The Institutional Real Estate Inc Sponsorship brochure, Connected-Investor Focused, We connect people, data and insights, sponsorship, events, IREI Products
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NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT MANAGERS 24 NAREIM LETTING SOFTWARE DO THE JOB Today, you can put a portfolio asset management solution in place that will do the arduous work of data extraction and delivery for you. It takes preparation, planning and coordination, but once implemented there's a lot less time spent wrestling with data and a lot more for actually using it. These solutions are software-agnostic: they can pull data from any popular property management software system – then assemble it in the way general partners and limited partners want it in order to perform their jobs, with the Key Performance Indicators, Key Success Indicators and other business measures that are specific to their investments and strategies. This frees asset managers from having to deal with diverse data coming from all directions, often on different schedules, and trying to make sense of it. Timing is a factor as well as data quality. Data is made available within four or five days after the end of the quarter, rather than two or three months. That's a big advantage in markets that evolve quickly, allowing managers to be agile and responsive to market changes. LAYING THE GROUNDWORK Core business process changes take effort, and the transformation of data collection and delivery is no exception. "PAM software is by no means plug-and-play," says John D'Angelo. "You get out of it what you put into it, and that involves carefully defining the data you want from the field: the type of business measures, the level of granularity, etc." "There isn't a one-size-fits-all template," he continues. "A PAM solution can help facilitate the movement of data from the properties to asset managers, but you have to articulate exactly what data you want and how you want it in order for your property managers and joint venture partners to know what you expect." Organizations implementing PAM software have a choice to either use internal staff or call in an outside resource (such as RealFoundations) to manage the project. Either way, asset managers must get involved to define the data they want to see. D'Angelo says those who implement PAM solutions can expect a bell curve when it comes to the quality and consistency of data delivered. Most of it will be in line with what's been asked for. Some will be superb. But there will be those property managers who will struggle to deliver what is requested, and these situations have to be addressed. Still, he says, even though not all the data will be perfect, by being deliberate in understanding and articulating your data needs you're way ahead of where you were before. One challenge D'Angelo mentions in particular is getting everyone who depends on data at the general partner firm to agree on what business measures will be driven by the data: not just Key Performance Indicators and Key Success Indicators, but all of them. And the more specific, the better. Another is getting asset managers to loosen their grips on working their own data, a task they're now accustomed to. "It should be made clear that there's a huge benefit to the organization as a whole in freeing the asset managers and their analysts up to do analysis rather than wrestling with the data," says D'Angelo. "Data should be seen as an enterprise asset, not something manipulated and used in separate silos and perhaps even varying from one manager to another. Managers must learn to trust the shared data contained in the PAM software even if they didn't personally have a hand in getting it there." D'Angelo makes a key point here: To implement PAM successfully, you must put a layer of governance and standards over the data being delivered to asset managers that mitigates the rogue efforts of individual managers. PAM is part of a standardized, consistent process of moving data from the individual property level all the way up to the limited partner level, and delivering it to each level in between in the form it's needed. It is becoming increasingly clear that while there's cost and commitment involved in implementing a PAM solution, there's a greater cost to not doing it. Quite simply, you don't want to be in the data management business. Yes, you'll invest time and effort in corralling your analysts to specify the data they need, and you'll take on the expenses of leasing the software and perhaps calling in a consulting firm to help with implementation. But in return, you'll free up your analysts to create value, putting the data they need at their fingertips instead of having them spend their time assembling it themselves. Over the last 25 years, Alan James has worked with top fund and institutional managers in providing technology solutions to increase shareholder value. Previously, Alan served in various capacities at Yardi, Oracle Corporation, PeopleSoft and J.D. Edwards on solutions for real estate owners, managers and REITS. Alan holds a BS in Accounting and Finance Law from Portland State University.