Australia’s Charter Hall paves the way for innovation by supporting proptech startups
The organisation that Aidan Coleman joined in 2014 as its transformational Chief Technical Officer is not as well-known as it deserves to be. But it sits among the ASX top 100 companies with more than 350 properties and around A$23bn under management. It differs from its rivals somewhat – as well as managing assets for active funds in key retail, office complex and industrial markets it is also deeply involved in property finance as an investment manager for some 30 funds across the retail and wholesale space.
Coleman found that he had a dual role. The first objective was to create a scalable technology and information systems capability and platform that could support the business going forward. The second, no less important, was to understand the potential impact of technology disruption and help the business to identify opportunities that would get it onto the front foot and create a real commercial advantage. There was, he says, much work to be done to achieve the former and transform the internal employee experience. The latter he took to like a duck to water, taking leadership of the accelerator programme described below.
On his appointment Coleman found a business whose leadership, though attuned to the potential of IT, was experiencing growing pains as it put its EnterPRISE business technology transformation programme into effect, still relying on manual processing, spreadsheets and print-tailored solutions. The first task that faced him was to make the case for an IT focused vision. “Bringing the business along on the transformation journey was a significant part of my first years. In the last 18 months we have gained positive momentum, and we have been able to shift our focus more towards innovation and how we might utilise investment in some of the newer platforms and technologies to add value, not only empowering our employees with the information and tools they need, but giving a better experience to our tenants and customers.” There’s a new wave of younger property investors emerging, he says: more tech savvy and demanding than their predecessors and ready to embrace the concepts of proptech and fintech.
The cloud beckons
It quickly became clear to Coleman, from annual engagement surveys, that that investment in technology had not been prioritised, though that soon started to change. “People across the business are now encouraging us to continue to invest in and focus on digitisation.”
A good example of transformation initiatives that have impacted cycle times and helped de-risk the business was the group wide Forecasting Analytics program, launched in 2016 and developed in partnership with MRI Software. “MRI is a well-known global platform in our industry,” Coleman says, “but less so in the investment management space. We have put our IP into MRI, and that allows us to really draw out the value of this platform.”
In the past Charter Hall was doing this in a bespoke way, fund by fund: this has shifted to a more integrated real-time environment that admits of change. For example, what used to take 10 people 20 days in Excel will now take minutes, like reflecting a future interest rate assumption change across all property and fund valuations. “We’ve significantly improved our risk profile by moving our key inputs, calculations and outputs/analytics into a centralised and controlled environment,” Coleman says.
A principle he established from day one was to minimise the fixed footprint, whether in infrastructure or people, to minimise capital spend, moving it where possible to operational cost so as to create more elasticity in the business. “Property cycles go up and down. When we are booming we need to be able to dial up services and capability quite quickly and when they flatten we need to be able to do the opposite. But when you have fixed costs you can't do that so we have been looking at platform- and software-as-a-service (PaaS and SaaS) strategies for any new applications or software that we bring on board. I also wanted to transition from on premise legacy platforms, either replatforming in a cloud-based environment or decommissioning them altogether.”
Disaster recovery (DR) relying on a secondary data centre, both expensive and of doubtful efficacy, was a case in point. Considerable capital expenditure would have been needed to upgrade it, and most of the time that capacity wouldn’t be needed. Bringing in technology partners like Microsoft and VMware to create a DR solution in the cloud meant that for a management fee Charter Hall moved millions of dollars off its balance sheet, at the same time enabling it to recover from any disaster scenario with speed and agility.
Microsoft Azure is now Charter Hall’s platform of choice for conditioning all its data and documents, continues Coleman. “We have been able to eliminate all but between 5% and 10% of existing infrastructure in our data centres.” Unlocking the value of elements such as OneDrive, SharePoint in conjunction with Power BI, and the CRM capabilities of Dynamics has de-risked the business significantly as well as eliminating infrastructure cost. “From an infrastructure point of view, I would say that we are very close to being fully cloud enabled,” Coleman continues. “We are rolling out a network to our retail shopping centres and corporate sites over the next 12 months and that will give us a lot capacity and bandwidth into all our properties. People in retail sites will be working in the cloud: all their applications, documents and key network points will be cloud-enabled and that will speed traffic over the large distances that separate these sites in Australia, reducing latency and congestion through to our data centre.”
