The Leader - September 2007 - (Page 128) re sea r ch f INdINGs by richard kadzis centralization reflects drive to Globalize, outsource and Integrate, arc survey shows Globalization and outsourcing are driving the centralization of corporate operating models and, in turn, the ways that multinational companies are organized. For corporate real estate (CRE), departmental structures to a large degree mirror these overarching enterprise-level shifts. Centralization within real estate, facilities and workplace is most readily seen through the leadership role that CRE plays in the globally integrated portfolio model. The wide outsourcing of surrounding supply chain practices and principles is its key characteristic. So too is the allocation of today’s CRE department budget, half of which is spent on outsourcing on average. With this in mind, this CoreNet Global Applied Research Center (ARC) Research Bulletin on CRE Trends in Organizational Structure picks up where the August 2006 study on Sourcing Trends concludes: Corporate real estate executives working inside the enterprise today are now focused mainly on higher-level functions including the management of outsourced services, and, by extension, tend to be more centralized in their roles. FI G. 1 hoW Is the level of ceNtralIzatIoN ch a NGING? 35% 30% 25% 20% 15% 10% 5% 0% much more decentralized compared to 3 years ago no change change over the next 5 years much more centralized three-fourths of respondents said that outsourcing has impacted their cre organization structures. How the positioning of CRE professionals impacts or is impacted by the increasingly centralized structure of internal CRE departments is one of the primary questions addressed within the ARC Expert Survey on Organization Trends conducted in April 2007. This is another indicator that centralization, outsourcing, integration and the changing nature of what CRE does internally are interlocked so that the degree of centralization is also accelerating (see Figure 1). Centralization thus continues to be a trend impacting current and future organizations, making it a long-term industry driver regardless of whether it’s more apt to be used as a cost control in the context of efficiency or one day to promote flexibility, innovation and strategic effectiveness. n There are wide variations in sizes of CRE department staffs n Outsourced organizations still need senior managers inside n Increased centralization is more for cost reduction and less for driving mission n Conflict arises between centralization and the need for flexibility and speed th e le ade r 128 september / october 2007
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