptable level of risk, while also aiming to provide tenants renting accommodation managed by it with high-quality, future-proof and good-value homes. This requires a powerful, integrated software package. The old system, which was designed in-house on the basis of AS/400, involved a combination of isolated solutions such as Microsoft Access and Excel and was simply no longer up to the task: Real estate-specific data was transmitted using a batch process, which led to slow response times. Lists of jobs for maintenance projects and tasks or business management assessments were only seen by the BVK weeks later. Employees then had to send them via the in-house postal system, which sometimes led to delays in making important decisions. The complicated and time-consuming workflows also slowed things down.
The BVK had strict requirements when it came to a new software package. It had to support the management of direct investments with functionalities such as management, rental, new building, building maintenance, controlling and accounting for real estate and it had to be as easy as possible to integrate it into the existing SAP R/3 Enterprise. It also had to be able to “grow” with ongoing changes in processes.

Cooperation on the basis of trust

At the start of 2003, following a Europe-wide invitation to tender, the BVK opted for the WIS RunEasy real estate solution from business consultants Wiscore. This is a preconfigured industry solution based on the functionality of SAP Real Estate Management from mySAP ERP. “The BVK’s ideas were very much in tune with those of Wiscore and, in my opinion, this is vital for the success of an IT project,” said Norman Fackelmann, Head of Controlling and IT Project Manager. “One sure sign of this was the fact that we were able to implement the project on time and budget from the kick-off in March 2003 right through to going live at the start of January, 2004.” Several Wiscore consultants worked directly alongside the BVK project team on-site on a continuous basis. Any unresolved issues were discussed jointly on a weekly basis. The project team broke the project down into a number of coordinated subprojects such as rental, management, new building and accounting. The management board delegated parts of project responsibility to the relevant departments since they were in an ideal position to know the processes and the requirements of users as a result of their operational experience. An independent external consultant carried out continuous quality checks. This meant that a number of problems such as the lack of time for implementation in the highly standardized accounts department were detected early and an effective solution found.

Transmitting real estate information in real time

The processes for real estate management have become more transparent, leaner and thus more cost-effective. The average management costs per rental unit were reduced to less than Euro 20 which compares well with the average costs in this sector. Due to the fact that approval processes are largely paperless and users receive accurate information on individual premises or projects quickly and reliably at the press of a button, response times for real estate-specific processes such as subletting rented accommodation or maintenance measures are reduced. The BVK is able to respond to queries faster and more effectively, improving satisfaction levels among tenants and increasing the number of people interested in renting properties.
The Wiscore solution is also integrated into the overall processes of the BVK. For example, the general accounting unit automatically receives the required date from the annual accounts for the managed real estate. The entire real estate annual accounts for 2004 are currently being created using the new system. Interim costs and revenue from real estate management are supplied directly to controlling. When it comes to new building or renovation and development projects, integration with the SAP R/3 Project Management component ensures reliable control of costs, resources and deadlines. This means that the management has at its disposal real-time and flexible assessments of costs, rental occupancy levels and profits for individual premises. This is an essential prerequisite for active portfolio management.
Approximately 140 BVK employees are now using WIS RunEasy. After the solution went live, the BVK set up an internal user forum which enabled employees to exchange their experiences with the new software and make suggestions for improvements. These are then implemented as technical and process improvements on an ongoing basis.

Planned link to DIX

Following the successful introduction and the initial positive experience of the new software, the BVK held a workshop to gather suggestions to enable it to continually improve its real estate business management processes. One suggestion was a link to the German Real Estate Index (Deutscher Immobilienindex – DIX) as an important indicator for the development in the value of real estate, optical archiving and billing of incidental costs. There are also plans in future to professionally market real estate via the BVK website using, for example, the SAP-based Wiscore software package WIS IMO in order to further optimize management of interested parties and obtain key information relating to demand structures and any changes in the market. “We will plan and implement these projects step-by-step,” explained Fackelmann. “In doing so, we are able to rely on the sound framework provided by the Wiscore solution.”

Daniel F. Just

Daniel F. Just

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