When United Dominion Realty Trust started automating the purchasing and invoicing for maintenance supplies in 2003, the Richmond, Va.-based REIT projected that it would save about $152,000 in the first year, after paying to deploy the technology. Even though it conducted a detailed ROI analysis beforehand, the firm was off target with that estimate–in a good way. In actuality, it saved more than three times that much.
"In the first 12 months, we saved just under a half-million dollars," says David Houghton, vice president and director of purchasing and corporate services at UDRT, which has now automated purchasing for approximately 270 properties. The push has boosted its annual savings to $4 million, or 4 percent of its total maintenance and supply spend. "The change has been dramatic," Houghton says.
While still an emerging trend among multifamily owners and operators, companies that have automated both the buying and billing process at their properties are seeing real dollar savings across the board. They're getting a clear, quantifiable view of what they're buying–and from whom–for the first time. Using applications from OpsTechnology, RealPage, Realeum, and others, they're also automating and centralizing the billing and payables process, cutting down on time spent manually entering invoices into their systems while ensuring prompt-payment discounts from suppliers and eliminating the need to cut checks on site. At the same time, they're ensuring that on-site managers buy only from those vendors with whom they've negotiated national contracts.
"Our goal has been to create an accurate purchase order, with the contract price that existed between a specific management company and a specific supplier, and provide that in an application that's as easy to use as Amazon.com," says Sukhi Singh, co-founder and COO of San Francisco-based OpsTechnology, the leader for automated purchasing technology in the multifamily industry. "Then, we allow them to create an electronic purchase order and electronically submit it directly to the supplier."
Launched in 1999, OpsTechnology now counts more than 150 suppliers in its OpsBuyer network, an electronic marketplace that includes heavyweights such as The Home Depot, Whirlpool, and Sherwin-Williams, and has implemented its system at seven of the MFE Top 50 firms. It added Chicago-based Equity Residential–one of the nation's largest multifamily players with more than 200,000 units under management–to its customer list in April, and United Dominion's $4 million in annual savings came from using its technology. "The entire process literally had to be developed from scratch," Singh says of the changes within the multifamily industry.
After seven years of development, the firm's online catalogue is so deep that software vendor Realeum, which had been offering its own purchasing and invoicing solution to new clients, will now act as a reseller of OpsTechnology's application instead. "We were never planning on building a catalogue piece into our solution," says Socrates Verses, CEO of Rockville, Md.-based Realeum, whose flagship Foundation property management software is used for 200,000 units nationally. "What OpsTechnology brought to us was an enhancement to our own software that was truly high value to a lot of our clients. My personal opinion is that nobody else even comes close."