By Maria Siakavellas

APRIL 02, 2002 -- New York--It's no secret the multi-housing industry is not the easiest industry to work through. The innumerable steps and long processes that stem from the initial notion of a project and finally trickle down to the day-to-day management of a property rarely go without a hitch. Although multi-housing professionals are indeed benefiting from a multitude of new innovations, the technological goals set by many companies have yet to be met. The dot-com clamor has ceased and what was once dubbed a technological revolution is now more of a technological evolution; a process to span a timeframe quite a bit longer than first anticipated.

What's more, the viability of the much-talked-about Web-based property management software has been questioned, and although the industry has yet to abandon the concept, initiatives are being re-evaluated to reflect more realistic goals. "I believe the Web-based property management system concept is alive and well," says Jacob Garza, president and CEO of Richardson, Texas-based Property Automation Software Corp. "But, and I am not saying that we are not seeking out developing [such a system], the tools that are available today to get [such a] robust application over the Web are still a little ways away."

Garza adds what property management companies really need is a robust application to handle the enormous amounts of data that flow through their systems--something Web-based software programs cannot yet provide.

"I don't want to sound like a pessimist [because] I believe that ultimately we'll all be on the Web. It's just that it is going to take a little time for the technology to mature and the [industry] to fully embrace having their data reside somewhere other than their central offices," Garza says.

And the steps to be taken before this concept can truly come to life are numerous.

For many, the real estate industry is seldom the first in line to welcome new technology. "The real estate industry as a whole has had early adapters and late adapters to any type of technology," says Mark Burgess, vice president, sales and marketing, REmanage, Inc., Dallas. "But for whatever reason, when you compare the real estate industry to other industries out there, it has been on the backside of the wave as far as adapting to new solutions." According to Burgess, there are a number of multi-housing companies still operating their portfolios with old legacy systems and DOS-based solutions, and they have remained both successful and profitable even with this limited use of technology. Yet he adds that with time, these firms will realize the true need for both updated hardware and software.

"They have a responsibility to stay profitable and continue to grow and with growth comes the need to hire new employees," Burgess explains. "Well, if you're out there trying to buy a new computer today, good luck with finding one that will run an old DOS solution. And if you're trying to hire people today, good luck with trying to hire someone that is comfortable with, or wants to work on, an old DOS solution."

Whereas in the past the topics of discussion among property managers were about simply increasing rents and decreasing delinquencies, Burgess adds, today workflow efficiencies, technology and how to better use that technology are on the forefront. "You can add to the bottom line or take away from the bottom line just as quickly with [technological] decisions as you can with other business decisions," he notes.

Perhaps the biggest hurdle causing the multi-housing industry to technologically lag behind other industries is its inability to establish and adopt a uniform data standard and common software architecture. According to sources, most of the software solutions and applications introduced to the industry today cannot properly communicate with one another or even with the back office systems of multi-housing companies.

Furthermore, without a common language or open architecture, new technologies will hardly have the opportunity to revolutionize the multi-housing industry.

The potential of a uniform data standard has been acknowledged, however, as the National Multi Housing Council (NMHC) recently created a working group to explore its creation. "The goal is to try and create a data dictionary, define elements and establish a protocol for [extensible markup language] (XML) to facilitate software integration," says David Cardwell, vice president for finance and technology at NMHC. "The whole basis of this is to improve the transmission of information and the use of data by the industry."

According to NMHC, it will provide the institutional structure needed for the development and ongoing maintenance of the data standards initiative, while hosting meetings and coordinating activities for the working group. (At press time, approximately 30 individuals were registered to participate in the working group representing such companies as AMSI, AvalonBay Communities, Inc., Archstone-Smith, BRE Properties, Camden Properties Trust, Equity Residential Properties Trust, Real Page, Realeum, SafeRent, Village Green, Yardi Systems and others.)

Cardwell, who says the initiative was launched based on the interest generated by a number of multi-housing owners, managers and technology providers, admits the effort to create a common data standard—or as NMHC has preliminarily labeled it, Multifamily Information and Transaction Standard (MITS)--should be short-term while the benefits to the industry will undoubtedly be long-term.

Russ Sandlin, director of residential business development for Cleveland-based Management Reports International (MRI), agrees. "At the property management level, the real goal is to be able to integrate different [software] programs," he says, also noting that MRI is already heavily involved in NMHC's data standard initiative. "A couple of things have happened in the industry in the last five years [or so] as it is moving forward towards the collection of real-time data," Sandlin explains.

Numerous software companies, such as MRI, have come out with an Internet-based product that will allow property management information to be stored onto a database in real-time. "There have also been a lot of initiatives where owners have been trying to create ancillary income, as well as a reduction in operating expenses," he adds. "For example, one is water submetering, another would be resident screening and yet another would be--using the Internet to buy goods and services."

Some companies offering these services have created Internet-based solutions for the property management industry and what MITS would do, Sandlin further explains, is allow these companies to easily exchange data amongst themselves and property management software companies, such as MRI, as well.

"Conceptually now the only way to accomplish that would be if, for example, we [establish] a relationship with SafeRent and [go] through the process of merging our architectures," he says, adding that this process of merging and integrating software architectures can be a costly and time-consuming one. "If we had the standardized data exchange platform, then that process would be much more simplified. It would allow us to talk to those programs more efficiently." Without a common multi-housing XML-based language, property management companies are forced to individually turn to multiple sites and companies in order to obtain all these products and services instead of using one complete solution. "When the data exchange library is standardized, then we'll be able to do the integration so that [property managers] won't have to," Sandlin notes.

Furthermore, Sandlin believes that MITS will ultimately allow the industry to compile statistical information from these various sources. "Ultimately, in the big picture they are looking at the ability to collate information from different sources. For example, if you took the two or three top property management software providers, one of the ultimate goals would be for those companies to be able to collate data that would be generic in nature," Sandlin says. "It would be generalized data that would enable us to get statistical information on the marketplace that is not available today."

But one downside to the MITS initiative can be its price tag. According to NMHC, it will contribute the "initial seed funds necessary to provide administrative and professional support services to start the effort," but it acknowledges that a primary task for the working group is to determine the greater financial commitment needed to undertake and sustain the project. "We have to figure out how to fund it, whether we are going to try to utilize information that is already existing or develop something on our own," Cardwell says. "It's hard to debate the need for standardization. There are so many benefits, and the only downside to standardization is that there is a cost to it, which is hard to quantify," he adds.

However, the real difficulty in establishing and adopting a uniform data standard lies in the nature of the multi-housing industry. Inconsistency, sources say, poses a significant challenge. "One of the challenges that all technology companies face is the capability of giving clients choices on the front end," Sandlin says. The lack of consistency from player to player--primarily the variation in size and type--forces many service and application providers to focus on specific elements of property operations and keeps them from trying to fully integrate systems. Yet Cardwell believes this fact just amplifies the need for and value of MITS.

In the end, the costs and hard work of executing such a project should pale in comparison to the savings and workflow efficiencies companies should finally incur when using a complete solution.

"What I think you are going to see happen is [software products] will become total solutions and I think that's the big thing," says Burgess. "[It's better to] give[property managers] one key to [operate] the whole ship and not a bunch of little keys to different rooms in a ship."