In the first two installments of this blog series, I discussed how to identify the business need when evaluating new technologies (what problem am I solving?) as well as how to gain buy-in from stakeholders (critical to ensure everyone is working toward the desired outcome). In this third installment, I'll discuss the next natural step – how to effectively determine the budget for a new tech acquisition.

Determine Your Budget

The right tech solution, identified and deployed correctly, should improve NOI. Too often, operators view new technology as a cost center only, largely because there hasn't been a well-thought-out, process-oriented approach. If operators are able to shift the thinking to how a potential solution will impact the bottom line, there will be fewer "misses" in onboarding new tech.

Of course, the margins in multifamily can be tight, creating strain when deploying new technology – especially if it isn't replacing an existing solution. That's why it's crucial to decide how the company will pay for the product before evaluating new solutions. If you don't have an existing budget, that shouldn't mean that you continue to live with the pain point.

Work with department heads across the company to understand where the company is financially and what other projects may be in the works. Some of the items for consideration of the organization's financial health and ability to invest in new tech should include analysis of financial statements:

• Income statement: assess the company's profitability by examining revenue, expenses, and net income over time.
• Balance sheet: Review the company's assets, liabilities, and equity to understand its financial position at a given point in time.
• Cash flow statement: Evaluate the company's cash inflows and outflows from operating, investing, and financing activities.

Also, be sure to establish and understand what you believe will be the ROI of implementing a new solution. You can use a simple cost-benefit ratio, or more advanced methods such as net present value, internal rate of return, or payback period. It will be very important to understand all of the costs involved initially and going forward, or Total Cost of Ownership (TCO):

• Initial Costs: Purchase price, installation, and setup.
• Ongoing Costs: Maintenance, updates, and support.
• Indirect Costs: Training, downtime during implementation, and potential disruption.

The right tech solution, identified and deployed correctly, will improve NOI. Too often, operators view new technology as a cost center, largely because there hasn't been a well-thought-out, process-oriented approach. If operators are able to shift the thinking to how the solution will impact the bottom line, there will be fewer "misses" in onboarding new tech solutions.

Next Steps:

• Determine how you will fund the solution
• Calculate the ROI
• Create a budget that is reasonable and justifiable
• Gain approval for the earmarked funds

Questions to ask:

• Have I explored all financial impacts, both cost and ROI?
• Have I identified any potential obstacles to moving forward with funding?
• Why should I spend money on this solution vs. other pain points/areas?
• What are the potential risks of not implementing this technology?
• How will this technology impact our competitive position in the market?
• What are the scalability considerations for this technology as our business grows?

All solutions are not created equal. Doing your homework will save undue cost and frustration.