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Trends in property management software.

My recent telephone survey of 293 publishers of property management software revealed 135 still in business and 158 dead or missing in action. The 158 are only the latest addition to the casualty roll, which was already well above 100 prior to this survey.

The survival or disappearance of property management software publishers is not an indicator of quality of the software. Some good ones are now gone, and some bad ones are still with us. Similarly, the survival to date of a property management software publisher is not necessarily a guarantee of financial strength. Several of the survivors are having problems.

Of the 135 publishers still in business, each one offers one or more software programs specifically designed for property management applications. More than 95 percent of these are accounting-based programs, and most of those are comprehensive programs that include both tenant- and summary-level accounting.

Because these are not generic programs, and they are not designed for other industries, why, you might ask, have you not heard of more than a few of them? Many of the programs are not designed for your general requirements. And, of the many programs that probably do address your requirements, several are not visible enough to show up on your list of potential candidates.

The reason for the first factor is simple. If you are considering microcomputer-based programs you will not be concerned with the minicomputer-based options or vice versa. Similarly, if you are seeking programs for mainstream property management, you will not be concerned with specialty niche property management programs such as those for resorts.

The second factor is more complex. The market for property management software is still immature and inefficient. The marketing "channels" are very weak. Retail stores do not generally sell special-industry software, and too few qualified local dealers are available. As a result, mail order is the primary channel.

The demand side of the market is not large enough or dynamic enough to support the supply side. Nor are prices for property management software high enough to promote market maturity.

In a mature, efficient market, things like product quality, level of functionality, and general goodness of fit" are not generally out of line with price, market share, product visibility, and promotion. In immature, inefficient markets - such as for property management software - these factors are not always good indicators of the product qualities or characteristics. They are not good contra-indicators either. Some visible, well-promoted products deserve their image, but some which are promotion-driven and R&D-shy do not. And, some publishers that are product-development-driven and promotion-shy deserve more sales than they achieve.

What's new

In 1991 the property management software industry is still in a shakeout. Very few new publishers have entered the market in the past several months. Consequently, "what's new" is generally an improvement of what's old. While the results are spotty, several publishers are moving forward.

Some vendors are making only surface changes or adding minor new features, catching up from being behind, or following a trend after someone else's new twist. Software publishers commonly add several minor new features on each upgrade. These enhance the quality and overall functionality of the program, but they do not generally improve the sales edge.

Changes in hardware and

operating system platforms

". . . DOS is dying, but it isn't dead; Windows is the future, but not |the' future; OS/2 is ultimately where we're going, except that it isn't going anywhere; and Unix is what everyone seems to want to avoid, but it's already here. . . ."

The mainstream operating systems and computers for property management software programs are MS-DOS for microcomputers, IBM AS/400 minicomputers, and Xenix/Unix as the third primary alternative.

* Micro vs. mini. One of the key trends over the past several years has been the downward migration of property management software from minis to micros. Each year more mini system vendors make the very difficult decision to offer a microcomputer version. A few vendors offer only a teaser version on micros.

Two of the long-time mini-based vendors who recently announced micro property management programs are SSI (Systems Specialists, Inc.) and TenMan Systems. As with all such previous announcements it will take a few months to determine if they are actually committed to micros.

* Unix. In contrast to MS-DOS, there are several different versions of Unix. in property management software, we keep seeing more Unix-based programs each year There are more Xenix-based programs on micros, still several Unix-based programs on minicomputers, and a handful of property management programs for IBM'S RS6000 workstation system.

The increased availability of property management software programs running under Unix seems, in recent years, to be much more related to the increased ease of adapting to that platform than to the relative merits of the operating system. One promising development is a system running both DOS and Unix in a seamless integrated environment.

* OS/2. One major property management software vendor, Timberline, has been committed to OS/2. There is still no competition for it.

* Macintosh. In property management software, the Macintosh is not a factor as a mainstream competitor But, because some buyers express a special requirement for it, a niche market exists. A handful of vendors offer Mac property management programs, and Good Software has come out with a new one.

