Creating and Capturing Value with Data-Enabled Services in Real Estate Development Business
Niinisaari, Joona (2020)
2020
Tuotantotalouden DI-ohjelma - Master's Programme in Industrial Engineering and Management
Tekniikan ja luonnontieteiden tiedekunta - Faculty of Engineering and Natural Sciences
This publication is copyrighted. You may download, display and print it for Your own personal use. Commercial use is prohibited.
Hyväksymispäivämäärä
2020-11-30
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tuni-202011188071
https://urn.fi/URN:NBN:fi:tuni-202011188071
Tiivistelmä
Digitalization has facilitated servitization in many industries, but real estate development and construction companies have been slow to adopt new servitized business models. Building data is often siloed to different systems that are operated by different stakeholders, and the potential of combining data from different sources is unknown. Real estate developers’ role as a systems integrator has been recognized in literature only recently, and the potential of different data-enabled services has hardly been studied from developer's perspective. Also, investors', tenants', and end-users' needs regarding data-enabled services in office properties have been studied too little to understand real estate developers' value creation and value capturing potential.
The focal company has a key position in real estate value system by undertaking both development and construction activities. To leverage this position and enable value capturing and value creation in the operation phase of a property, the focal company must develop new service offerings and appropriate business models. The main challenge is knowing what kinds of services and functionalities would respond to customer needs and if customers would be willing to pay for them. The objectives of this study were twofold: 1) increasing understanding of customer needs regarding data-enabled services to enable value creation, and 2) exploring challenges and opportunities in data-enabled services and business model development to facilitate value capturing. The objectives were addressed by following design science research methodology, utilizing semi-structured interviews. The interviews were conducted inside the focal company’s real estate development unit and outside the focal company, focusing on real estate investors and office tenants.
Customer needs were addressed by building value creation structures to tenants and end-users as well as investors, which included their goals, challenges, and decision-making factors regarding office properties. Tenants and end-users perceived productivity, wellbeing, and ease of daily life as the most important goals that could be supported by data-enabled services, whereas investors emphasized maximizing return for given risk level. Sustainability also played an increasing role in the goals of both customer groups. A key challenge for both customer groups was the uncertainty caused by the COVID-19 pandemic. Other key challenges perceived by investors were repair deficit and difficulties in obtaining accurate data on property condition. Tenants’ decision-making regarding office premises was mainly built around location-price-quality triad, while investors perceived location as the main factor followed by length and quality of leases but also adaptability and flexibility in property design.
Service offering propositions for tenants and end users as well as for investors were built based on their value creation structures. Instead of separate service charges, most tenant and end-user services should be included in rent to realize the benefits of accumulating customer data, while ensuring ecosystem benefits for tenants through a common digital service platform. Investor services should be tailored based on individual investors’ risk profiles, and new opportunities in value-based pricing methods should be explored, since they can be used to divide risks and consequently increase investors’ willingness to buy novel and untested services. To facilitate co-creation of value, trust building, and development of more focused offerings, the focal company should aim for continuous dialogue with both customer groups.
The focal company has a key position in real estate value system by undertaking both development and construction activities. To leverage this position and enable value capturing and value creation in the operation phase of a property, the focal company must develop new service offerings and appropriate business models. The main challenge is knowing what kinds of services and functionalities would respond to customer needs and if customers would be willing to pay for them. The objectives of this study were twofold: 1) increasing understanding of customer needs regarding data-enabled services to enable value creation, and 2) exploring challenges and opportunities in data-enabled services and business model development to facilitate value capturing. The objectives were addressed by following design science research methodology, utilizing semi-structured interviews. The interviews were conducted inside the focal company’s real estate development unit and outside the focal company, focusing on real estate investors and office tenants.
Customer needs were addressed by building value creation structures to tenants and end-users as well as investors, which included their goals, challenges, and decision-making factors regarding office properties. Tenants and end-users perceived productivity, wellbeing, and ease of daily life as the most important goals that could be supported by data-enabled services, whereas investors emphasized maximizing return for given risk level. Sustainability also played an increasing role in the goals of both customer groups. A key challenge for both customer groups was the uncertainty caused by the COVID-19 pandemic. Other key challenges perceived by investors were repair deficit and difficulties in obtaining accurate data on property condition. Tenants’ decision-making regarding office premises was mainly built around location-price-quality triad, while investors perceived location as the main factor followed by length and quality of leases but also adaptability and flexibility in property design.
Service offering propositions for tenants and end users as well as for investors were built based on their value creation structures. Instead of separate service charges, most tenant and end-user services should be included in rent to realize the benefits of accumulating customer data, while ensuring ecosystem benefits for tenants through a common digital service platform. Investor services should be tailored based on individual investors’ risk profiles, and new opportunities in value-based pricing methods should be explored, since they can be used to divide risks and consequently increase investors’ willingness to buy novel and untested services. To facilitate co-creation of value, trust building, and development of more focused offerings, the focal company should aim for continuous dialogue with both customer groups.