In a world awash in vendors and services, an aggressive pursuit of information, a strong vetting process and a robust trial run can help ensure that your tech rollout succeeds.
It’s early March and leasing season is in full swing. But Melissa Smith’s stress is elsewhere.
Fogelman is transitioning at least four technology vendors to under one umbrella and Smith says it is “the bane of my existence.”
Smith probably is not alone. With so much technology and so many vendors you have strong relationships out there selling everything from back office software to smart home solutions to maintenance management systems to marketing services, it is little wonder that vendor selections and transitions can be a painful process.
But if you have a standard and impartial process in place things can go much easier. At Fogelman, the technology buying process often starts with a standard RFP. It next invites the companies in for a sales presentation and then narrows the field of candidates. Then it interviews the operators, checks referrals, conducts contract reviews and negotiations, and beta-tests the product before, finally, proceeds with the rollout.
Some apartment firms have decided to go beyond the RFP process. They have invested in accelerators to stay on top on the latest tech developments and even partner with the most promising startups. The strategy can be rewarding.
“Our attitude about new technology is that if it is going to disrupt our business, let’s talk about it,” says Eric Potter, Director of Applied Innovation for apartment company Waterton Associates. “We will work with it and see how we can use it. What we don’t want to do is box these companies out. Waterton Associates is a strong believer in new technology and we want to partner with these companies.”
Regardless of how new technology is discovered, there are steps that must be taken to make sure the apartment company identifies and implements the right technology. It starts with determining the company’s or its residents’ needs. It then usually goes through an employee-based committee to gain buy-in. Meanwhile, the company must have a handle on any fees and the rights of data ownership. Finally, communities are chosen to conduct pilot programs to ensure that the tech investment is a success.
Girish Gehani considers himself a techie. The Chief Operating Officer for Trilogy Real Estate Group, he monitors the Chicago tech space closely (which he says has “exploded” in the past 24 months) and has been involved advisory capacity with some tech start-ups. This has helped him find companies that create branded apps, offer short-term rental platforms and provide business intelligence.
“I like to measure the pulse of what is going on in the tech industry,” Gehani says. “I like to say that I’m not on the bleeding edge, but I’m on the cutting edge.”
Another Chicago-based firm, Waterton Associates, took a more direct approach. The company was once a partner to a venture accelerator that invests in technology startups who aim to disrupt the real estate and housing industry.
Participation in the accelerator gave Waterton a chance to view technologies that it would otherwise not have seen.
“We are looking for things that will help our clients—folks who live in our buildings, our associates and the companies that invest in our buildings,” Potter says. “If the technology can make the lives easier for any one of those groups, we will look at it.”
Potter says that before investing in a technology, a company must do a thorough needs analysis for each of those groups. For Waterton, this helps his company steer clear of what he calls the “cool-guy stuff” – that which has a lot of bells and whistles, but does little to help the company operationally.
“Our focus is first to understand the technology, determine how we would use it and whether it would address any pain points for members of those groups,” Potter says. “If we do invest in this technology, it would be because it will help us to solve a problem?”
If you do not want to be a consultant or investor with start-ups, follow the strategy of Bob Gleason, who is Vice President of Operational Support for Village Green. Gleason tries to attend as many trade shows and conferences as possible. Like Potter, he prioritizes technologies that address the needs of his residents, associates and clients.
“We want the technology to help them deal with day-to-day challenges by creating efficiencies that can compress those issues,” Gleason says.
Once a need has been identified, many apartment firms turn to a committee to study and analyze the vendors.
Wood Partners uses an internal 12-person IT steering committee that hosts vendors who come in to present their products.
“The committee is made up of operations, IT, accounting and marketing folks,” says Steve Hallsey, Director Operations for Wood. “After each demonstration, the group opines as to how the new product will create a process improvement, customer experience or an operating efficiency.
FPI Management also assembles a search committee that determines what company needs are and finds technology that can fill those voids. It asks about front- and back-end functionality and drills down into the importance of each function.
“We spend a lot of time on research and development,” says Vanessa Siebern, Vice President, FPI Management. “We dissect the vendor and we asked every question imaginable. Then we compare them and pick the best in breed.”
Village Green invites technology providers that it finds interesting in for an office visit.
“We have a Business Intelligence Committee and an IT committee [that vets vendors], but at the end of the day, it is normally the CEO who makes the decision if it is a big move forward for us. She is the final sign-off,” Gleason says.
As a third-party property manager, FPI Management usually does not roll out technology company-wide. It has a customized list of needs for each of its buildings and then, based on a committee’s recommendations, it brings the technology to those communities, accordingly.
“It is really the property manager, in concert with the owner and the regional manager, making recommendations on what would be the best fit at the property,” Siebern says. “It is not one person making these decisions across the board.” We have the people who are intimately aware of what is going on at the building making those purchasing decisions.”
This community-by-community formula also means that FPI does not have “captive” providers. Instead, it has month-to-month contracts with most vendors.
“We constantly look for the best of the best out there,” Siebern says. “We think we have a competitive edge because we are not committed to using anybody for a long period of time and we can bring in the new technology whenever we want to.”
The Fine Print
For Village Green, hiring any new vendor means looking at references from industry professionals. “We interview each one and determine who has the best product for the cost,” Gleason says. “We don’t always go with the lowest price or the highest price. It’s the best cost for the quality.”
When working with start-ups, checking references and credentials is even more important, according to Potter. He points out that the start-up space has a lot of inexperienced people, such as a 25-year old trying to offer a brokerage solution when his only commercial real estate experience is living in an apartment.
“You need to spend time checking vendor credentials, looking at what certifications staff has, whether it is growing or shrinking and whether it has internal engineering teams,” Potter says. “That can tell you if the vendor has an ability to add features when you have something new that you want to try.”
Potter also advises apartment firms to check the contract to ensure there are not a lot of “nickel and dime” fees.
“Best practice is to understand how the fees work,” Potter says. “We do not want to get hit by a host of fees. We want to see the fees built in.”
Then there’s the issue of data rights, something businesses today see as crucial.
“You need to understand who holds custody of your data in case you change systems,” Potter says. “You should expect to pay something, especially when you have encrypted data, but a technology company shouldn’t charge exorbitant fees if you end the partnership and want your data back, that’s a red flag.”
The Test Drive
Once you have ensured that new technology will meet your needs, you have all the key stakeholders on board and you have read the fine print, there is one hugely critical step left—the test drive.
“We normally beta test anything that we're doing,” Gleason says. “We set up a short-term contract that allows us to beta test a couple of different assets. If it’s enterprise level, we test a smaller subset before we lock into a longer-term contract. This way, we understand exactly what we are getting.”
If a vendor does not allow a pilot period, that raises a huge red flag, Potter says. “Being able to test drive the software is not a big ask, as long as you properly describe the way in which you would use it,” Potter says. “A pilot period really helps us to create valuable feedback.”
Potter says the length of the pilot period does not matter as much as the amount of usable data you get and the understanding you get in respect to how interacts with Waterton’s other software.
“It is important that a lot of things we do integrate into the core system, whether its property management or managing investor relations or accounting,” he says. “Also make sure you have the resources available to actually try the technology and for your tech team to support and train it.”
When conducting the beta tests, Gehani typically uses senior managers and property managers who are open to trying new technology.
“If we want to see whether it is something that will help our assets, we will study it upfront and ultimately pick one or two of our sites where we will have some buy-in,” he says.