* Microsoft (MS) Windows. The supply side of the property management software market is even less interested in Windows than the Mac. A couple of publishers, including Good Software and Geac J&E Systems, have new Windows property management programs.

* Other operating systems. Other operating systems are gradually losing ground in property management software through attrition. This is especially true of the proprietary operating systems of minicomputer manufacturers.

* Service bureaus. Most of the service bureaus died years ago it looked like they would all go. But now a few around the country are apparently stable and set for at least a few more years.

Software platforms

One of the fundamental choices a software publisher makes is to use a programming language or a "user-accessible" language Another choice is whether to build a general ledger program or interface to someone else's.

The trend in microcomputer programs continues to be fewer programs in BASIC and COBOL and more programs in a modern and powerful language, such as "C." A few publishers are using different languages in different parts of their programs, including a few that use assembly language to speed up some operations.

One thing to be aware of in considering a program is the match between the language and the operating system. For example, of the dozen property management programs that will now run on the IBM AS/400, only a very few have been rewritten to exploit the superior AS/400 capabilities.

Ninety percent of property management programs are written in a programming language. An alternative to a programming language is to write programs in a "language" such as dBase. There are several alternatives available for software publishers to use.

In the early days of microcomputers, dBase was a popular property management software development platform. The commercial failure of the dBase programs, and later attempts in Clipper, have led to the current focus on Foxbase as a preferred development platform. Other competing platforms found under one or two property management programs include Revelation, Paradox, and Omnis 5.

One potential trend to watch for at the high end of the micro spectrum is the use of "4GL" ("fourth generation language") programs for property management software development. Two long-term successful publishers are rewriting their programs in 4GLs.

The primary rationalization for the use of nonprogramming languages for property management.software has been that users can customize the programs. That goal is only realized in the 4GL environment when professional 4GL programmers are employed by the user.

The real reasons for the use of these platforms, instead of programming languages, have been that programming costs were lower, and many programs were originally developed by amateurs without commercialization in mind.

On the other hand, the nonprogramming-language programs are often better overall than their programming-language-based competitors and have the better report writing capability. These programs usually operate more slowly than those based on programming languages. In addition, software based on a programming language is generally more costly to develop and to upgrade.

One trend is for software publishers to buy third-party sections of program code-for example, to handle input. That reduces program development costs but also increases dependence on third parties for program improvements.

Storage organization

One fundamental issue every property management software publisher must address is how to organize the storage of data. Surprising as it seems nowadays, the concept of "database" in relation to the organization of data is fairly new. The old accounting programs do not incorporate database methods.

Sometimes it is easy to determine if your program has a database core. For example, the documentation may show the data file details. Or the program may provide for sophisticated ad hoc report writing including advanced select/filter and sort/order capabilities.

Without clear indicators to show the existence of a database foundation, the program may be weak in its data storage organization. One limitation would be reports available only in predetermined, preformatted options.

Most of the programs used as nonprogramming-language platforms for property management software, such as Revelation, Foxbase, and 4GL, are database programs. On the other hand, some property management software built-in programming languages have excellent databases and report writers.

User interaction

The mainstream user interface in property management software is "character-based" or text-based." The state-of-the-art alternative is GUI (graphical user interface, or "gooey").

Examples of GUI-based property management systems are few; only those on Macintosh and MS-Windows. This is not a trend now, and probably never will be on those platforms.

The major user-interface trend in property management software is "look and feel." Instead of moving to MS-Windows, property management software publishers are adding elements of the "look and feel" of GUI - for example, windows," pull-down menus, context-sensitive help systems, automatic messages, "hot key" navigation systems using function keys. Programming in languages such as C makes this easier to implement.

Program improvements

The issue of how program improvements are implemented is an "advanced" issue. Beginners and new users do not usually see why it is important. Software publishers generally diminish it, but it is significant. The program changes go to the heart of the quality and design integrity of a program.

The property management software publishers are in a bind because the current economics of the business will not provide for enough resources to implement improvements except by the standard of retrofitting and patching. Yet this cut and paste" approach often reduces program quality. The best opportunity for a publisher to rework a program, instead of retrofit it, is when a new platform is adopted.

