Other sectors were once dependent on Excel.
In writing this series we gave a lot of consideration to the OG of the Excel model - the accountant.
The rise of financial cloud-based tools is well-documented, creating improved efficiencies and disruption in the finance sector. Financial reporting tools and platforms like Sage and Xero have - over the last few years - streamlined financial reporting for both SME and enterprise businesses.
Nick's partner is an accountant and has often talked about the disruption that is being created within an industry that is arguably the original wizards of Excel. Cloud-based software can influence an accountancy firm’s growth - recent research by Xero found that accounting and bookkeeping firms with higher rates of growth are the ones with the highest instance of clients using cloud-based accounting software.
When we talked about this as a team, Jonathan - our CTO - raised the point that there is a powerful psychological side when it comes to change resistance. We want to know: what is it that people value so strongly in doing the work themselves, even though we know the research shows that it's inefficient?
There may be an element of personal pride or sense of having more control, or even the Sunk Cost Fallacy may be at play, given the amount of time and money invested in creating or adapting Excel models. But in our experience, resistance to change has more to do with lack of knowledge around alternatives. Property developers aren't being stubborn or short-sighted - they're smart, hardworking people who seek efficiency! But they're also incredibly busy, and don't always have the time to research or try out new options, so older ways of working sometimes stick around longer than they ought to.
There have been a number of financial reporting tools available for the real estate industry, but they have never been universally embraced. (Although it is worth noting that these platforms have seldom been fully cloud-based, and have therefore rarely stacked up in a cost/benefit analysis.) Why is this? Why is Excel still the norm in the real estate sector, and will this change? There have been great advances made in Proptech over the last few years, but there's still a lack of innovation in financial reporting.
As data in other sectors becomes increasingly cloud-based and subject to analysis, we may find that many of the assumptions that sit behind the actual appraisal are challenged, or even changed. With APIs allowing the integration of platforms and datasets, there is an opportunity to create greater efficiencies, analysis, and even significant change in the near future. Deep and complex data and integrations exist for other financial tools but don't exist in real estate, yet… but the potential is exciting to consider.
Many people to whom we have demonstrated the Aprao platform can instantly see the advantages of using cloud-based software. While we understand that some companies have ingrained processes built around the use of Excel, evolution will come to the market whether we like it or not - and those who fail to evolve could be left behind the curve as more agile players enter the market.
Cloud-based technologies evolve all the time, based on market demands, particularly around communication, efficiency, and analysis. By way of example: WhatsApp is a tool used by a staggering number of people globally as a means of communication, both personally and to do business. Comparing Whatsapp to Excel development appraisals may seem a little far-fetched, but the principle stands: people want faster results, better communication, ease of use and sharing, and global accessibility. For these reasons cloud-based technology will continue to evolve on a fast trajectory, while Excel will not.
It's time for the way of Excel development appraisals to "hang up its boots" and watch as a new wave of innovation is embraced.