Yardi Systems is like Uncle Sam: It wants you. And it doesn’t want you going anywhere else. Since launching in 1984, the Santa Barbara, Calif.–based provider of multifamily technology services has regularly migrated new applications into Voyager, its Web-based enterprise management system, with the goal of fulfilling every one of its clients’ technological wants and needs via one interface.
“We find that there is tremendous benefit to our clients when they can eliminate the need to transfer data between platforms and avoid redundancy of multiple systems,” says Yardi vice president of marketing Brad Setser, who points to utility billing, payment processing, procure-to-pay, and revenue management as examples of applications that Yardi has brought into the Voyager fold at the behest of its clients. “In those cases in which we acquired a solution, we re-engineered the solution into our core platform so that the need for an interface would be eliminated.”
Yardi’s approach puts the company squarely in the middle of a perpetual debate in multifamily technology, a seemingly endless argument that pits “best-of-breed” and “integrated” solutions against one another in the battle to win IT, operational, and platform dominance.
Yardi’s not alone in the vendor space in this endeavor to be a systems provider of choice. Its primary competitor in the apartment space, Carrollton, Texas–based RealPage, is just as eager for multifamily business, even if its approach to market is somewhat different. “On the application stack, the notion of tight integration versus best-of-breed I don’t view as an either/or,” says RealPage CEO Steve Winn. “I think you can have integrated platforms that are also best-of-breed. The key is that the architecture of the system needs to support the integration of third-party applications. I think you have to have the ability to interface to other third-party application providers whether they are best-of-breed or not, and you need an open architecture with Web services and data exchange capabilities that let those multiple applications interface.”
Welcome to the new world of multifamily technology—one in which the attempt to develop encompassing IT solutions driven by user demand is a priority of the first order, and where the appetite and aptitude apartment firms possess when it comes to adopting those new technologies have grown exponentially. Here are four factors driving the way ahead for the modern multifamily IT world, from shifts in marketing to mobile to virtualization and more.
If Yardi’s intention is to provide slick, consumer-friendly, single-click property management from A to Z, then it comes as no surprise that it has recently unveiled new ILS solution RENTCafé, a consumer-facing website that, on the front end, advertises a “comprehensive list of nationally available apartments” and on the back end pairs apartment availability and pricing from opted-in Voyager users with leads from the ILS. What is unclear is whether the deployment of yet another industry ILS in and of itself doesn’t signify a step backward for multifamily technology.
The truth is, operators typically are looking for consolidation in the apartment Internet marketing space, not more fragmentation. “We would love to see some consolidation, particularly among the larger ILS players, but there’s too much opportunity: It’s still really the Wild West out there,” says Gary Redmond, vice president of e-commerce at Englewood Colo.–based Archstone, an owner of 436 communities representing 78,207 units that uses MRI and is not a Yardi client. Just three years ago, Redmond and his colleague, Archstone group vice president of strategic systems Donald Davidoff, began a broad e-commerce initiative at the firm aimed at integrating marketing and IT; deploying resident-friendly tech applications; and finding efficiencies for Archstone through the greater leveraging of technology. At the time, Redmond and Davidoff thought consolidation among third-party apartment Internet markets was a given. Now, there are more options than ever. “With the ease of entry and low barrier to get into that space, I think you’ll continue to see new entrants there,” Redmond says.
Indeed, while Yardi deployed RENTCafé to great fanfare, challenges remain, including how to generate a critical mass of resident prospects who actively use the system to search for apartments. Part of building that traffic will require the development of a listings engine that supports it, which also remains unclear: While RENTCafé is technically in full deployment, actual usage of the system is still being tested by key Yardi technology partners, and Yardi is unable to provide statistics on the number of users or the number of individual property listings or markets that currently encompass the RENTCafé platform.
