Treasury & Risk's 7th Annual Alexander Hamilton Best Practices Summit — October 1 and 2, 2002
2002 — Real Estate Winner: Gold—Whirlpool; Silver—Microsoft
A ONE-STOP REAL ESTATE SHOP
Whirlpool takes home the gold
GOLD REAL ESTATE WINNER—Whirlpool Corp.’s Web-based real estate extranet provides one-stop shopping for everyone concerned with the company’s real estate transactions and facilities management.
Ultimately, the extranet cut 35% off the company’s facilities management costs by allowing it to outsource such tasks at its headquarters and nearby locations. “On one page, we’ve combined the information that the real estate people need to manage transactions with the self-service component for facilities management,” says Carl Nedderman, Whirlpool’s director of corporate real estate.
Headquarters employees can use the extranet to submit requests for repairs or to book a conference room. And because Whirlpool’s extranet is Web-based, that self-service capacity can easily be provided to other Whirlpool locations, Nedderman says.
The real estate group also outsources its transaction activities and project management for all 330 locations in 48 countries worldwide. “To do this [much outsourcing] on a global basis without the service providers and the real estate group and our end users having access [to information] on a real-time basis made it very difficult to manage effectively,” he says.
The platform collects data on how much it costs Whirlpool locations to operate their facilities and benchmarks those costs against other Whirlpool locations and other companies. Nedderman expects this careful comparison of costs to create “better operating efficiencies” down the road by encouraging locations with high costs to become more efficient.
His department operates with only six employees and was facing increased activity, much of it overseas. “We weren’t being allowed to increase our head count, so we had to find a way to more effectively manage those resources,” Nedderman says. “So we gravitated toward this system.”
Nedderman is especially proud of his budget for the extranet project, which came to a grand total of $50,000. Combining Whirlpool’s facilities management business and transaction business and placing it all with one provider made Whirlpool a strategic account for the provider, Jones Lang LaSalle, which pitched in to design the extranet, he says. “Basically, they are developing this system for us at no cost to us,” Nedderman says. “That’s a biggie—a lot of companies spend millions of dollars to have what we have.”
He also sees the extranet as “a marketing tool for the treasury department,” and notes that other parts of the business, such as legal, security and procurement, are trying to get on board. “Once they find the information resource that’s here, they’re tagging onto it and asking us to collect cost information for them and tie it to this data base,” Nedderman says.
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SILVER REAL ESTATE WINNER—Over the last five years, Microsoft’s real estate group developed portfolio management strategies that helped it to provide enough space to keep up with the 11% annual growth in the company’s headcount. More recently, the group has had to fine-tune its methods as Microsoft’s growth rate slowed. The new focus: how to avoid burdening the company with unnecessary space.
“When we were in a phase of incredible growth, there wasn’t much time to work on tools, we just needed space,” says Mary Dixon, the company’s senior manager of real estate and facilities. “But with the change in the economy and Microsoft’s growth being impacted, we had to refine the tools to be more strategic.”
For example, the company’s supply/demand tool now applies three different growth rates to Microsoft’s real estate portfolio, and develops plans not only for the expected growth rate but also for other scenarios.
The real estate group’s work seems to be panning out. Microsoft’s square foot per head fell to 262 in FY 02 from 269 in FY 01, which represents $7.1 million in costs avoided. It expects a fall to 254 square feet per head in FY 03 for another $9.3 million of costs avoided.
—As seen in the October 2002 issue of Treasury & Risk magazine