When did buildings officially turn into data streams? Most analysts cite the Tax Reform Act of 1986 as the birth of real estate's new digital discipline. The truth is a bit more complex.

The accumulation of huge portfolios by the REITs took a few years. Once they achieved critical mass, the complex holdings quickly demanded the development of a unique financial and operational science.

Simon Property Group, for example, now has almost 250 properties in 35 different states. Lend Lease has a five-continent portfolio worth almost $30 billion. Thanks to sophisticated information systems, today both firms know the exact value and profitability of every single square foot in their mix.

Under the microscope Scale became a serious issue when the REITs consolidated to give Wall Street the growth it demanded. The volume of transactions and information simply exploded.

Because of fierce scrutiny and constant pressure from financial analysts, portfolio managers suddenly had to prove they were rigorously monitoring and controlling each asset.

Nine months ago, NAREIT President Steven Wechsler rolled out the industry's first real-time public performance index, explaining that access to comprehensive real-time information is in ever-increasing demand.

The critical importance of real-time data is now well understood by portfolio managers. Increasingly, they find smart systems to be their best protection from the operational headaches that growth creates.

Simon, for example, keeps an army of leasing agents busy filling malls and shopping centers scattered throughout North America. Simon execs were quick to see that any system evolution that streamlined and automated the lease-up cycle would contribute directly to the profitability of each project and, ultimately, to the company's bottomline.

At Lend Lease, financial executives took the initiative when they saw it took seven senior staffers nine weeks out of every quarter to revalue the monster portfolio. The inefficient, error-prone exercise drove Lend Lease to search out a smarter, faster solution.

Integration to the rescue Luckily, component software surfaced that could be configured to control the information explosion.

Lotus Notes is just one example, and perhaps the most recognized knowledge management tool in the market today. Notes puts a super-friendly interface on powerful software systems that would otherwise be too complex and intimidating to the average end-user.

Time, again, is a critical factor to companies considering new systems. The smartest software tool, in management's eyes, is the one their employees can learn and adapt to in the shortest timeframe possible.

The backbone of Simon's current leasing document and workflow automation system is a Notes application created years before knowledge management became the hot concept it is today.

The application shaves weeks off the lease-up cycle, contributes directly to FFO, and provides hard proof of the management efficiency Wall Street analysts love so much. Industrial-strength integration also helped Lend Lease turn its nine-week portfolio headache into a two-day no-brainer.

Thanks to Notes knowledge management technology, a single mouse-click sets in motion the gathering of information from multiple databases and the simultaneous calculation of all formulae. There is no room for human error.

The next wave: ASPs In spite of the NAREIT call to action and the example of leaders like Simon and Lend Lease, our industry is still criticized by outsiders as reluctant to embrace new systems, much less the mysterious new bag of tricks called knowledge management.

The reluctance has cultural roots. Real estate is still dominated by maverick dealmakers who successfully navigate their careers by instinct. Entrepreneurs are understandably loathe to hand over the reins of their valiantly built empires to a new generation of self-proclaimed digital wizards.

Price, too, has proved a sticking point. Function-rich, customized software systems that deliver really dynamic ROI traditionally require six and even seven figure outlays.

That's all about to change. Just as we struggle to get our heads around knowledge management, an equally profound trend looms on the horizon, one that will break the price barrier and extend the advantages of integrated systems to the smallest players in the market.

Application Service Providers, or ASPs, are a new channel for software services that will fundamentally and forever alter the market for these services.

For as little as $360 per user per month, real estate ASPs offer bundled access to the most sophisticated systems, maintenance and support. No bulky upfront investment, no painstaking and disruptive implementation in house.

The Internet is what makes the new market for rentalware so viable. The web is a proven universal platform, since Internet-enabled property management solutions have been up and running perfectly since 1996.

Since 1986, then, your buildings have become streams of data. From now on, you can run them super-efficiently on computers located outside your own building.