Technology in real estate: a 75-year March of progress.

IT'S AMAZING--THE MASSIVE EXPANSION OF TECHNOLOGY'S REACH ACROSS ALL ASPECTS OF HUMAN ENDEAVOR THROUGHOUT THIS LAST CENTURY, FROM TRANSISTORS TO SPACE FLIGHT TO COMPUTERS AND HAND-HELD ELECTRONIC DEVICES.

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Over the 75 years of IREM's existence, the commercial and multifamily segments of the real estate industry have been no exception to this breathtaking escalation. Today, real estate management is driven by its underlying technology. The scope of technological innovation would astound even the most visionary leaders of three quarters of a century ago.

Decades of evolution, from ledgers to computers

Handwritten bookkeeping methods from the 1930s eventually gave way to the first forms of automation. It wasn't until the last quarter-century that the real estate industry experienced the most profound growth and progress in its portfolio management technology.

In the 1980s, Microsoft DOS-based accounting systems let real estate managers and accountants make digital entries to property financial books and generate static reporting by using computers.

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This marked the end of the era of manual ledgers and handwritten checks; property managers and accountants began relying on databases to keep transaction information organized and easily accessible. For the first time, property managers and investors could validate data entry and produce automated reports on occupancy percentages and financial performance. As technology continued to advance, visionary commercial and multifamily real estate companies saw opportunity in innovation. They realized that working more efficiently and managing more information in meaningful ways would provide a competitive edge and generate growth through the expansion of portfolios and new markets--and that was just the tip of the iceberg!

Business strategy in a technology culture

Technology has evolved to the current state of the art in real estate technology: strategically focused Internet-based property management software packages that consolidate portfolio, financial, lease and other data into one database. The best equipped among them comprise a browser-based, dashboard-driven platform that handles the full real estate lifestyle for a diverse portfolio with dynamic consolidation capability, and even include functionality for multiple tax and accounting rules, language translations and currency conversions--all in a single, fully integrated, end-to-end system. This all sounds technically impressive, but what does it really mean for today's property managers?

The answer is a series of profound payoffs for property managers: better informed decision-making and faster access to information on new or expanded markets, along with the means to grow operations. With a complete picture of a portfolio, managers can diminish risk and more easily see a path to organizational growth and profitability. Another byproduct is healthy synergy of best practices and competition: Businesspeople seeking faster and more agile technology to match and surpass their competitors look to their technology providers for the next great innovation, which in turn leads to the industry's next wave of best practices.

As in any industry, property management companies must consider all stakeholders's expectations when devising a strategic business plan. Technology has permeated both our business and personal lives, giving rise to high expectations of information accessibility, service availability and investment success. Today, competitive edge is gained not only by efficient operations, but also by managing larger portfolios, making faster and more reliable decisions, and providing services that competitors can't provide.

Over the past 75 years, real estate's most successful leaders were those who were able to look ahead. Today's leaders must do the same; as part of their vision for success they must understand how to leverage the latest market demands and economic trends. Because many demands of the marketplace hinge on technology, business leaders must incorporate technology into the strategic planning process.

Enhanced opportunity beckons

Real estate technology has fully matured from a set of tactical tools into a key element of a business plan that drives efficienty, visibility, risk mitigation and service. All of those factors maximize the capacity for growth and success. Capabilities that were virtually unthinkable 75 years ago--not to mention 25, or even 10 years ago--are now within our reach. As a result, companies are better positioned to achieve their strategic priorities across their entire real estate business. By understanding technology's impact and making careful, strategic technology choices, real estate business leaders can reap the rewards of a more efficient and agile enterprise.

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TECHNOLOGY TRENDS TAKING SHAPE: With strategic planning in mind, what can we look forward to in real estate technology? Technology has developed to such a level that merely implementing a property management and accounting system into your business does not provide the kind of competitive edge it provided a few years ago. Here are a few new trends and differentiators that we can soon anticipate:

PORTALS: The combination of a faster-paced industry and service expectations means that we can expect portals to be widely adopted. Already increasingly used in the multifamily industry, portals will also allow the commercial industry the ability to extend dynamic access to external stakeholders such as tenants and residents, prospects, owners and vendors by enabling online information and transactions to be integrated with an operating database. Portals allow for dynamic marketing of units and space, online applications and leasing, rent payments and ledgers, online paperless invoicing, online reporting and many other applications. The property manager who is able to fully leverage this technology will gain a clear competitive edge.

PAPERLESS TRANSACTIONS. The pressure to reduce paper across our industry is manifesting in the adoption of paperless processing. Centralized invoice processing, routing and synchronization with various accounts payable systems across an organization can eliminate paper and the cost of paper handling, reduce invoice cycle time and enforce consistency across the accounts payable organization. Many industry leaders have already adopted this capability; coupled with online invoicing through portals, this technology will have a tremendous impact on both operational costs and paper conservation.

GOING GREEN. In addition to paperless processing, technology also can support green building initiatives. New technologies offer centralized online green procurement services and spend management, and we expect them to help set the standard for efficient cost-effective procurement practices for sustainability in the real estate industry. Some prospects require demonstrations of sustainability in the buildings they occupy; whether motivated by environmental concern or market demand, we can expect this trend to accelerate. E-procurement technology and services also boost the development of such sustainability initiatives.

EXPANSION LEADING TO FULL BUSINESS INTEGRATION. Portfolio expansion and globalization mean that the amount of data that must be managed is greater than could have been imagined even 10 years ago. Coupling this with a faster pace, driving the need for instant business intelligence, full visibility and increased scalability offers a picture of what we can anticipate--the continued trend toward replacing multiple software systems with a single, integrated business-wide system. Business solutions with this capability will enable a tremendous reduction in the cost of IT and operations, while maximizing the capacity for growth even across multi-national portfolios.

BY BRADLEY SETSER, VICE PRESIDENT OF MARKETING, YARDI SYSTEMS

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