Input and operations

New developments in property management software during the past few months have included some data input innovations. And, one property management program publisher has focused special effort on the recovery element of program operations.

The mainstream method of data input is, of course, the keyboard, but some property management software publishers are introducing new methods. For example, Data Compass is using a light pen for automatic receipt processing of self-mailer rent bills. Other property management software publishers are preparing for bar code imaging (for example, of leases) and voice input.

Chris Schaefer Company has placed special emphasis on fail-safe recovery following a system failure. The system does not require any data reloading or file reprocessing.

Output

Improvements in property management software output capabilities are, at the same time, more important and less heralded than many other program developments. Three areas of particular interest are report processing, report formats, and external program interfaces.

* Report processing, Improvements in property management software report processing have been gradual until recently. Buyers and users now generally understand that one of the best ways to get more out of a property management system is to get more and better reports. Some property management software publishers are responding with leading-edge improvements.

The two primary types of reports processed by users are predefined reports and reports produced from report writers/ generators. Three aspects of predefined reports that offer new options are parameters, queues, and stored queues.

Most property management software reports have predefined and fixed parameters and data contents. More programs are providing options for the user to specify time periods or dates, level of detail/summary, entity combination, and other parameters.

Many property management programs require the user to print one report, wait, select another report, wait, and so forth. Some programs-for example, American Computer Systems (ACS)-provide for a report queue; mark all the reports you want, then print them all. ACS goes further and provides for stored queues.

Report writers are becoming even more sophisticated and easier to use. There is still a long way to go in both power and ease of use. Nevertheless, a few have reached the point where an infrequent user can produce cost-effective results.

* Report formats. One long-term trend in report formats has been a gradual decline in wide-carriage 14" x 17" "computerpages" reports. More programs use smaller page formats.

Another likely future trend will be laser printers as primary property management system printers. They are already becoming a force for change in report formats.

Laser printers with graphics-based, instead of text-based, output, can use 81/2" x 11" paper for all property management reports. They can print vertical/portrait or horizontal/landscape formats. And they can produce anything a typesetter or forms designer can produce. For example, with good use of line-separations, shadings, print/character/style distinctions, density, and other design elements, very readable reports can be produced on letter-size paper Graphics are, of course, an extra benefit.

* External program interfaces. The existence of export interfaces from property management software programs is becoming more common and more expected. The first thing to look for is the ability to access data in ASCII" format. The data may be stored that way, or some interface and conversion sequence may be able to produce it.

Beyond the basics, you can find export interfaces to other data storage formats and to other software programs-report writers, databases, Lotus, and other analysis programs. A new development is interfaces to HUD programs.

Another new factor is that more property management software publishers are focusing on making the export interfaces much easier to use. Export can now be performed by simple menu operation with very few steps in some programs.

Property types

The generic property types addressed by property management software are, of course, apartment and commercial" properties. Other property types, depending on their complexity, are either managed with specialized niche programs or treated as generic property management. For example, complex and sophisticated retail property management is addressed by niche property management software, while simpler retail is just commercial" property.

In recent months several of the software publishers have focused on two niches: HUD and resort software.

For several years, the HUD property management software market has had very few suppliers. Now there are nearly a dozen. The two major strategies of the vendors new to the HUD software market are to build a new HUD module for their program or to develop an interface to another vendor's HUD modules. For example, A&M Software has developed some of these relationships for its HUD Manager program.

The market for resort property management software was very slow for years and has picked up recently. There are several variations of "resorts" so the dozen plus resort property management programs really represent a few, even more narrow niches.

There are three types of vendors offering resort property management software - those that have specialized in the niche for a long time, those that have added it to a successful mainstream property management software line, and those that formerly focused on mainstream property management software. The bottom line is that buyers have more choice. Yet the market is still very immature and knowing what you are getting is still very difficult.

Expanding uses

What do you do once you have the bookkeeping/accounting take care of? Where can a computer help you next? One possibility is tenanting. Two related areas are credit checking and traffic?

Will a closer connection of credit reporting to property management systems become a trend? Or, will there be only a few instances of it?

