Over the last decade the Cloud has revolutionised the way in which organisations around the world carry out their day to day operations. Allowing businesses to move from physical IT assets to having data stored remotely and available anywhere has epitomised the “-as-a-Service” way we operate today. Where once you would expect to receive a fixed line telephone and beige desktop PC on your first day in a job, nowadays you are more likely to receive an iPhone. This transformation has resulted in the rise of Cloud computing, which has essentially wedged the internet between the user and everything that used to tie you to your desk.
The implications of Cloud computing are widespread across almost all industries, but what does this mean for commercial real estate landlords? One way of answering this is to dissect the fundamentals of the Cloud.
The following are three components of Cloud computing that combined make up the inner workings of your computer, in other words - the Cloud tech stack. Later I’ll explain why this tech stack matters for landlords.
The Cloud tech stack
The first area of Cloud computing to be fully realised was storage. File hosting services like Dropbox and Google Drive replace the harddrive on your computer by storing files and documents in the Cloud. The big beige box we once used has shrunk as devices require less physical space to store the huge amount of data we use today. As well as replacing the original storage method, Cloud storage is becoming the only feasible way of storing data, given the rate at which the data we create and need to work is increasing.
Salesforce is one of the best examples of a ‘true’ Cloud based software; it’s never been installed on a user’s computer, rather always delivered via a web browser. Programmes like Salesforce benefit from automatic updates, bug fixes, and installation. However, this doesn’t mean the end for IT teams. With Cloud software the traditional IT team take on a more strategic, rather than reactionary, role.
3. Processing power
The processing required to run your platform can now be Cloud based. Amazon Web Services (AWS) is a big player in this area and the fact that AWS delivers 83% of all of Amazon’s revenue proves that the uptake of Cloud computing is already high. AWS takes up 35% of the Cloud infrastructure market share by selling flexible storage and service space for businesses to develop their own platforms. AWS and platforms alike have quietly become an intrinsic part of our lives for example, the whole of Netflix’s global architecture is hosted on AWS.
Away in the Cloud with WiredScore
WiredScore are using the same Cloud ‘tech stack’, Google’s Cloud powered App platform, that we used as a company of two employees. Undoubtedly nothing will have changed as we approach 100 employees next year. The scalability of this Cloud based model ensures that we are in a position where we have ultimate freedom thanks to tech that moves with the business.
Cloud watching - what does this mean for landlords?
Offices are now built with the tenant front of mind as landlords increasingly try to accommodate tenant’s evolving requirements. Transition to the Cloud has become an essential journey for most businesses to take on as the benefits greatly outweigh the cost of transformation. So, why is the Cloud so important for businesses?
A major driving factor for businesses to use Cloud services is the shift of software and technology from being an upfront capital cost to being an ongoing operating cost. As a business scales it can pay on a per monthly basis for every employee it adds. Gone are the days where organisations have to make judgement calls on their IT requirements based on their predicted growth years in advance. The digital transformation process partly is about how businesses will transfer their in-house systems to the Cloud in order to optimise this capital vs operational (CAPEX vs OPEX) model and de-risk digital spend.
Scalability with space-as-a-service
Lengthy traditional lease structures no longer serve the tenant of today with increasing work environment expectations. Tenants have become more choosy about where they work, and businesses have started to reduce their office space to decrease leasing costs- which are the second biggest item of company expenditure after employee salaries.
The Cloud highlights how fundamental scalability is for modern business operations. Businesses can scale their digital operations thanks to the Cloud, so, why can’t they scale their office space?
Introducing space-as-a-service, a bit like real-estate’s version of the Cloud! Space-as-a-service provides a flexible and adaptable solution for office space. Even large and traditional corporations are now using co-working spaces, showing there is clear demand for this malleable model. In our first year in a co-working space in London I was amazed to see a major brewery company and a major financial advisor moving onto our floor - their teams were excited by the new surroundings, and their bosses excited by the flexibility. By embracing space-as-a-service landlords can provide tenants with flexible leases in flexible working spaces.
However, flexible working isn’t just about scalability, it’s about the company office providing a collaborative and dynamic environment for its tenants. Sedentary desk work is a thing of the past thanks to the Cloud; now we work from break out areas, meeting rooms, and quiet spaces. For landlords it’s important that the space they offer is optimised to meet their tenants’ modern working methods, and businesses are happy to pay a premium if it is.
A final consideration and a pretty obvious one - connectivity. One counter side to the Cloud is that the internet is now entirely between you and your device. This means access to reliable connectivity is of paramount importance when working on the Cloud. Let’s take an office with 300 employees, each reliant on being connected to the Cloud for their everyday work. Suddenly a building’s digital infrastructure design is fundamental not just to the security and resilience of internet provision but for the complete operations function of businesses. Additionally, ever increasing bandwidth requirements as Cloud services evolve, coupled with business growth, means that buildings need to be prepared to support increasing connectivity capacity.
Those landlords who are building with a tenant-led focus will benefit from understanding the importance of the Cloud for modern businesses; de-risking large CAPEX costs, scalable solution, and enables flexible working. Cloud computing became the solution for a world requiring greater flexibility and scalability. Our offices ultimately need to offer the same.