Proptech to the rescue
Until recently real estate technology has been, relatively speaking, neither user friendly nor integrated, he admits. Innovation, and not only in the IT space, is one of his passions, one in which he has taken a leadership role. One innovative solution his team delivered was a first in Australia in partnership with a proptech startup aptly named Comfy – an app that delivers ‘climate control on demand’, allowing people to make known their temperature preferences using their smartphones.
“Before Comfy,” Coleman says, “we had very little information on how occupants were actually experiencing the temperature in the building. The standard approach for temperature control in buildings has been ‘one temperature fits all’, and the feedback loop is manual and usually complaint-driven.” This is about more than end user satisfaction. It is expected to deliver between 15-25% energy savings across properties as it’s rolled out in more offices. For example, Comfy will use machine learning to track and learn how meeting rooms and shared spaces are used, heat or cool the room for the meetings and not waste energy conditioning an empty room.
There are significant benefits from collaborating with these startups, Coleman believes. “Engaging with them is creating a palpable dynamism within the business that we have never seen before, and from a brand positioning perspective it has been fantastic. We have been getting a huge amount of feedback from our peers and lots of coverage from major news organisations in Australia, and among whom proptech is becoming a new hot topic.”
So, ahead of most of the competition, Charter Hall has really thrown its weight behind proptech, partnering with the Australian incubator and accelerator Collective Campus in an initiative to find and encourage some of the most promising startups. After some discussion it lit upon three relevant segments – smart buildings, shared space (think of it as Airbnb for offices) and finally fintech. There has been a lot of disruption by financial technology of Australia’s financial institutions and this is starting to spill over into real estate fintech.
The Charter Hall PropTech Accelerator was set up in 2017 in collaboration with Collective Campus. It’s an initiative very much led by Coleman: “We received applications from about 50 startups, went through a process of evaluation and shortlisting that reduced the list to 15. These we brought in to a two-day boot camp in Melbourne and took them through a very intensive two days of thrashing out their business case and their business model, culminating in a pitch night to which we invited peers, customers and potential investors.”
Out of this group, four startups were invited to join a 13-week programme that stated in February 2018. The four companies have been given intensive training around business and product development, marketing and everything a startup needs to survive and grow. The programme culminates with a demo day when their products will be showcased to Charter Hall leaders and managers, and a range of investors that partner with Charter Hall.
Why these technologies are of interest to Charter Hall is a no-brainer for Coleman. “We are all about bringing to life the experiences that we can provide to our customers. For example we have investors spread around the globe, and potential tenant customers that we want to bring into our commercial offices, so why not use advanced visualisation technology to give them that experience wherever they are, showing them the fit-outs they might be able to achieve and the potential of the space? Till now we had to show potential clients, in person, our assets in the form of physical models or at best architects’ 3D plans. They may be based in Perth and we might want to take them through that asset in Sydney: virtually reality enables us to bring that experience to life.”
Embarking on this process, and the collaboration with Collective Campus, has in a real sense augmented Coleman’s team, or at least the resources available to them. “These four startups are really trying to revolutionise different parts of our business. As the programme ends we can see how to continue to partner with them, whether that may be by investing in their business, partnering with them as a strategic customer, or simply continuing to leverage the platforms they have developed.” It’s a kind of symbiosis that may have been explored in Silicon Valley, Cambridge or Sophia Antipolis but it is less common in ANZ. “We are blazing a trail here in Australia,” Coleman proclaims with satisfaction.
IT at Charter Hall has a very different look and feel today compared with 2014. It has given the company a much more visual experience from the board down through the business units. “All this was a bit of a shock to the system but a shock that was needed in order to effect change,” Coleman concludes. “Now I feel that we have morphed into a steady state. People are very accepting, asking for more, looking to get even more engaged. We have a great cohort of business product owners at all levels of the business full.”
More remains to be done in the way of change management and employee experience, but the business is ready now, he feels, to take full advantage of a proptech revolution that is still in its infancy.