In 1982, Anant Yardi, a director of systems development for the Burroughs Corp. (later to become Unisys) saw a glaring need for an integrated accounting and property management software for the residential real estate market. Within two years, “Basic Property Management” was written for the Apple II computer, Sabaco Realtors signed on as the first client, and Yardi Systems was born.
The Santa Barbara, Calif.-based company now claims approximately 20,000 clients representing some 7 million residential units and 8 billion square feet of commercial space, and continues to add integrated features—including e-procurement, check scanning, utility billing, and electronic funds transfer, among others—to its original core accounting and lease management systems. Yardi Voyager, the company’s flagship product for multifamily, is now in version 6.0, and as Yardi users gathered in Santa Barbara last week for the company’s 10th Yardi Advanced Solutions Conference, Anant Yardi sat down with Multifamily Executive for a rare interview in which he discusses social media, competitive advantage, and the very evolution of multifamily technology itself.
MFE: You’re not known for granting many interviews. Why the low profile for a company as large and intrinsic to multifamily technology as Yardi Systems?
Yardi: Yes, most people I don’t think realize that there even is a Mr. Yardi. It’s not particularly that I am trying to hide that fact, but this is a huge company with many talented people. Is it really important to know that there is a Mr. Yardi? Really the key question is: Are we providing the right product and providing the right service to our clients? As long as we get that done it is much better for the people who are doing the work to get the credit.
MFE: Speaking of getting things done, Yardi just recently completed the acquisition of Energy Billing Systems. Can you tell us about the company’s growth philosophy?
Yardi: I don’t know that we have well-defined formula for acquisitions. From time to time, things come our way, and there is always an ongoing discussion about whether we should build functionality in-house or should we purchase it? We find that wherever we can make an acquisition in a new area of interest to us, it bootstraps the process. Just by virtue of the acquisition, we get much closer to that marketplace and get access to that market’s knowledgebase. We then unleash our programmers on re-writing the systems for integration into the Yardi platform. We just acquired Energy Billing Solutions, and already over the past six weeks we have had a dozen people converging on Colorado Springs, Colo., to advance that process rather rapidly.
MFE: How much has your original vision for Yardi Systems evolved since the '80s? How much has the market itself changed?
Yardi: I had no idea that the size of this market was as large as it has turned out to be. In the early nineties when we released our Windows program, the use of relational databases was not commonplace. Our exposure to the market furthermore indicated that there were a large number of companies looking for functionality in an open architecture environment. That is when we released our Enterprise program and shortly thereafter our Voyager system. Even into the early 2000s those products were still focused on accounting and lease management. Today there is a much broader perspective of applications. At the center of all property management businesses there is the requirement for accounting and financial management and lease administration, but then there is this huge suite of products and capabilities that the marketplace seems to be looking for in terms of portals to improve resident experience, in terms of online payment or electronic funds transfer, utility billing, and invoice processing.
MFE: What’s driving the need and expectation for new systems capabilities in multifamily technology? Is it the renter, on-site manager, executive management teams, or the systems providers?
Yardi: It seems to me it is a combination of all of these things. The starting point in many cases is the customer. For our property management clients, that means the multifamily resident. We are finding that residents are far more comfortable and quite savvy in terms of usage of new technology. The notion of Facebook, the notion of Twitter, just looking at news on the Internet—these are all things that come naturally to them. The second thing we find is that our clients are looking to improve their productivity; they are looking to become more efficient; they are feeling some degree of stress and pressure because of the economy; and they are looking for alternatives in terms of streamlining their operations. The third is that technology itself is changing and continues to grow. I would say that there is movement on all fronts.
MFE: What seems to be challenging your clients right now?
Yardi: Younger residents are becoming far more demanding in terms of an online experience. That is clearly one thing property managers are attempting to properly cater to and handle. There also appears to still be high turnover on the properties at the site level. To be able to keep site managers trained given that turn over is a challenge for them. Finally, the economy is challenging everyone to keep finding ways for pairing down cost. The awareness and the level of desire to change and adapt to meet those challenges seem to be higher than they have been in years past.
MFE: How do you gauge the general level of technology adoption and usage in multifamily?
Yardi: Sometimes people continue to ask if the real estate market is lagging behind when it comes to technology. My reaction to that is that it depends on what the comparison point is. If we compare the real estate marketplace with online reservations for airlines or stock trading, we might conclude that adoption is somewhat slow, but I don’t know that it is appropriate to make that comparison. Compared to other industries, the adoption rate is at least as good as in any other relatively stable marketplace.
MFE: What if you compare the market to itself? Looking back five years ago, there seems to be an almost exponential increase in adoption amongst multifamily users today. Do those users seem to be getting and getting better at it?
Yardi: Of course. Fifteen years ago even the notion of a centralized database may have been foreign. Most companies were accepting of the fact that each property maintained its own database and there was a degree of dependence on local staff. Then there was the transition to relational databases and the advantages of consolidated views of a portfolio. Once that was well under control—which I think it is now—the attention switched to ancillary services. Whether it is portals or electronics funds transfer or invoice processing or e-procurement or convergent billing, there seem to be any number of things that multifamily users seem willing to take on. My sense of this audience [at YASC] is that the number of people who are now focused on and interested in getting the most out of their system is extremely high. They are all eager and looking for ways to improve their productivity, efficiencies, keep their units occupied and improve their resident experience.
MFE: How critical is it for Yardi users to consider social media in how they approach the market?
Yardi: Social media certainly seems to be a way that people are electing to communicate with groups of close friends, and there’s not much question that it is an effective mode of that type of communication. But the application of social media to business segments, particularly real estate, I think is still to be determined. There is a great deal of interest in it—certainly in our portal product we provide linking to Facebook and Twitter—but is there a paradigm change here? That’s difficult to say. Sometimes these changes don’t really crystallize except in retrospect. The marketplace has the challenge of anticipating which way things might go, we have the challenge of keeping in tune with the marketplace, and there are certainly false alarms that come along in that process. Still, Facebook and Twitter are clearly here to stay. Is their primary use the communication between tightly knit groups of peers or is there something more than that? That is to be determined.
MFE: Finally, what competitive advantage does Yardi seek to give to its end user client?
Yardi: We like to make sure that anything we do is properly integrated into a baseline system. With the acquisitions that we have done, we have taken the time to rewrite all of the programs so they are properly integrated into the Voyager program. One of our strengths I would say is that there is one single database that houses all functions. There is consequently better visibility into everything that is happening in the entire company.