Integrating Realty Business Processes
Being a hard core real estate guy who had nothing to do with technology to being the Founder of an ERP Solution company ‘BuildSupply’, which is one of the early entrant in the real estate ERP solution segment, Sameer Nayar is trying hard to help the realty developers in creating the economies of scale and scope.
Most of my time was spent on Wall Street and I was last associated with Credit Suisse as Asia Pacific head. I knew lot of real estate players in India because of my background, but we weren’t investing big in Indian market because we believed that Indian developers don’t have a capacity to give shape to large executions. We were rather investing in China and Japan, but India was a small market for us and I am talking about 2007-08 when the markets were really hot, still the execution capabilities in India weren’t up to the mark. Now at that time in China, they were building projects 3-40 million sq.ft at a time, they had the infrastructure and capabilities and here in India developers were very ambiguous with their predictions, while they use to talk about doing 5 million sq.ft in gestation of 5 years, their past history told us something that was totally different, as in they built only half a million sq.ft in last 5 years, so know the question was that how you will take your business to that level, where it’s growing by 10x, to that no one had an answer.
Germination of BuildSupply:
By this time I left my job at the bank and tried to realise and analyse that what are the pertinent pain points for real estate segment in India, to which I realised that there are two pain points for realty sector over here, one is the approvals and clearances part, to which no one can do much and second was the construction side and no one really cared about the construction part, because majority of profit for the developer was coming from the land, so they were only acquiring land without concentrating much on construction part. But now, with land pricing going down the only way a developer can make money is by constructing. So, now developers woke up to the aspect of building well and building on time at a right cost and from here the genesis of BuilldSupply also happened.
So, while I was trying to understand the real estate market of India, I tried to find out the ERP solutions for builder/developers that only cater to the real estate requirements and I was astonished to find out that there was no ERP software solution catering to the real estate market, so to bridge this divide we came up with BuildSupply.
I took the task on myself to build an ERP solution that managed all the processes of real estate. We started two years ago and launched our product just 6 months back and for one and half years we only studied the market and did our R&D. In that period we met 100 companies and asked them about their processes and where they are lagging behind what kind of solutions they required. We met some very progressive companies in our journey like Godrej, Puravankara, Vatika et cetera, we tried to understand their pain points and built a solution to mitigate their problems and right now we are working with some of the pertinent real estate developers in India. We have close to 35-40 million sq.ft of development, which will be developed with the support of our ERP systems.
We are right now concentrating on markets of Delhi, Mumbai and Bengaluru. We will reach out to other important markets as well, but right now we are only concentrating on these three markets. We are happy with the response we have got from our clients, for example, Godrej, which is our biggest client is using our software across their offices in India and across their departments be it planning and execution, procurement, contracts, audit the software can be used across the different operations of real estate.
USP of BuildSupply:
The biggest problem in using ERP solutions for real estate operations lies in the lack of standardization, everytime a new project is started architect makes it own BOQ and specifications. So we made a database of line items, which is now of 13 million line items and is helpful to be used across asset classes. We spent 9 months on this with 20 cost engineers only doing this work. Our solution can be used across different departments, so traditionally different departments in realty business are not in a habit to interact with each other and lot of discrepancy happens because of it now with our software solution, they all are on same page and the work process has become more transparent and standardise.
ROI to developers:
As an owner I care about two things, one my development is happening on time and two I am saving on cost and with RERA coming in picture it mandates the developer to use the money from the project on that very project itself, so the need to complete the project on time and efficiently has increased many fold now. Our software is a great tool for RERA because with the help of it you can show your customer till last rupee that where you have spent it, the specifications can be put on website as well.
I am very optimistic about the market because if you want to increase your efficiencies to achieve the economies of scale then you need to be at the top of things, you can’t afford to lose out on money or have loopholes in your backward and forward integration. Your construction work can’t halt, so yes, all the progressive developers are getting on board with us because our software ‘BuildSupply’ helps them to be in sync with everything, with all their departments, which leads to higher operational efficiencies and creation of scale, like affordable housing can only be profitable for a builder if they are doing a 30-40 lakh sq.ft, that you can’t manage on excel, so there we can be of help in creating their scale, in managing their line items and thus helping them in saving on cost and time.