At this time one property management software publisher has added a credit reporting system to the property management system menu. And in San Diego, for example, two third-party system vendors are focusing specifically on the property management industry. One of the clear signs of maturity and sophistication in the use of computers by an organization is when it uses them for tasks that are not performed without them. For example, while dollar-accounting is performed in the absence of computers, traffic-accounting rarely is. Property management organizations that use traffic systems are probably more sophisticated than those which do not.

Of course, it is not that simple. The key is whether it can be profitable or not. In the domain of traffic and prospect follow-up additions to property management software, little new is being offered. And that is odd.

AMSI broke the ground a few years ago with its traffic and marketing program. So far, there is little competition. In the "managerial" era of property management, this kind of system is inevitable. It is still too early. In addition, this kind of system is useless without the personnel and procedures in place to make it work.

Receipts

A fundamental distinction of property management systems from generic accounting is in receipts - billing, collecting, recording. There are as many variations in the details of receipts functions in property management programs as there are publishers of them. Two of the most noticeable instances of continuing development in property management receipts functionality are lock box and remote processing.

With the advent of new technology, including OCR/MICR printing with property management systems, lock box arrangements should be more profitable. Softa, for example, has a new lock box system for its software.

The provision of on-site computer capabilities is one of the current major trends in property management software. Within the next one to three years, the trend will have matured, and the capability will be a familiar option in the mainstream.

The idea of putting a computer on a site is not just for receipts processing. of course. But without that fundamental aspect, it may not make much sense. There will continue to be many different variations in the fundamental aspects of remote processing. For example: The software program used at the site may be a special site program or a copy of the regular program. And, the data package that is transmitted from the site may be the entire database or only the latest changes to it. And, the telecommunications technology may be generic and simple or very specialized and sophisticated.

Current developments in property management remote processing systems include two-way data transfer (for example, by MRI) and user-customizable site setup (for example, by MRI and AMSI systems). One of the several issues that vendors and users are exploring is the involvement of site personnel in accounts payable procedures.

One surprising new development is the announcement by Prentice Hall that they have changed their long-time strategy and will now provide general ledger and accounts payable modules for their Onsite family.

Payments

The account number at the bottom of your checks must be specially printed in order to be read during bank processing by the magnetic ink character recognition (MICR) system.

Instead of ordering precoded checks from the bank, you can, with several property management systems, print your own MICR lines on blank check stock. This is another of the major trends in property management software and is already being offered by Minicom Data Systems and several other publishers. The capability will become standard before too long.

Property maintenance

Maintenance, like traffic systems, have been slow to develop over the years. But maintenance systems are starting to catch on. A few more work-order type systems are now available.

More comprehensive preventive maintenance/facilities management systems have been absent from the property management software market until recently. Project Data Systems has introduced its FACTS (Facilities Analysis, Control, and Tracking System) program.

Executive management

Among the needs not well-satisfied in property management programs to date have been those of the executive manager With new developments in executive-information systems and asset-management features in property management systems, that is beginning to alter.

Executive information system (EIS) features are designed to satisfy the information needs of the executive manager as contrasted to the middle- or front-line manager. Those needs are more related to analytic reports and summary data relevant to longer term and strategic views of the enterprise and its management activities. Both Geac J&E and Tenman are offering executive workstation/information systems.

A skeptic might suggest that if asset management" were as important as its image suggests, you would see it reflected in real estate/property management software programs. As you do not see it there, how much demand really exists?

A few property management programs incorporate a limited number of asset-management-related features such as consolidation capability and projections interface. Realwise, for example, has specific reports for the "asset manager" role.

Marketing

In addition to new developments in the programs, there are relevant changes in the vendors, their marketing, and their pricing.

One of the major property management software industry events of the past months was the financial crisis of Jones & Erickson (J&E). The outcome of this upheaval was survival, in what looks like a much stronger condition, when the company was acquired by Geac, a successful software publisher

Marketing approaches that provide real information instead of hype are also becoming more common. One publisher provides excellent analysis of cost savings; another provides detailed user-reference lists that include contact and phone number. Three vendors show very clear strategic thinking on behalf of their property manager customers, and a few have superb explanatory material for their programs.

