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For many organizations, the move

• How do we input all of our lease data into one central- to reclassify the majority of operating
ized electronic system to simplify lease management leases means it will be the first
and accounting compliance?
• What type of technology system should we be assess- time lease liabilities have shown up
ing for our portfolio? on their financials.

The road to compliance will inherently be paved with
numerous challenges. But, if companies have not yet
started to assess the answers to these questions, they analytics capabilities. Others might be looking solely for a
are setting themselves up to endure an even rockier road lease accounting solution.
ahead.
A company’s decision around the overall sophistication of
SUSTAINING A SMOOTH RIDE: MITIGATING THE their lease system technology will be driven by the size,
ROADBLOCKS TO COMPLIANCE complexity, and needs of their lease portfolio. Those with
less than 1,000 leases in their portfolio have more tech-
Roadblock #1: It’s all about the data nology system options because they generally have less
Perhaps the biggest challenge that companies face as overall information, making it easier for them to input and
they prepare for the new standards is developing an manage the data. These organizations might opt for just
inventory of their lease data. Often times, companies do a lease accounting solution and decide they do not need
not know exactly how many leases they have, where the the end-to-end lease administration system. Those with
data is located, or if the leases are properly documented; more than 2,000 leases, however, might be more likely
and if so, to what extent. Some might have a formal to invest in a technology that can aggregate all of their
repository filled with this data, while others may have disparate data and serve as a centralized lease adminis-
paper leases piled in desk drawers or information strewn tration and accounting system.
across spreadsheets. Others may have a combination
of both. Roadblock #3: Putting it all together
Once organizations have a complete inventory of their data
Under the new regulations, the amount of data compa- and have congregated it all into one electronic system, the
nies are required to maintain will increase considerably – next step is to define the necessary change and data man-
in some cases, it might be as much as double what they agement processes that will help them achieve compliance
currently report on. As a result, companies are obliged by the new standards’ implementation date. For most
to go back to their existing contracts and assess the gap public companies, this date is January 1, 2019. For most
in what they currently gather versus what they need to non-public companies, that date is January 1, 2020.
gather in order to uphold compliance moving forward.
Businesses need a robust data management strategy
Roadblock #2: Defining a lease technology strategy to ensure that they can regularly report on the required
As difficult as it is for companies to develop an inventory data, and maintain a compliant reporting structure in the
for their lease data, this is just one piece of the puzzle. future. This may require some companies to account
Once all of the lease data is inventoried, companies still for a potential lack of internal controls and implement
face substantial challenges when it comes to defining organizational changes accordingly. Leadership support
a future-facing plan of action. It can’t be done on paper throughout this process is critical to streamlining and
anymore; companies will need to identify a technology ensuring success.
system into which they can import, store, process, and
access all of this information. While some may already Jean Chick is a Deloitte Partner in Real Estate and
have an existing system that holds some lease data, it is Location Strategy with over 21 years of experience.
likely not capturing all of the components required in the She is a leader in real estate technology enable-
new standards. The existing data may be inconsistent, ment, portfolio optimization, advanced workplace
scattered, or partial. strategy and operating model design. She has led a
global corporate real estate function including all strategy, design,
Companies first need to decide what type of lease solu- transaction management, facilities and program management.
tion they are looking for. Some might be optimally served Jean navigates complex financial and operational issues while
by investing in an end-to-end user interface that serves as balancing change management to maximize return on real estate
a comprehensive lease administration solution with data investments.

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