Fall conference season is fast approaching, and this year's program promises a few interesting conversations. I've been preparing what promises to be an intriguing conversation on a topic that seems to be growing in importance: how multifamily operators select technology. A lot has changed about the tech itself and how we fund the companies that make it. Both provide important context for a session that I am particularly looking forward to at Blueprint next month.
The panel—No Solutions, Only Trade-offs: Raising the Bar on Your Technology Stack—will explore how the leaders of three quite different companies approach decisions affecting their firms' tech stacks. Melanie French, CEO of RR Living; Josh Gampp, CTO of UDR and Jeremy Poteet, EVP of Technology at JBG Smith, should provide enough diversity of perspective to do the topic justice.
Setting the baseline
Before I share any more details on the conversation that we are planning for the Blueprint session, here is a list of my own observations about tech decision-making that make this panel feel necessary.
- We're talking a lot these days about software beauty contests, but that's not how most software decisions get made.
- AI (as well as some other technologies) is eroding tech product categories. You can get the same functionality in products that didn't previously compete directly. Apples-to-apples technology comparisons are getting harder to do.
- Best-of-breed (BoB) solutions grab outsize attention and focus in an industry where most software is purchased from Yardi, RealPage, or AppFolio.
- In the main, companies are currently buying too much software to be used by property teams, and are systematically under-accounting for the overhead of teams using a lot of apps.
- The smartest tech stacks are optimized for the company's operating model, and vice versa.
- Sometimes it's OK not to implement software.
Three types of decisions
The points above are voiced as challenges to the status quo. Their intent is to drive a conversation about how to buy the best technology given the unique context of each organization. If beauty contests don't reflect true technology decisions, it's worth thinking about how tech choices are usually framed. Three spring to mind:
1/ PMS vendor solution vs best of breed.
While most technology is purchased from PMS vendors, there are times when companies choose to add BoB functionality. The question is "why?" Sometimes capabilities don't exist at the same level within the PMS stack. Fraud prevention provides a good, current example of that scenario (note: that will be the subject of a forthcoming 20for20 deep dive series).
That may mean the PMS version of the tool is suboptimal, or it may mean they offer no solution (at least not yet). In either case, the quality of the decision is about understanding what the new functionality is worth, and whether that value is above the threshold for bringing a new supplier into the tech stack. I want to understand more about how companies figure that out (in full knowledge that most tend not to).
Since the context of these decisions usually concerns innovation, the characteristics of the founders are often more important than the functional points of their software. That includes their ability to deliver on their vision and the leverage the buyer expects to have relative to working with a huge PMS vendor.
Finally, we must now factor in the common scenario where property management companies are also investors in technology funds that have backed the BoB provider. The expectation that LPs purchase the technology in which their funds invest creates a new consideration.
And finally, buyers must account for the founder's objectives and the inevitability of their eventual exit.
2/ Build vs buy.
This decision type applies to larger companies that can consider developing technology, rather than purchasing it off the shelf. Most multifamily companies don't run IT shops large enough for development projects, but for some it is an option. These are decisions about ownership: of functionality, roadmap, control, and fit on one side, and the support burden, technical debt, and ongoing maintenance on the other.
3/ Whether or not to do the project at all.
Perhaps the most impactful, and by far the most neglected decision type by leaders managing tech stacks, is the decision not to do a project.
Companies underestimate how committed they already are by the time they begin a software evaluation. Once the conversation focuses on "which vendor has the best mousetrap," it becomes challenging for companies to remain focused on the specifics of the business problem they are trying to solve.
It is generally hard to kill a process that is already underway at a company, so the most effective approach is to avoid as many evaluations as possible. Again, that means being highly disciplined about what is core vs non-core to your business, and understanding the relationship between specific functionality and competitive advantage or disadvantage. Those are hard decisions to execute effectively by committee.
There is a lot to talk about, which is why I approached Blueprint with this topic. It is to the organizers' credit that they took the time to collaborate on making a session of it. My hope is that by drilling into specific decisions that reflect reality, we can draw some conclusions about the real principles for maintaining and developing the right tech stack for your business.
I hope most of my readers are planning to make the trip to Las Vegas and will join us for this panel. And if you haven't yet registered for Blueprint Las Vegas in September, click below to access the 20for20 discount.
Photo by Aydın Photography