Two major themes seem to be coming up lately in multifamily technology and operations. One is centralization—the dominant idea in how companies are restructuring work. The other is tech bloat—the growing problem of companies buying too much technology without fully accounting for the associated costs. As with so many big topics in multifamily, the two ideas are starting to converge.
Many companies are exploring centralization, but at the same time, they continue to implement new software that requires some level of interaction with properties. It's now common for property teams to be using more than 30 different apps. Site teams' working days are punctuated by service-related interruptions, which makes it unrealistic to expect teams to master 30 different applications. It also makes centralization harder.
How did we get here?
The influx of venture capital into multifamily technology has funded more individual tech solutions than ever before. Each offers some potential upside to would-be customers, at least when considered in isolation. But technologies are not implemented in isolation. If you've spent any time in the leasing office recently, you'll have noticed the cumulative impact of tech on team workload.
More apps mean more screen time for property staff, filling out forms and switching between pieces of software that were not designed to work together. The leasing office is an inefficient place for administrative work at the best of times, given the frequent interruptions. As the administrative overhead increases, so do the inefficiencies.
The problem of tech bloat is worse still in third-party managed properties. Vendors have learned to sell their products to owners directly, so the party the vendor is selling to is not the party that deploys the software. That means third-party managers must support an increasing breadth of applications, irrespective of whether they work well in the context of each operator's current platform.
These problems compound as companies attempt to move to a centralized operating model. The more technologies we push onto properties, the more busy work property teams have to do. The messy tech makes it harder to design high-quality central services, and the busy work makes it harder to take associates offsite.
How tech bloat complicates centralization
Moving property work to a more central location entails a high degree of coordination between properties and the shared services designed to support them. It is hard enough to design a centralized model for a few core workflows. When those workflows are spread across dozens of applications, it is harder to stitch them together. Simplifying a messy tech stack is more difficult than designing from scratch.
If we could shake the Etch-a-Sketch and design property management based on today's technology, most administrative functions would be conceived as centralized services. Operators would assign entire processes to specialized teams, tasked with maximizing efficiency.
Revenue management is a useful example of a multifamily process conceived from day one as a centralized function. Early adopters had to design how the new function would interact with site teams, regional teams and asset managers. They had to think through the collaboration model, the data requirements, and the appropriate access to systems before the software even existed.
That kind of process design is a lot easier when building a new function. It also makes it easier to evaluate and implement technology. Specialist teams are naturally more proficient in the processes they manage than property-based generalists can ever expect to be. They have the bandwidth and expertise to evaluate technologies far more effectively than in today's "all-you-can-eat" technology environment.
What's next?
The problem for today's multifamily operators is that rolling out software (whether it helps or not) is relatively easy. Changing the operating model is hard. Like with revenue management, it is better to design processes first and then apply technology to automate them. But in practice, that design work often requires making difficult decisions: reassigning responsibilities, removing roles from site teams, and fundamentally changing how work gets done.
Those decisions are hard, so companies often default to the easier route: shopping for technology. That habit will become costlier in the era of AI, given how heavily the technology relies on consistent data and coherent workflows. Fragmented technology and the siloed data will create a suboptimal environment for AI. That is one of the underappreciated consequences of unchecked tech bloat.
So here's a simple rule for companies contemplating centralization: unless a technology is customer-facing, it should be evaluated by and implemented with a central team. Property teams should, of course, have access—but not ownership, as we should be subtracting from, rather than adding to their technology-related workload.
Tech bloat, automation and centralization are themes that will continue to get coverage in these pages throughout the year. In September, I look forward to hosting a panel at Blueprint with a group of C-suite executives to explore tech acquisition in greater depth. Centralization brings the problem of tech bloat into sharper focus, as the state of the changing tech stack edges ever further up the list of executive priorities.
Photo by Michael Hamments on Unsplash