By Dan Friedman

(The following are excerpts taken from the September 1 issue of Commercial Property News. For complete text of the article please visit www.cpnonline.com/archives/2001/sep01/techno2.asp)

New York City - The tech wreck has taken its toll on software firms launched to serve the commercial real estate industry. A report issued in April by Banc of America L.L.C. identified 16 such firms that have gone bankrupt, merged, been acquired or are on the brink of collapse.

Those software firms that have survived (and even thrived) fall into two basic categories. First are the older, larger software companies-such as J.D. Edwards, Management Reports International and SS&C Technologies Inc.-that have established brand names and count commercial real estate as only part of their revenue base. They started out supplying the industry with accounting software, but many have moved on to property and portfolio management software as well. Their strength in the market derives primarily from their size, scope and stability.

Some smaller firms have hung on by forming strategic alliances with the big boys. AvidXchange.com, which provides online procurement software, was founded in 2000 and had 23 customers as of July 24, when it signed a deal to have its product offered as part of a package sold by Management Reports International. Management Reports is a 30-year-old firm that has 5,000 clients and some 40 percent of the accounting software market for commercial real estate.

"The customer is not looking to be dazzled by the technology; he wants to replicate the processes he already uses in an online environment with increased efficiency,"agreed Michael Praeger, CEO of AvidXchange.com. Praeger claims that use of AvidXchange's software has resulted in a 16 percent reduction in procurement costs for its customers.

Today's software survivors are playing down their technical wizardry and working to establish themselves as bonafide service providers. "At bottom, we're a service company,"said Thomas Ricci, vice president of systems implementation services at Management Reports International. "We've succeeded because we've always stayed focused on our core business-IT solutions for facility and portfolio management."