“There’s a finite number of eyeballs out there, so obviously, we watch any new competitor coming into the market,” says Peggy Abkemeier-Alford, president of Santa Monica, Calif.–based ILS Rent.com. “The [RENTCafé] website looks great, but we have been iterating on our product offering for 10 years, and that ongoing process is hard. It can also be difficult to get renter traffic, and that is what you really need.” Recent product iterations at Rent.com have included what Abkemeier-Alford calls nuts-and-bolts refinement to search optimization as well as efforts to improve and expand the ILS’s inventory mix while also continuing to reach out directly to prospects via an e-mail marketing program. “We’re continuing to figure out how to get renters engaged and improve the stickiness on our site but also gather the right eyeballs that are going to convert,” says Abkemeier-Alford. “Anything we can do to get the renters more engaged and staying on our site looking for properties is good for our customers.”
This challenge of capturing audience in a fragmented space isn’t exclusive to vendor offerings. Multifamily owners and operators struggle with marketing fragmentation as well, particularly in the use of social media to connect with existing and prospective renters. Everyone, it seems, is struggling with whether there is a true impact to the bottom line from online engagement activity—and whether consumers even want to have a social media relationship with their housing provider (see “Social Status”).
Ultimately, what renters increasingly want, Abkemeier-Alford says, is immediacy as it relates to information, availability, pricing, and, most importantly, a response. RENTCafé’s website, for example, is optimized for use on smart phones and, if running at full functionality, automatically pulls renters into a resident portal post-lease, allowing them to review their account profile, pay rent, and make maintenance requests online.
Quick Learners
Students who think market-rate multifamily will deliver technology that is as good as or better than what they already get have a big surprise ahead.
A whopping 64 percent of students at U.S. colleges and universities say they would consider relocating to new housing if their apartment’s Internet speeds were slower than expected, according to a survey of more than 10,000 students across 130 campuses conducted by Houston-based J Turner Research in partnership with Philadelphia-based Campus Apartments and Memphis, Tenn.–based Education Realty Trust (ERT). That may not be shocking to seasoned student housing operators, but taken in tandem with additional survey findings, the tech demands of students as they matriculate into market-rate apartments could prove to be a significant challenge in the next decade.
That’s because nearly every student surveyed (97 percent) expect the housing choices available to them after graduation will either meet or exceed their current tech experience. And a full 49 percent think the technology suite beyond student housing is just going to get better. “There are lessons to be learned in market-rate from what is going on in student housing,” says Andy Marshall, senior vice president and CIO of Campus Apartments. “Every student who goes to college has gone from, ‘Hey, I have a laptop’ to ‘Hey, I have a laptop, a PS3, an iPad, and a smart phone.’ It’s a huge change in how technology and bandwidth are consumed.”
As a result, student housing operators are constantly trying to deliver a maximum bandwidth experience to each unit that operators say could soon eclipse the 1 GB-per-second threshold.
“We’re not sure when enough is enough,” says Scott Casey, vice president of IT for ERT. “They gobble up 100 MB per second instantly, and if we went to 200 megs, they would gobble that up.
“We want to match the speed at home and at the university, but we could spend an inordinate amount of money on technology and still not be ahead of the game [consumption-wise].”
Beyond consumption, students are also multitasking communicators and expect their housing providers to be fluent, proficient, and immediately responsive across a wide range of media and devices.
“We’re using multiple ways to communicate, including via our website, on mobile apps, via e-mail, over text message, and, of course, with Twitter and Facebook,” Marshall says.
To keep communication lines open, most student housing providers are moving to wireless network overlays (in addition to existing wire-to-the-wall installs) that provide untethered connectivity in common areas, study areas, even the bathroom.
“Having fast, accessible Internet is like having a kitchen to these renters,” says J Turner president Joseph Batdorf. “If they walk in and you don’t have it, you’re dead.”
This user experience speaks directly to the increased sense of urgency when it comes to providing data and displaying it not only to rental prospects, but to existing residents, on-site staff, and company executives, as well. But even as Rent.com, Yardi, and other firms reach for stickiness in the ILS Web arena, there is a concession among most apartment IT executives that the mobile experience in and of itself is changing computing habits and evolving end users to expect task-based but single-enterprise software and systems with a simple, intuitive interface. Simply put, we want to go to one familiar place to do what we want to do, and we want to accomplish our objectives quickly and easily in order to get on with our lives.
