The Internet has triggered a ubiquitous awareness of technology among real estate professionals, as well as a keen sense of competition between software companies. Underscored by Y2K, this is a unique point in time in which all industries are focused on refreshing their technology tools, and real estate is no exception.
After a moment of calm in the fourth quarter, the recent wave of activity in the real estate sector to embrace new technologies is expected to crash ashore again next month, once Y2K system stability and user confidence is confirmed. Several new software introductions and powerful upgrades to existing capabilities are poised to assist companies in providing faster access to better information, increasing productivity and saving money in the long-run.
Internet-enabled applications are leading the discussions in real estate information technology, with scalability, standardization, application hosting, enhanced report writers and lease management capabilities, and workflow strategies as other core elements of new and planned software revisions and introductions.
Internet technology Web-based applications have many advantages over traditional network architecture, including speed; real-time data input and availability; centrally located applications, databases and documents; definable user accessibility; remote access from anywhere in the world; remote system administration; and increased uptime. Overall, the Internet can provide easier, faster and more accurate access to and dissemination of information, requiring less time and money than traditional methods.
"Real estate is a very decentralized business, with property managers and sales executives in multiple locations," says David Voigt, practice leader with Deloitte & Touche's Real Estate Operations and System Consulting Group in Chicago. "The most significant aspect to the real estate sector of Web-based applications is access to information by these remote users. In addition, with a Web-based approach, real estate companies can provide managers, investors and other recipients with a more timely view of critical data."
Asserts Andrew Marks, president of invata international inc., of Columbus, Ohio, "We live in an era where people expect more and more information, faster and faster. Technology has spoiled people, who are now demanding completely accurate information at the touch of a button. There was a time when tenants could call on Monday with questions and wait a day or two for answers. Now, if they have to call back at all, you're too slow,"
Invata is one of the software companies committed to providing an Internet-enabled product to the real estate industry. Introduced this month, invata's SamTrak GlobalConnect combines the company's existing service and maintenance tracking tool with the convenience and speed of the Internet, providing increased security and control at the home office and comprehensive maintenance management for an unlimited number of remotes users, reports Marks.
He explains, "Until now, the only two-way data access tool on the desktop has been the telephone," says Marks. "With SamTrak GlobalConnect, tenants can go right to their keyboards to enter work order requests and get immediate answers, such as when someone is scheduled to unclog the sink. Tenants are happier because they're getting the data they need faster, while the landlord steps out as middleman."
At Houston-based Management Reports International (MRI), the latest release of MRI for Windows (December 1999) incorporates the ability to use a standard browser to initiate and view all reports within the system, using sophisticated drill-down capabilities. "This means our clients can now give their customers - or the casual users within their own organizations, such as executives - the ability to view information at a global or detailed level without having to know the software at all," explains Ron McComas, vice president of marketing for MRI. "If a user knows Netscape or Internet Explorer, they easily can access information with this product. We think this introduction will have a significant impact in terms of client investment and usability."
Early this summer, GEAC Property Management Solutions (GPMS) of Houston plans to introduce eSite and eSuite, Web-enabled versions of its existing property management and leasing software, which today serves multiple users over an intranet but is not yet browser based. With eSite and eSuite, users will access the applications from anywhere in the world at any time, across platforms; all data and input by the user instantly update the database or document, which is then made available by the system to global users in real time. The only client-side software needed to access and execute the products will be a Web browser such as Internet Explorer or Yahoo.
"The Web will push a lot of services and data entry - for work orders and payments - out to the tenants and residents, making clients more productive," says Michael Mullin, general manager of GPMS.
NewStar Solutions Inc., of Rosemont, Ill., plans to become fully Web-enabled during 2000, reports Eva Freud, executive vice president of marketing for NewStar, which will release updates to its Retail and Commercial Property Management and Home Building modules during the first quarter. Freud says the goal of the company's suite of property management, home building and construction solutions is to be fully Internet- and eCommerce-enabled.
At Colonial Systems Inc. of Exton, Penn., which markets Colonial Property Management, a real estate accounting system, Dan Lehman, director of sales, confirms that most real estate software developers will be providing and/or planning products that are easier to use and access via the Internet. "We, too, are moving forward aggressively with that strategy," he reports. "The 3-tier client/server solution introduced with our latest update (October 1999) greatly improves performance from remote sites will help in allowing our customers to use the Internet as a backbone for communications."
