Multifamily's BI Evolution (Not Revolution)
by Dom Beveridge | June 30, 2020
When we come to write the history of the changes that coronavirus forced upon multifamily, there will be plenty to say about its impact on technology. With social distancing virtualizing property operations, demand for proptech has skyrocketed, for example (as we will discuss on this blog in the next few weeks). But as companies have accommodated work from home, another, more traditional technology has come to the fore: Business Intelligence (BI).
With social distancing and virtual office arrangements now commonplace, we have fewer opportunities to walk properties, meet with teams, and understand at first hand what is going on. In this environment, the need to draw insight from data is greater than ever, heightening the focus on the quality and accessibility of this most precious of assets. It is interesting, then, to consider the ways that companies are adopting BI in our industry.
What We've Learned About Multifamily Adoption
Over the last couple of years, we at D2 have researched an industry white paper: "20 for '20," which is based on 20 interviews with senior multifamily leaders. Somewhat surprisingly, in each of the last two years, BI emerged as a major finding, but for different reasons each year.
In our 2019 edition, we noted that the adoption pattern of BI was different from other enterprise technologies. Unlike with CRM or revenue management, for example, there has been no "big bang" of BI adoption. The pattern is more like a slow trickle of implementations over many years. Second, we were struck by the relatively low enthusiasm that BI seemed to inspire amongst those who had adopted it. This struck us as odd: BI has the power to transform organizations, but you wouldn't know it based on the tone of many of the companies who had rolled it out.
One year later, our 2020 findings suggested that attitudes have changed. 40% of COOs shared that BI had played a bigger role in their 2019 than anticipated, and 30% of respondents cited BI as their number one priority for 2020. Together these two data points suggested a very different perspective from one year earlier.
In the 2020 interviews, we asked for more details about the way that companies are approaching BI. What is striking about their answers is the unusually wide spectrum of capabilities and solution types currently in use, given the relatively long time the technology has been available. Of the 20 companies interviewed:
- 40% have built or are building their own platform, using standard tools like PowerBI
- 30% use a PMS vendor "off the shelf" solution
- 30% either have no solution or regard themselves as too early in their project to be considered live on BI
Multifamily's (Strange) BI Evolution
In reviewing the CIO responses on the subject of BI, the prevailing trend began to emerge. Most characterized their 2019 accomplishments and 2020 plans as stages in a journey (even if they did not use those words). The four descriptions above sound like discrete solution types. In reality, they are something more like a progression in a multi-year process.
For example, we spoke to COOs who had implemented off-the-shelf BI in 2020, but who were already considering moving to a more sophisticated BI infrastructure. It is understandable in the context of wanting to go from zero to at least enterprise reporting and some dashboarding capabilities. But companies appear to out-grow existing off-the-shelf solutions: identifying quickly the need for greater flexibility of data sources, reports and dashboards.
We also noted that some of the biggest 2020 projects entailed not implementing a new platform, but broadening organizational access to one that already exists. These typically larger companies had built their own capabilities over multiple years. Most have stories to tell of the missteps they had experienced as they developed their platforms.
Most do not regard implementation as "completed" in the way that they do with many other technologies (e.g., revenue management), which goes some way to explaining the slow adoption and relative apathy that we inferred from the interviews for the 2019 edition. But all in all, it is hard to look at the evolutionary path that most firms seem to follow without noticing an inefficiency in the way they have acquired their capabilities.
While COVID-19 has changed IT priorities for most multifamily organizations, BI ought to be moving up the list, not down. IoT devices, virtual tours, AI leasing and self-show are all adding to the data available for analysis and decision-making. The skill of marshaling data and leveraging it for decision-making is already growing in importance - it is now time for the industry to find a more efficient way to deliver the underlying technology.