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After two years of hard work, Charter Hall is in the final stages of implementing a cutting-edge software solution that is revolutionising the way it digests information and makes strategic decisions.
It has been compared to a ‘crystal ball’ because of its ability to provide the company’s decision-makers with near-instant visual insights into the status, risk profile and projected performance of every asset, portfolio, and fund across the groups $26.4bn platform.
Charter Hall began life in 1991 as a boutique investment management firm, but today it is one of Australia’s leading property groups, with $26.4 billion of funds under management, 779 properties across the office, retail, industrial and social infrastructure sectors.
Geoff Clark, Head of Office Finance at Charter Hall, says the company has expanded from $2-3 billion in funds under management 10 years ago to over $26 billion today.
“It is great to be part of that growth,’’ says Clark, “but we need to ensure the evolution of our systems architecture not only keeps pace with the growth of our business, but embeds further scalability into our operating model.
“There have been some significant challenges along the way, one of which has been maintaining the DNA of the company. Becoming a progressively larger organisation naturally brings with it increased complexity, structure and governance, but we want to ensure we preserve the nimble, entrepreneurial environment that has contributed to our success.’’
To meet these challenges, in 2016 Charter Hall began a partnership with US software company MRI, to jointly-design and implement a new investment modelling and analytics suite. Roll-out of the new software is now almost complete, and the process has been a great opportunity for the firm to re-evaluate its reporting processes and data quality, says Clark, who is Charter Hall’s lead sponsor for the MRI project.
“If you look at the Groups earnings guidance for FY19, which is a single cents per unit number, there are over 30,000 individual income and expense lines that roll up to that one number,’’ says Clark.
“Operators right across our industry are still manually preparing many forecasts off excel tenancy schedules and portfolio models collating these and running spreadsheets on top of that.
“We wanted an automated data flow right from the tenancy schedule through to the corporate forecast, but there were several challenges.’
One of these challenges was standardisation. As the company had grown, so too had the variety of processes, statistics and reports, and by 2016 there wasn't a single ‘Charter Hall way’ of doing things in many cases.
“The way retail operates, prepares forecasts and makes decisions was distinctly different from office and distinctly different again from industrial,’’ says Clark.
“The implementation of MRI has brought many of these issues to light because it's often not until you look to implement a new tool across the entire business that these things boil up to the surface.’’
Because of this lack of consistency, rapid and accurate reporting had become a challenge for Charter Hall.
“We have had an over-reliance on Excel,’’ says Clark. “It is a highly pliable tool, but with dozens of individuals running hundreds of reports and analyses manually across the business, it is a risk that is difficult to manage.
“We wanted to be sure we were getting things right, and that the fundamentals had integrity and were sound. We needed the ability to drill right down from any number to the underlying calculation itself so we could trust it.’’
In partnership with MRI, Charter Hall has now built a new system to replace the spreadsheets, automate property and fund analytics, and deliver this information on an app to any device in a visual and interactive environment. Final delivery will take place later in 2018.
“The ultimate goal driving this technology investment is to become the most self-aware organisation in the industry, so the decisions our leaders make are near-perfectly informed, and prescient”
The efficiency gains are also enormous – tasks that used to take dozens of people weeks can now be completed in minutes.
More importantly, the company can now quickly assess the impact of market events on every level of the business. From new trends in tenant demand to changes in credit or capital markets, MRI will provide the clearest view yet of how the organisation is influenced by external forces.
“This will be the first time our Executive Committee will have live access to all that information across the platform,’’ says Clark.
“Having that data to hand, and knowing the numbers in there are robust and current, gives them a huge advantage in terms of making swift decisions, building out the group strategy, and having a greater depth of insight into what's actually happening throughout the business.’’
The MRI project has delivered an unprecedented level of insight into how the business is performing, as well as the ability to perform scenario analysis at every level of Charter Hall.
“We’ve also significantly improved our risk profile by moving all our key inputs, calculations and outputs and analytics into a centralised and controlled environment,’’ says Clarke.
“The journey has been transformative for our organisation. We now have one source of truth for our data.”