Other products and solutions As ARGUS Financial Software of Houston experiments with new Internet capabilities, for now the firm is more focused on scalability - providing a data interchange interface between its sophisticated DYNA products for complex deal structures and its more broadly-used line of ARGUS application software. According to managing director Ronnie Dean, the company's goal is to perfect the data interchange between the two product lines so that data may flow up to DYNA for complicated partnership, equity and debt structuring applications, for example, then back down to ARGUS at the back end for property disposition and mortgage banking applications, or vice versa.
Part of the solution on which ARGUS is focused addresses the need for software standardization, which Dean says is more important than ever before in this industry, since few of the increasing number of accounting, asset-management and other software applications talk to each other. "A number of our customers have huge portfolios with thousands of leases," he says. "When changes to those property files take place, they need to be reflected in new cash-flow projections, which is difficult to do when everything has to be retyped," he says. "We are focused on automating a seamless data exchange between software systems so that people can make better use of their time and resources." Dean adds that ARGUS is following an expansion path along which the acquisition of DYNA may be the first of a series of new directions and product offerings.
Standardization is also a core consideration for new releases from Timberline Software Corp. of Beaverton, Ore. According to Liz Jacobs, product marketing specialist, the company has aligned itself firmly with Microsoft-type standards, and most recently has partnered with BizTalk, which uses XML, a standard for sharing information. "XML allows our clients to integrate lease administration systems with suppliers, vendors, wholesalers and anyone else with whom they are doing business," she says. "The technology allows electronic integration by attaching tags to particular words that dissimilar systems can recognize. Thus, a standard lease can be boiled down to its nuts and bolts in a two-page abstract then easily converted to flow into a 35-page legal document, facilitating communication between tenant and landlord attorneys. We see this type of standardization as the future of real estate technology."
Jacobs says Timberline is committed to providing an open architecture with which its systems can speak with others to reduce processing time and increase accuracy by eliminating data entry errors. However, there is always a balance between any technology and its core functionality. "We feel that, while the increased sophistication of technology should allow smoother functionality and processing of day-to-day activities, it should remain behind the scenes," says Jacobs. "We try to avoid creating tools that require customers to be trained suddenly and extensively. Our ultimate goal is ease of use."
Timberline's future software revisions will be technology-driven to a great extent, says Jacobs, with up to four revisions possible per year.
The latest version of Yardi's Enterprise software (June 1999) offers two database platforms - MS SQL Server and Oracle - providing increased flexibility so clients need not rearrange their processes around the software, but the other way around, reports Karen Edgar, vice president of marketing for Yardi.
"With Enterprise 4.0, the core program has been enhanced to include many feature sets that can be added and changed," she says, adding that an enhanced report writer allows users to set up various reports for any user at any frequency, then automatically runs it and delivers it via e-mail or Internet, and/or prints hard copy.
SKYLINE II, Version 1.0 for Windows, a new property management system, will be unveiled this month by SS&C of Windsor, Conn. According to Robert Cummings, senior director of real estate applications for the company, SKYLINE II features a completely re-engineered database with a new engine, but provides the same look, feel and functionality of its predecessor. SKYLINE II offers a 32-bit graphical user interface written in Visual BASIC, and a new MS SQL Server environment which allows the product to operate in a variety of popular operating systems. "The product's biggest bang is its enhanced report writing capability, which includes standard and user-defined custom reports," notes Cummings.
With new WinStack TopDown, a stacking plan generator introduced in November 1999 by Real Pro-Jections of Carlsbad, Calif., users can view tenant space both vertically and horizontally to help manage commercial and residential property down to the square foot. It offers almost limitless options for analyzing properties, and generates color-coded stacking and floor plans for management and presentation purposes.
Comtronic Systems of Cle Elum, Wash., will introduce two new software products this month: Property Manager Edge and Property Manager Edge Professional. Both will offer Windows 2000-style help, drill-down menus, one-key searching and other key capabilities. Edge Professional will also provide full e-mail reporting, Web posting and other features.
Application hosting During the second quarter, Realogic of Chicago will introduce Ellipsis for lease administration and abstracting, a new product to be written entirely in JAVA, "the programming language of the Internet," says Sal Caldarone, CEO of the company. "We're taking the bold step of writing the application in JAVA, so that the Ellipsis software eventually can be run over the Internet, rather than residing on the customer's computer," he says. "Users no longer need to be in their offices where the software is located, but can access the program anywhere via the Internet."
Caldarone reports a strong trend toward leasing rather than buying today's real estate applications software or application hosting. With this strategy, users avoid the outright purchase, loading and management of real estate software applications by leasing their use from software providers.
Confirms Voigt of Deloitte & Touche, "The cycle is now complete, as many companies consider the outsourcing of the maintenance and support of their central systems to application service providers (ASP). The thin client user interface [dumb terminal] is back with a new technology face and name, but similar capabilities. This portion of the cycle will be the hot bed of conversation for the next few years."