Trends in pricing patterns are continuing as before with a few new developments. Overall, prices are stable or increasing. Bottom line, price per any measure of value/functionality is declining as program improvements continually provide more bang-for-the-buck.

Almost every instance of price reduction for property management software is a case of milking the product. One rule of thumb in this industry is to assume that price reductions are effectively going-out-of-business sales.

That does not apply to publishers who offer more limited versions of their product at a lower price point. For example, Comtronic added Property Management "Lite" as a new entry-level program to their product line.

More property management software publishers are moving toward a broader spectrum of price points in order to reach a broader market. For the same reason, more leasing arrangements are available.

As the property management software industry matures. two strategies that we are just beginning to see will probably become trends. One is unbundling. For example, one property management software publisher that formerly offered one program and provided regular updates, now has a price list of program options that formerly would have been incorporated as upgrades.

The other strategy will have the effect of shifting the revenue structure of the property management software publisher from predominantly sales of programs to predominantly service and support. One way to do this is to drop 800-number free support in favor of time-charged support.

It does not sound good for the user, but it is inevitable that the economics of the business shift.

Conclusion

What is new in property management software can be viewed as a set of possibilities and opportunities. What do you see ahead? What do you want?

One prediction for the coming months is that the attrition rate will be 15 percent to 20 percent net. And, there will be very, very tough competition over the next few months in the high-end micro market as strong vendors from below move up and as strong and weak mini-systems vendors move down. This, too, will create better software options for you.

Computer Developments

Laser check printer

Xerox Corporation Distributed Printing Systems, El Segundo, California, announces the Xerox 4197 Desktop MICR Laser Printer The new printer offers the property manager distributed checkwriting capacity on site or in regional offices. Data for checks may be downloaded directly from the main office or handled on site while maintaining centralized cash controls.

The printer will produce checks on blank or preprinted stock in a variety of sizes, including logos, digitized signatures, and MICR lines. The printer will print approximately 11 pages per minute and can handle an average of 3,000 to 15,000 checks per month. It can also print W-2 forms, payment coupons, and standard correspondence.

Among the attractive features of the new 4197 Desktop MICR printer is its four-level security, which requires password access for check printing and provides a comprehensive audit trail by user ID number of the number, amount, time, and recipient of each check printed. The programmable password function allows the supervisor to change passwords. The print cartridge containing the MICR coding information also has a security feature which permits it to work only in designated machines.

The check printer is compatible with a variety of checkwriting software programs and will emulate most laser printers. It operates with an IBM PC or compatible. Tone and dry ink cartridges are modular and may be replaced easily by the operator For more data, circle no. 221 on card.

Inventory module added

Decision Dynamics, Inc., Lake Oswego, Oregon, announces an inventory module for the newly released MicroStar Maintenance Management System.

Reorder reporting, part usage, vendors and cost tracking are all included in the inventory module. The history in MicroStar automatically accumulates the usage and tracks the cost for a group of equipment or an individual piece of equipment. For more data, circle no. 222 on card.

Michael J. Hanrahan is president of Real Estate Software Test Lab and Real Estate Software Advisors in San Francisco. He has been a software review consultant for JPM since 1987 and has independently evaluated more than 50 property management software programs.

Mr. Hanrahan has been in the real estate business for more than 20 years. His academic background includes advanced studies and bachelor's and M.B.A. degrees in real estate, urban economics, applied economics, and international business. Prior to his current activities, he was director of research of Questor Associates, the predecessor company to the Roulac Real Estate Consulting Group of Deloitte Haskins & Sells.

Mr Hanrahan speaks to, writes for, and advises real estate companies, trade associations, and publications about real estate software for property management, investment, and other real estate applications. He also maintains the Real Estate Software Information Bank.
COPYRIGHT 1991 National Association of Realtors
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Computers
Author:Hanrahan, Michael J.
Publication:Journal of Property Management
Date:Sep 1, 1991
Words:4460
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