“Everyone is doing so much computing on smart phones that when they do get to the desktop, they’ve already trained themselves to look at it quickly, and if what they want is not there, they move on,” says Virginia Love, training and marketing director at Chicago-based Waterton Residential, which owns and manages 14,000 units. “Just look at the questions on the differences between iPhone, BlackBerry, and Droid apps—people are eager to make a call on the superiority of one app over another based on one tiny step. The takeaway is that users find value in every split second that they save when trying to figure software and systems out in order to use them.”
That shift in mind-set is even migrating into the property management and accounting systems forming the core of multifamily IT systems. Where detailed, layered, and complex computing once ruled the leasing office interface, vendors are moving toward ease of use on the desktop (or, more likely, the laptop), if not adopting a tablet- or mobile-first interface entirely.
“The smart phone has completely redefined our expectations of what technology looks like and how it is delivered,” says Brian Donahoo, CEO of Goleta, Calif.–based AppFolio, a Cisco Systems–backed venture launched in 2008 to provide property management and accounting systems to middle-market apartment firms. “Everything we design now we need to think how it will look on an iPhone or an iPad. User expectations of technology are simplicity, ease of use, and seamless interaction, and technology that doesn’t deliver that in an immediate fashion is deemed a failure.”
Social Status
Divisions persist between all-in and opt-out multifamily social media models.
“Social networking isn’t bringing in the new renters, but it is becoming a critical component of creating the sense of community that is necessary for renewals,” Sanders says.
Still, while most multifamily firms at least dabble in social media, polarization persists between apartment companies that have totally embraced social media as part of their marketing platform and those that remain skeptical of the bottom-line ROI of social networking. And apartment heavyweights on both sides of the issue press their cases with spirited, congenial debate that isn’t likely to diminish anytime soon.
Englewood, Colo.–based Archstone’s group vice president of strategic systems Donald Davidoff, for one, says social media testing at Archstone has revealed bounce rates (the percentage of visitors who visit a website and then immediately leave without exploring it) above 60 percent from social media–driven Web visits, compared with typical bounce rates of 20 percent to 30 percent. “That’s the difference in quality between traditional SEO- and ILS-driven media referrals and what we are seeing from social media sites,” Davidoff says.
Meanwhile, Greenbelt, Md.–based Bozzuto Group’s chief marketing officer Jamie Gorski says that firms looking to social media to generate prospect leads are missing the larger value proposition of sites such as Facebook, Twitter, LinkedIn, and Foursquare. “You don’t engage in social to generate leads,” Gorski says. “You do it to protect your brand, to extend your brand, to communicate with customers, to understand what they are saying about you, and to make improvements.”
That diligence should extend to online reputation management, particularly on sites such as ApartmentRatings.com and Yelp.com, which are typically among the first page links generated by search engines. Outside of that, however, the jury is out on whether there is a value to a concentrated social media effort.
“We have 95 percent occupancy with 70,000 units and 20 percent year-over-year growth in lead count,” Davidoff says. “There are lots of ways to drive results that don’t include classic social media outlets, and our numbers are proof of that.”
To that end, AppFolio launched an iPhone app earlier this year allowing its property and asset managers real-time access to all resident, owner, property, unit, and vendor records. AppFolio isn’t alone in that regard: RealPage unveiled new and improved smart phone and iPad applications for its OpsTechnology and PropertyWare platforms last fall, while Yardi intends to make all of its software offerings available via smart phone in the first half of 2011. Meanwhile, even larger multifamily owner/operators are developing brand-specific property management mobile apps. Archstone has deployed iPhone and Droid apps for resident rent payments and service requests, and Highlands Ranch, Colo.–based UDR has incorporated augmented reality browsing into its apartment search applications.
3. The death of the local server
Coinciding with the migration of most multifamily technologies onto a mobilized interface has been a back-end data center movement toward Software as a Service (SaaS), managed service, and cloud computing models. While the term “cloud computing” continues to beguile nontech industry executives with its equivocal definitions and promises, most multifamily IT specialists nevertheless admit that software and systems that are self-maintained and self-contained on enterprise servers are on the wane, even if the alternative vendor-hosted and SaaS destinations aren’t exactly new.
