April 30, 2021 |
Updated May 4, 2021
Implementing the right technology to maximize ROI.
Historically, multifamily housing has taken a measured approach to adopting new technology. However, the demand for safe and remote means of conducting business, brought about by the COVID-19 pandemic, pushed the apartment industry into a tech revolution. Real estate innovations were implemented at an unprecedented rate as operators fast-tracked deployment to help navigate an unprecedented situation.
As the tech renaissance continues, multifamily companies are looking to not only solve current problems but adopt solutions with the capability of delivering a long-term return on investment (ROI). Knowing what to look for, and what to avoid, when sifting through the new products on the market is vital. Implementing the wrong technology and having to remove it and replace it is inefficient and wasteful. In short, operators must be strategic, careful and deliberate when considering a new solution and evaluating the solution’s provider.
For companies that specialize in a particular segment of the market, like Edgewood and Vantage Management—an affordable housing and mixed-income operator—vetting a supplier partner requires additional layers of scrutiny.
“For us, the vendor has to have an understanding of the affordable experience,” said Michael Chang, Vice President of Information Technology for Edgewood and Vantage. “They need to be familiar with some of the limitations, and most importantly our regulatory reporting requirements. Otherwise, they might do or suggest things that would cause an administrative issue or, in the worst case, violations of regulations. Not having to teach the vendor about our operational and regulatory landscape is incredibly important.”
That puts an increased emphasis on the vetting process.
Look Before You Leap
“I want all the information I can get, whether it’s good or bad,” Chang said. “I find user reviews very valuable, especially when people take the time to write in-depth and detail their experience. There is no better feedback than from a current customer. Just because the feedback is bad doesn’t eliminate the vendor. We want to see a fair and balanced overview of the vendor from a customer that profiles like us.”
Once a new tech partner is selected, Chang said a pilot test at two or three communities typically enables Edgewood and Vantage to come to a conclusion on whether to cut ties or take a product portfolio-wide.
“It’s a scary proposition to commit 30,000 units just based on faith or maybe what you’ve seen in a demo or heard from another customer,” Chang said. “We always choose a few test sites and just work out the kinks. Our experience has shown that there’s always problems and things that you didn’t know about or anticipate, and it’s much better to address those with a small group. And if you need to change direction, it’s a much easier with three or four sites than it is with a hundred.”
Chang said the initial success of an implementation hinges on key associates embracing the new technology and promoting its benefits during testing.
“Finding associates who are engaged and willing to help model some of the behaviors and practices that you’re trying to change is crucial,” Chang said. “You need to have those early adopters who buy-in and lead the process. Finding those champions is really important.”
During the pilot phase, Edgewood and Vantage’s ROI lens focuses on the reduction in labor and time afforded by the new technology.
“That’s where the easy gains are,” Chang said, noting that other ROI contributors often are less tangible. “Risk management is something that’s more subtle, but it might have an even bigger impact. It’s just harder to quantify. If you put in smart devices to monitor leaks, and then you do prevent leaks, it’s hard to say, ‘Hey, look. This would’ve been a leak, but we prevented it, so there’s your ROI.’”
Alternative ROI Measurement
Fortunately, a solid ROI doesn’t have to reveal itself on a ledger. Companies like CAPREIT are taking a resident-centric approach to tech adoption.
“As we look at technology, one of the first components we think about is, ‘What is the right thing to do?’” said Savas Karas, Chief Transformation Officer for CAPREIT. “We don’t start from the cost standpoint, which is maybe a little unusual, but as a technology strategy, I have found that yields the greatest results for organizations. If we could implement something that drove resident happiness but didn't necessarily have a dollar impact back to the company, I believe that we would.”
CAPREIT applies an impact scale to assess the potential ROI of any innovation it is considering, using three criteria streams: How does it positively impact residents? How does it positively impact the company’s business partners? And, how does it positively impact CAPREIT itself?
Karas said that while the answers to those questions are easier to glean when assessing a standalone product, the overall impact is typically greater when new technologies can be fused with existing platforms.
“Real success typically comes through integration,” Karas said. “The more products that we can integrate, typically the greater our success and our efficiency are going to be.”
Just as important as seamless integration is the alignment of objectives between a customer and their technology partner, Karas said.
“We see the company that we select as a true partner. Both of us come to the table wanting to succeed, and I think that’s an important mindset,” Karas said. “I have also seen companies that view their technology company not as a partner but almost an opponent, and I think that’s a recipe for failure.”
A comprehensive contract that clearly delineates expectations and requirements is important, too, Karas adds.
“A lot of projects start without the expectations on both sides being properly spelled out in a contract,” he said. “I think putting the time in to develop a detailed contract serves both parties. Most of the time when things fail, it really is because you and your technology partner have different definitions of success. Or, the company didn’t do its homework to understand where and how the technology has been successful in the past. We put the time in to ensure we have the right expectations and the right technology before moving forward.”
With both parties pulling harmoniously in the same direction, the result should be improved productivity and a reduced workload for associates.
“We want to work smarter, not harder,” said Morgan Porter, Director of Digital Marketing for Birchstone Residential. “In this day and age, with AI and smart automation, our work cycle should be getting shorter with every product introduced to our tech stack. This is not to be confused with replacing a team member. Instead, we’re aiming to allow our teams to focus on the customer experience instead of managing software solutions.”
When evaluating a new solution, Birchstone prioritizes open API access, visibility into performance data and development flexibility. The company uses 60- to 90-day pilot tests to evaluate products as well as to identify and request enhancements necessary to future-proof a solution.
“As we look to add new tech, we must assess where we are currently with our operational processes,” Porter said. “We need to identify potential pain points or bottlenecks, as well as consider what technology, conveniences and services our target audience— both future associates and residents—will expect in one, three or five years from now. We always want to remain nimble and agile to future adoptions.”
Doug Pike is a Content Manager for LinnellTaylor Marketing.