In my last blog, I commented on how our industry regularly falls prey to the “scratch an itch” approach of buying point solutions rather than making decisions about where their company wanted to be with their tech stack in 3-5 years.

That got me thinking about how, if I was a Chief Information or Chief Technology Officer for an operator or owner, I would go about making decisions differently. How would I expect systems to connect and what would my desired tech stack look like?

While it might seem obvious that I would want a single-vendor stack so everything was already integrated and I would have only “one throat to choke,” I quickly realized a fundamental flaw to that approach. As anyone who follows the history and evolution of technology, or really the evolution of business in general, knows, companies cannot possibly be great at everything. That’s why most conglomerates in the western world have been broken up into multiple companies, each focused on what they can be good at. Even great companies like Google and Apple have struggled to create industry-leading products outside the core that got them where they are.

The more I thought about it, the more I realized that there are two key areas of the business that I would want to focus on 1) the “leasing” platform and 2) the “analytics” platform. Depending on the business model, there may be a third area, e.g. a value-add or development company would need a robust project management platform. For purposes of this discussion, we’ll focus on the two platforms universal to all multifamily operators and owners.

The Leasing Platform

The leasing platform would obviously include the property management system (PMS). It would also include anything related to property operations and accounting. While most operators use a single product for both, there are examples of companies using one software solution for their leasing/operations and another for their accounting. The leasing platform would also include anything else customer-facing and/or related to the process of procuring leases and directly managing them: websites, lead nurturing, customer relationship management (CRM), resident portals, prospect portals, credit screening, service and make-ready management, etc.

The Analytics Platform

The analytics platform includes all things data. In particular, I think of three key areas: business intelligence (BI), budgeting/forecasting and pricing and revenue management (PRM). Business intelligence is where we would gather all our data for reporting and dashboarding. In an increasingly complex business environment, it’s important to get away from an Excel “spreadmart” world where four reports have five different occupancy numbers and associates spend 5-10 times as much time assembling and collating data as they do analyzing it. Bringing data from the various transactional “systems of record” into a “single source of truth” enables everyone to make better decisions, faster.

Budgeting and forecasting is best run as a part of an analytics platform rather than a point solution as it benefits from a clean and simple flow of data from a BI platform, and the BI platform benefits from data flowing smoothly and quickly from budgeting and forecasting into its data model.

The same goes for PRM solutions. BI benefits from a direct feed of PRM data (not just results, but also the metadata of the various calculations that lead to the results), and PRM benefits from being able to show visualizations based on data in the BI platform.

Having understood what I need, the next decision is how best to go about building such a tech stack.

Three Archetypical Approaches

I see three archetypical approaches:

1. Acquire a single platform for both.This is what the PMS vendors want everyone to do as they chase share of pocket. The advantages of this approach are simplicity and the proverbial “one throat to choke” mentioned earlier. The disadvantages are, as also mentioned earlier, that no company can be best in class in everything; and let’s be honest—while each of the primary PMS offerings in our industry have their competitive advantages, none are anywhere near “best in class” across all the needs we have. For that reason, we typically see this as a preferred solution only for very small portfolios where the “juice” of the benefits of individual best-in-class solutions isn’t worth the “squeeze” of the overhead of managing multiple systems. This is where platforms like AppFolio shine, less so where those PMS who serve larger portfolios do.
2. Acquire a leasing platform and an analytics platform, ensuring the latter can ingest all the necessary data from the former.This approach recognizes that the expertise needed to develop these two different platforms is very different resulting in focusing on separate solutions for each. However, it also solves the problem of widely disparate tech stacks by explicitly choosing connected solutions that make up a true platform.
3. Hybrid solution where we have a base platform or platforms but select point solutions for key areas where best-in-class solutions are worth the extra integration effort.This solution tries to get the best of both worlds. The default is to use as much of a leasing platform solution and an analytics platform solution while sprinkling in specific point solutions where it’s worth the effort. On the leasing side, this might be a decision to build custom websites to leverage more flexibility while using the platform’s CRM or choosing a best-in-class CRM while using the platform’s screening module—it just depends on where we each see in the incremental value based on our business model. On the analytics side, maybe we already have a bespoke BI solution that is good enough…or maybe we want to layer a best-in-class PRM solution into our analytics platform—again, it depends on each unique situation. However, the point is that these are the exceptions and not the rule!

You’ll notice I didn’t include a fourth option to just keep scratching itches by buying individual point solutions across the board and struggling to integrate them. That’s because, if I was a CIO or CTO, I’d be trying to solve that problem, not continue it!