Multifamily executives say that in three to five years, cloud computing will be a huge priority in the industry. Others are looking for any and every way to turn social networking and smart phone applications into a revenue source. When it comes to technology, the options run the gamut.
Multifamily Executive chatted with top IT executives Ken Hodges, vice president of information technology for Irvine, Calif.-based Western National Group; Scott McCurdy, vice president of information technology for Seattle-based Pinnacle, an American Management Services Co.; Dhrubo Sircar, chief information officer at Greensboro, N.C.-based Bell Partners; and Steve Small, chief information officer for Chicago-based AMLI Residential about how they plan to navigate the growing tech cloud while prioritizing operational needs and investments over the next few years.
Tell us: What exactly is cloud computing, and how is it impacting multifamily real estate operations?
Sircar: Cloud computing is going to be on a lot of people’s minds in the coming years, and there is already a lot of noise around it. When we talk about cloud computing, we’re not talking about going to a single vendor necessarily, we are talking about where the IT service and/or solution is really not within our own domain or infrastructure. A lot of us [already] use vendors—whether for property management or something else—that put us significantly into the cloud space. I would say 90 percent of property management companies are already buying hosted services from Yardi, MRI, RealPage, etc. Or look at Internet lead management—we get that from ILSs, so we don’t typically maintain the infrastructure for that, either. I think it is important to understand that we are ‘already there’ in some of the multifamily mission-critical systems.
Hodges: I agree. There is a lot of buzz around cloud computing, and what cloud computing actually is depends on what types of solutions you are talking about—there is software as a service (SaaS); there is platform as a service; and infrastructure as a service. Some of it is public, while some of it is private. But regardless of what type of application you are talking about, my take is that cloud computing per se is not going to save your job as an IT executive, nor is it going to save your multifamily business. It is [simply] another tool in your tool box that you can use to cut costs.
McCurdy: Cloud computing is a real big-ticket item for Pinnacle this year. I’m working very hard on pursuing something that will provide cloud-based computing for our entire data center, including Yardi, which we have self-hosted for as long as we have had the product. I think cloud computing goes hand-in-hand with the potential for outsourcing. That’s really where your returns are going to come from: If you can outsource some of your staff, whether it is network administration or your help desk or your application support and training teams, there are big possibilities there for savings.
Will cloud computing change the way IT departments are staffed and operated?
Hodges: Cloud computing speaks more to the overall change in the way IT is perceived. Cloud computing can mitigate the need to worry about having a networking administrator, or a junior networking administrator, or a database administrator—all of those functions are really becoming more commodities that can be outsourced as compared to having in-house talent. The question is: Is IT a revenue-generating department or is it just keeping the lights on? The talk right now is that IT needs to be strategically aligned with business. Well, if you are not aligned with your business at this point, then you missed the boat.
McCurdy: Historically, a lot of the labor in IT was spent maintaining the systems and keeping them up and running and monitoring security and keeping e-mail going. And Ken is absolutely right, those are becoming commodities that you can purchase and the bulk of the time spent in IT can shift from maintaining to strategic.
Small: As the economy has become more difficult, cloud computing also presents an option to put the IT infrastructure under a periodic expense payment rather than outlaying it to capital costs. The reality is that no one cares anymore where the computers are hosted and who is running them until they are not working properly.
What effects do mobile and smart phone applications have on your organization?
Sircar: Mobile computing is a top area of focus at Bell. We are using a mobile alert-based model for handheld approval of purchase orders via [RealPage’s] OpsTechnology. From a business intelligence perspective, we also use [that technology]: Should someone’s occupancy drop below a certain threshold, we want to be able to send an alert out to key people. I am also exploring the iPad to see if a third party can write a rudimentary leasing application for us that can start the process to capture a lot of demographic information in the initial sales process.
McCurdy: Over time, we have tried to do several projects with handheld devices, starting with make-ready and work orders. Whether it was the timing or the application of the technology, it just didn’t seem to be there yet. The maintenance staff might use it, but it might take three times as long for them at the end using a handheld device versus just completing normal paperwork. It ended up failing. So we have sat back and are waiting for the right combination of applications and hardware to make it more convenient and easier to use.
Hodges: We are definitely doing a lot more with mobile applications and smart phones, particularly on the operational side. We have a scaled down mobile interface for our intranet that our area managers can use to improve workflow, approve purchase orders for payment, even pull up an operating statement. The screen is limited as to what you can see, so the amount of information that you can pull is likewise limited. But with 3G technology, and now with 4G technology, the bandwidth is there to do a lot more. We are moving in that direction. I think we’ll be able to make some strides as the technology gets better.
What about social networking as it relates to apartment marketing?
Small: There will be big opportunities to grow revenue per unit as the economy recovers, but you cannot be lazy about it: How well you perform will be determined by how well you are managing your Internet marketing and leads. Whether you are using Facebook or Twitter, I don’t see social networking as a very effective marketing tool in terms of going out and finding customers, but it is a forum you certainly need to be aware of. Regardless, how IT supports marketing is certainly a big topic of interest for our organization, and the revenue side is often of more interest than the expense side—there have been techniques and technologies for reducing expenses for some time, whereas the Internet now is really becoming the battleground in terms of marketing and customer acquisition.
McCurdy: You can’t ignore social networking—it is something you have to do. But maintaining it, monitoring it, and updating it takes either one or two full-time workers to make that happen, depending upon the size of your portfolio. So we think it is going to be a great opportunity for a third party to manage for you, which is how we are pursuing it.
Sircar: The people who stay in our properties are really looking for a sense of community, and social networking is really one of the pillars of creating a community, along with a pool and movie nights and all of that stuff. Social networking has an indirect relationship to revenue because it makes people feel more connected. But as a marketing channel, it is more like Craigslist when it comes to qualified leads. I don’t think many of us can say how many Facebook leads have turned into leases. Social networking will mature over the next three or four years, but I haven’t seen that data yet, either at Bell or [at my previous position] with UDR. It is just too early.