“In a lot of ways, the term ‘cloud computing’ is arguably being used to sell ASP [application service provider] services and technology that has been around since the 1960s,” says Andy Marshall, senior vice president and chief information officer at Campus Apartments, a Philadelphia-based firm servicing more than 26,000 beds in the student housing sector, which is seeing significant changes in the technology demands of its residents—shifts that are likely to reshape market-rate multifamily offerings in the years to come (see “Quick Learners”). “We have no fundamental objection to outsourcing or cloud or Web serviced–based functions because we are never going to be able to do everything. Where the cloud makes sense functionally and economically—for credit checks and bank routing confirmations and inbound and outbound SMS texting, for instance—we are delighted to do it.”
Still, Marshall is reticent to put the entirety of the Campus Apartments IT enterprise into the cloud, citing concerns over security as well as future systems integration and just-in-time access to critical data. “In general, you’ll find that the larger student housing and apartment firms are not using SaaS or the cloud to run their back-end systems,” Marshall says. “We are running a lot of different software platforms, and if you have your core data on someone else’s servers, you do not have the same level of accessibility and integration as you would have if you were running it yourself.”
Winn disagrees and points to RealPage’s UDE Direct (which allows for daily downloads of all client data) and other application programming interfaces (APIs) that allow users to access the firm’s Cloud Computing Division SaaS data center with their own report writing tools. “We’ve built hundreds of Web services allowing real-time third-party interaction with the system, so the notion that this is closed or inflexible is not accurate,” Winn says. “Cloud computing is a place to outsource all of your enterprise systems, and it is not uncommon for us to host 10 to 15 different vendors in the cloud that collectively a large owner or fee manager would use to run their business. The cloud concept is a megatrend allowing the CIO to figure out ways to improve the business processes that run their company. That’s where the high return on investment for a CIO comes from. I would say managing servers and firewalls and that kind of thing is not high value-add.”
4. The continuing evolution of the “right” solution
Regardless of where systems sit, multifamily technology is certain to continue its evolution toward user-friendly, just-in-time data delivery that will also increasingly see cooperation between IT and marketing departments. “I don’t know that marketing and IT are becoming one industry-wide,” Davidoff says. “But there is a greater shared understanding of the concepts and opportunities between those two disciplines. There are still only a handful of multifamily companies other than Archstone where marketing reports to the CIO, but you can see even at the technology conferences that there is a more rounded representation of IT, e-commerce, and marketing personnel.”
Multifamily technology vendors are cognizant of that shift as well and might be able to twist the single-source versus best-of-breed argument in their favor as more firms see technology playing into marketing and other core business strategies. “I think integration is a word that was introduced to the multifamily industry loaded with promise, and the reality is that operators are finding that, in practice, integration has become riddled with inefficiency,” says AppFolio’s Donahoo. “The executive wants access to data, but the ability to present that data is extremely difficult with integrated systems.” Setser agrees, and while Yardi remains firmly committed to working with clients who opt for best-of-breed solutions, the truth is that the firm would rather just keep you in the fold, whether you buy into its philosophy or not. “There remains tremendous opportunity for front-office functions such as marketing and leasing apartments, resident services, and maintenance tasks and executive tasks such as business intelligence and approvals to become fully mobile-enabled,” Setser says. “We are working on mobile access options and will be providing iPad and handheld device access for both RENTCafé and Voyager. Prospects will be able to search and apply for apartments online; residents can pay rent and enter work requests; maintenance workers can fulfill work orders; managers can approve payables; and executives will be able to review their key performance indicators all on their iPads, iPhones, Droids, and BlackBerrys.”
Whether Yardi gets there before anyone else remains to be seen, but its vision is one that’s broadly shared by many vendors and apartment owners alike. Whether single-sourced or integrated, self-hosted or pitched to the cloud, multifamily technology looks like it’s about to get smaller and is reaching toward a not-so-distant future where the progressive apartment executive can run an entire IT enterprise right from the palm of his hand.