In its approach to application hosting, this past summer CTI Ltd. of Houston completed a 5,000 sq. ft. data center with redundant T-1 telecommunications to the Internet, and a huge, four-way processor, which runs the CTI Real Estate System. According to Craig Lofton, executive vice president of CTI, users pay a low per-user monthly fee to access CTI's Reactor235.com system from their own PCs connected to the Internet. CTI maintains the operating system and all release upgrades; All a customer has to do is sign on, says Lofton.
In November 1999, MRI formally unveiled NetSource, an expert outsourcing service designed for the real estate management industry using Internet and Intel-based client/server technologies. Like CTI's approach - and one reportedly being considered by J.D. Edwards of Denver, and by Realogic Analytics - NetSource provides online access to MRI for Windows client/server software hosted on high-powered servers at MRI's data center. Current customers include Prudential Real Estate Investors (PREI) of Parsippany, N.J., with more than 300 employees and strategic business partners slated for access to applications hosted and managed by MRI.
States McComas of MRI, "With NetSource, users can concentrate on their core goal, which is managing and improving the value of their real estate holdings, not supervising their technology. They can focus their resources on real estate, not hardware and software."
Provider challenges Whether it's a Web-based, hosted or traditional software application, bringing the offering to market and having it implemented by an organization sometimes takes more time than users are willing to wait. As today's real estate companies look more closely at internal operations for ways to be more profitable - rather than growing through acquisitions - enhancing their software systems can be key to these internal growth strategies, and users want that power now.
"Just as people have become conditioned to instant access to information, they also want their software revisions right away, but a proper upgrade can take months or even a year," states Marks of invata. "Today's society doesn't want to wait, so the challenge for software providers is to deliver the newest, greatest, leading-edge software capabilities as quickly as users request them."
A related challenge for software developers is stopping the modifications so the product can get out the door, says Marks. "If it were up to the programmers, they would spend every day of every year doing upgrades. They're obsessed with taking what is great and making it even better. At some point they have to stop and get the product tested, shrink-wrapped and out to the customer. But there's always more that could have been done. The application can always be one functionality better."
At MRI, McComas says the real challenge of a software upgrade is understanding client needs as they pertain to a functionality being requested. Providers must have a complete understanding of the industry to understand which requested capabilities are universal and which are unique to one or two users. "As developers, we need a thorough understanding of the industry," he says. "We can't just have Visual BASIC programmers on staff, but ones that also comprehend the real estate industry and its application needs." McComas reports that software revisions rely on heavy client input, and that the company's new module, ForeSight (Advanced Budgeting), evolved primarily from client requests and feedback.
Edgar of Yardi says the challenge and goal of her company's software upgrade activities is having the products available before customers ask for them. She says that Yardi never wants to be behind the curve and responding, but ready with the technology when the market states its needs. To determine those needs upfront, Yardi formally conducts several focus groups each year with key customers to discuss real world demands and related features, among other strategies. She stresses that each upgrade is always backwards compatible.
The most time-consuming activity related to software revisions providing by Colonial Systems Inc., is testing, says Lehman. New revisions need to be tested thoroughly, and multiple times, and in multiple ways, he says. "A single program is used differently by various customers," he says. "We must think of every possible way someone would interact with the program, then test it, which is a time-consuming task. In addition, we often develop new programs that interact with existing ones, all of which must be tested with the new offering.
We also support multiple hardware platforms, as well as multiple databases, which we also test before a revision is released," he says.
"We're learning that a thorough software upgrade can take twice as long as expected - by the time the program is written, beta tested, accepted and released with the least amount of bugs," admits Caldarone of Realogic. "Some software companies don't mind getting the product out quickly and fixing the bugs later, but we take the time to catch as much upfront as possible."
At SS&C, developers follow a predetermined cycle of planning methodology to get new features and functions out the door. According to Cummings, the time-consuming process uses "a diversity of input in a systematic fashion that incorporates all stakeholder views (including clients', vendors' and industry partners') and encompasses major drivers of change, such as technology and regulatory impacts." After a filtering and grading process, up to 100 items eventually are coded and delivered in a subsequent software revision, he says.
To smooth out its product-revision testing, CTI manages a separate in-house server for what Lofton calls its Customer Invitationals. For each upgrade, key CTI customers load their databases on the in-house server to test the new revision and provide feedback in a realistic setting, a strategy CTI borrowed from IBM.
