In transition: SAP-based corporate real estate management

This article first appeared in EY Real Estate Trends issue no. 91 – December 2023.

SAP is focusing on its core business. The partnership announced with Planon is a cornerstone of this strategic realignment. The following article sets out the possible impact on real estate companies.

Focus on core business – software giant SAP is taking the same step as many other companies, preferring to let partners deal with anything that is not a core product. The partnership with software provider Planon, announced in the spring of 2023, makes clear that corporate real estate management will also be affected.

Looking back: corporate real estate management with SAP

Around 1990, SAP launched its corporate real estate management range with ‘SAP Classic RE’, focusing back then on the housing sector. From 2004 onwards, the corporate and commercial sectors were covered as well, with ‘SAP RE-FX ECC’. Companies have been able to use ‘SAP RE-FX S/4HANA’ since 2015. ‘SAP Cloud for Real Estate’ was launched in 2016, followed in 2021 by ‘SAP Intelligent Real Estate’.

A number of updates are now available thanks to the partnership with Planon. Based on current plans, tasks will be distributed between SAP and Planon as follows: SAP S/4HANA^® will accommodate Finance Processes (Real Estate Accounting Objects), Contract Management (E2E Real Estate Contract Management Processes) and Lease Accounting (IFRS 16, US GAAP 842 & Local GAAP Compliance); Planon is set to cover Real Estate Management (Portfolio Management), Space & Workplace, Services Management (Space, CAD/BIM, Workplace Management), Asset & Maintenance Management (Reactive & Planned Maintenance) and Energy & Sustainability Management (Energy Data Capture, Audits, etc.).

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Effort versus added value

‘Asset & Maintenance Management’, in particular, is currently often handled by many real estate companies entirely in SAP or in third-party solutions. These companies may wonder how this will work both technically and organisationally. After all, switching to Planon could require a comprehensive implementation project. But any real estate company that uses SAP^® and does not wish to switch to the Planon solution immediately should also bear in mind that innovations in the future can be expected to come largely, and possibly even exclusively, from Planon and not from corporate real estate management covered by SAP. Real estate companies should take this anticipated innovation gap into account when deciding whether to use SAP and/or Planon. This will be even more significant when maintenance ends for S/4HANA.

Continuing uncertainty

There are as yet no clear answers. This is partly why we have noticed users and consultants adopting a wait-and-see approach with respect to the partnership. It makes sense to just observe how well the technical implementation between Planon and S/4HANA turns out. We have no idea right now how rapid the technical implementation will be or when real estate companies will in fact be able to start testing how the integration between their SAP environment and the new Planon environment will look for them. If, over the months ahead, the software providers succeed in guiding their customers, and users also accept that the path to Planon will involve some work along the lines of potential implementation projects and training, then this collaboration may become a win-win-win situation: for the two providers and also for real estate companies as users.

Conclusion

Despite all the uncertainties, the partnership between the two companies does offer great opportunities for real estate companies. Planon and SAP are leaders in their core competencies, so bundling the strengths of the two providers may offer considerable added value for real estate companies.

If you would like to know more, please read this EY article on the strengths and potential of the IWMS offered by SAP partner Planon.

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