In order for an industry to advance and reach a greater level of organization, efficiency and sophistication, standards of operation need to be established. Whether it was the housing industry that needed to agree on a 2x4 in order to improve the building process, the electrical industry that needed to standardize on a plug in order to make sure all appliances would work or the auto industry that established a VIN number (Vehicle Identification Number), every industry at some point must look at its methods of operation and establish certain rules of interoperability in order to advance the marketplace.

As recently as two weeks ago, some of the smartest people in the Commercial Real Estate industry argued that data standards were not needed. Their position was that their firm was very automated but there was little need to exchange information with any other outside entities. While there are still holdouts on this topic, the number of Commercial Real Estate organizations, software companies and data providers that are getting behind the idea of standards is growing.

Realcomm's history with data standards goes back to 2000 when we organized a meeting of five data standards organizations who agreed to meet for the first time. The Data Consortium, the Appraisal Institute, Mortgage Industry Standards Maintenance Organization (MISMO), International Alliance For Interoperability and Alliance For Advanced Real Estate Transaction Technology (AARTT) participated in the session. By Realcomm 2003 in Chicago, the list of participating organizations had grown to over a dozen different groups that were in some way dealing with data standards in our industry. These new entries into the Commercial Real Estate data standards world included the National Association of REALTORS (NAR), CABA, Open Standards Consortium for Real Estate (OSCRE) and PISCES from the UK to name a few.

There were three consistent themes that came from that data standards meeting in Chicago: 1) few of the groups were aware of each other and were somewhat surprised to find out that there were so many others, 2) with all these different groups, many of which were embarking on the same tasks, there was a need for an umbrella organization to share information among the groups and 3) with all this duplication of efforts and common objectives there might be an opportunity for logical consolidation.

As in any social order, at some point, when all the variables are in place, a leader must emerge. Out of all these different groups, one should take the lead role and attempt to organize the data standards of our industry. As it turns out, OSCRE with the help of NAR is taking the lead and working with PISCES in the UK to take our standards initiatives to another level. It really seems, for the first time in the history of our industry that we are getting close to a standards body that can really make this happen.

Some may still ask why this is so important and actually the answer, or should we say answers, are quite easy: 1) the amount of human and financial capital required to "cut" & "paste" information from disparate automation systems is extraordinary, 2) we will never get to a level of sophisticated integration in our transactions without established data standards, 3) without standards we will not achieve the operating efficiencies associated with other service sectors such as Financial Services, Insurance or Retail and 4) Next Generation Data Warehousing Applications, which will produce much more accurate and comprehensive forecasting and analysis tools, will require standardized data which is being electronically collected from numerous sources in real-time.

Everyone who is spending any time or money creating an information management system for our industry has a vested interest in this concept. Every private firm, software company, professional association or data provider will need to join in this effort. It would not make sense to develop an application costing millions of dollars if the system was not able to comply with the standards and communicate in a seamless fashion with other systems. It is incumbent on every organization to put aside their self-interest for a brief moment and participate in this effort. A unified industry is what is required in order to make data standards a reality. Can you imagine if the building industry did not agree on the 2x4, try building a house when one week you get a 2x3, the next week they deliver a 2x4 and the week after that a 2x5.

This week, a group of our data standard representatives, led by OSCRE are meeting in London to formulate a strategy for our industry. It is very exciting to see such rapid advances and we believe that we will be seeing a unified organization dealing with data standards in our industry in the very near future. Hopefully, we will be able to report on the results of this meeting in next week’s Advisory.