Educating the industry Lofton adds that though some industry professionals report that the real estate sector has been slow to adopt new information technologies, "I don't think the industry has been as sluggish with technology as it thinks it has. Yes, it's been behind, but so have other industries, like transportation and energy. It's popular to criticize this industry, but I think real estate professionals have made great strides in their use of technology," he asserts.
However, the industry has been behind in forming technical staffs to manage their hardware and software, observes Purcell of Comtronic Systems. "Many real estate company owners and managers manage the systems themselves, and only when they have spare time; This has to change if they are to compete in larger market arenas. Today we see the bigger companies adding technical staff to implement Websites and system upgrades, while the smaller companies turn to consultants for this function."
Many software providers admit that one of their greatest challenges is educating current and prospective customers about their particular products, and the technologies available in general that can likely help them increase productivity, service clients more efficiently and save money.
The industry's major trade magazines that continually put a spotlight on technology aid the education process, states Cummings, as do the industry groups that have adopted technology task forces and host Web pages for disseminating information. "Organizations like the Mortgage Bankers Association, Pension Real Estate Association, Commercial Mortgage Security Association and National Association of Real Estate Investment Trusts have become less like clubs and more like true business associations," says Cummings. "They're striving to keep the industry abreast of new technological advancements, usually through Web pages, e-mails and bulletin boards that keep members apprised of breaking news. By doing this, they're raising the bar for everyone."
Marks of invata states his company helps promote the use of technology by eliminating fear. "People are afraid that software isn't secure and that it will crash, so we demonstrate continually that the electronic process is safer and more reliable than a human being," he says. "They are also afraid they can't do it - that they're too old to learn - or that they've been profitable without computers for decades, so why start now? We're showing people that they're not too old or too entrenched to adopt new technologies.
Shaping future application In addition to Web-based software applications, key capabilities of the future will also incorporate workflow processes, says McComas of MRI. "The industry is heading toward the workflow concept, which will present a major change for real estate users. The workflow concept closely mimics the ways in which companies do business. We see this model in the manufacturing and distribution industries but not in real estate, except in the lease flow area, the first iteration of this concept in our sector. I predict that, in 24 months, workflow technologies will be a major component of real estate software applications."
According to Marks, tomorrow's computer systems will also be making decisions for real estate users. He says when tenants contact a call center for a plumber, for example, the computer will dispatch the particular plumber assigned to that facility, not wait for a chief engineer to make the selection. "We will move toward actual decision-making by technology, which will free-up human beings to do what computers can't do, which is to be strategic."
Marks claims that over the next five years, as computers take on the more tactical nuts and bolts of running an operation, computers will be jumping through hoops while humans dream and hypothesize about better strategies and being better landlords and more profitable organizations for their employees and investors.
Complex Software Applications Demand More Powerful PCs, Ongoing Investments
The industry's more sophisticated software is driving the need for faster computers that can run these applications, but not all users have implemented the powerful PCs required, claims Dave Purcell, director of sales and marketing for Comtronic Systems of Cle Elum, Wash. Software providers continue to develop forward-thinking products with extended lifespans, which means the products are at the higher end, but many customers haven't come up to that level with their hardware, he says.
How can they keep up?
"Dollars," declares Purcell. "The monetary investment in system hardware is a continuing process, not a one-shot deal. Just when you think you're above the critical line, one new release changes your investment, and you need to upgrade all your computers."
For example, says Purcell, until recently, most Windows products worked well on computers with just 96K of RAM. But with the introduction of Windows 2000, suddenly 128K became the minimum requirement. "With every new application and upgrade, and for all the pieces that interface with those applications, each software company is upping the ante, which is your investment."
States Robert Cummings, senior director of real estate applications for SS&C of Windsor, Conn., "One of the biggest issues for users when making a hardware investment is not focusing on today, but on five years from now, to assure the equipment can handle future applications.
He continues, "Users can't hang onto a 286 and bleed every last dollar; They have to think of technology acquisition as an ongoing business expense. Users constantly hone their professional skills, marketing positions, Web pages, etc., and technology is another piece of that process. Users must stop thinking of technology as brick and mortar, but as a service delivery mechanism. Real estate is getting too competitive to think otherwise."
States David Voigt, a practice leader with Deloitte & Touche's Real Estate Operations and System Consulting Group in Chicago, "As real estate applications get more complex, their demands on hard drive sizes, processor speeds and memory are increasing geometrically. We've never seen a new software release that requires less power or space to run - but always far more - and the pace will continue to be rapid. This is one of the reasons why Internet applications are so attractive, since most of their processing power can take place on server-oriented, not client-oriented, equipment, reducing hardware costs at the front end."