Stuttgart, the capital of Baden-Württemberg, is an industrial location with a high quality of living and employment for around 590,000 citizens. The local government authorities have large and varied property assets. Property-related revenue and expenditure make up an important part of the city’s financial budget. However, as in many other local government authorities, real estate management was initially decentralized and scarcely coordinated, which had repercussions for information flow. File management, distributed data sources, different media and stand-alone solutions were a barrier to integrated real estate management. Uniform standards applicable to the whole of local government could not be implemented, and effectiveness was also restricted. Space management could not achieve the best possible results, because it was not organized across the board, and the related IT procedures did not cover all the necessary specialist functionality in all areas. For example, only one office used a rent accounting procedure. However, this had become outdated, and was due for replacement in 2001.
Model for other local government authorities
The administrators and decision-makers responsible for Stuttgart’s real estate were convinced that only an IT-supported land and building information system would offer a solution to the unclear and ineffective situation. The bar for the reform project was set high – the underlying aim was to optimize and standardize the business processes across the authorities based on a forward-looking IT solution, with integrated data management and mining.
After sounding out the software market in depth and investigating existing applications and products in practice, the city council gave the go-ahead for SAP Real Estate Management (SAP RE). A project team consisting of experts from local government implemented the new system, and with support from SAP, the system was enhanced with customer-specific modifications and developments.
After an implementation period of just 18 months, Stuttgart’s real estate information system (Stuttgarter Immobilien Informations System – SIIS) went live on schedule in May 2003 in the Office for Real Estate and Residence. The solution is a model for other government authorities; while many cities and authorities, including Dortmund, Cologne, and the real estate authorities in the state of Nordrhein-Westfalen, are already using the SAP Real Estate Management solution, Stuttgart was the first to combine SAP RE with the industry solution SAP for Public Sector. The result is a complete management system for all processes in public sector real estate and property management.
The following functions are used:
- Master data maintenance
- Contract management for rentals and leases
- Project accounting
- Service charge settlement
- Rent adjustments and correspondence
The basic database and the required specialist functionality for business-related real estate management have been implemented. Management of undeveloped sites, including parcel of land data, will go live with the SAP RE enhancement Land Use Management (SAP LUM) at the end of 2003.
Two accounting methods integrated
Financial accounting made high demands on the system, which had to meet special requirements relating to the accounting methods, in particular fiscal accounting and double-entry accounting. For decades, fiscal accounting has been used in the public sector. In the Stuttgart project, this had to be harmonized with the commercial method used as standard in SAP RE. The advantages of commercial accounting are recognized in the public sector, and there are efforts to adopt this method more widely in the authorities of the German federal states and local authorities. However, the regional bodies are reluctant to move away from the fiscal accounting method. Stuttgart can build on a forward-looking SAP R/3 solution that on the one hand enables double-entry accounting to be introduced in local government, while on the other, allows the city to retain trusted elements of fiscal accounting.
Real estate management for Stuttgart local government profits from a powerful SAP environment that covers the whole range of features offered by an integrated land and buildings information system – from data entry and organization through the maintenance and evaluation of extensive data to controlling. While it used to be difficult to determine information from different systems with different structures and data redundancy, the integrated IT solution has now improved all business processes because it offers faster information flow and the necessary transparency. Sophisticated reporting functionality also provides a solid foundation for effective decision-making. Reporting in the Stuttgart real estate information system permits specific queries across all real estate and properties, for example on the costs and revenues of rented properties, on master data, vacancies, profit centers, or rental agreements. Reporting is also connected to the local authorities’ budgetary accounting system. Costs and revenues are posted directly to the budget, and financial items and budget items are stored for the real estate objects.
However, the Stuttgart local authorities did not want to leave it at that. Further functionalities will make the new real estate solution even easier to use. For example, real estate management will be integrated in the city’s own Geographical Information System (GIS). This will make it possible to graphically represent and evaluate land and building information. Thanks to a new program enhancement for commercial real estate management, space and contract management will also become even more flexible in the future.