By: Crystal Fisher & Michael Rudin
The convergence of technology and Real Estate was a long time coming, and for the past decade startups looking to disrupt and improve the way traditional Real Estate has been operated have proliferated at an exponential rate across all segments of our industry. But, just because these startups have come to the forefront of our industry, does not mean that the process of adoption has been or will ever be entirely seamless. So how does a real estate owner/operator begin to engage these companies to improve on their business operations in an effective, smart, safe and secure way? We will share some best practices on how to identify, evaluate and implement pilot projects with startups that will help ensure the trial is successful for both you and the startup, and will hopefully lead to larger implementations across your portfolio.
There are many companies – some studies claim as many as a few thousand – that claim to be able to help you do your job better. To start, it is important to understand what matters to you and your organization (i.e. improve operational efficiency, attract/retain tenants, improve tenant comfort, etc.) and to decide internally what it would mean to successfully implement a new technology. Chances are there is a startup, or quite a few, that offer a solution to help solve your problem. There are a couple of important steps to consider prior to reviewing the tech landscape for a solution. First, clearly define the problem you are trying to solve and second, outline the goals for a solution. Often teams will jump right in and start looking at solutions, which creates a new problem – do not let available solutions define your needs, but instead, let your needs guide your search.
Once you have clearly defined your need, begin researching the available solutions. This may include SaaS (Software as a Service – less flexible/lower cost), custom built technology (highly flexible/higher cost), or a hybrid. You can begin your search online or by reaching out to industry peers. Some may have already gone through a similar process. Take your time and be selective, yet review enough solutions to clearly understand the landscape of available options. Consider building a simple feature and scoring matrix, which can be easily updated and provide a consistent method of reviewing capabilities across many companies. A simple scoring mechanism weighted by your most important functionality will also help you rapidly narrow the finalists. It can be as easy as grading features on a 1 to 10 scale.
Often, the end user will not be you, but a team you are supporting, so their buy in is critical; take this seriously and include them in the process as early as possible so they can give input/guidance on what a viable pilot might entail. If users do not buy in from the beginning, what is the point? This could mean a core group is included in the initial review of solutions or they are pulled in once finalists have been identified. But, either way, the team should be included in defining the initial requirements, goals, and criteria for measuring success. No matter what the technology, there should be clearly defined goals and outcomes.
Once you have completed your initial diligence it is time to reach out to the company (or companies) you plan to consider. Since many of the solutions will be from startups – as this is primarily where the disruption in the industry has begun – it is imperative to clearly understand the technology, scalability, and stability of the company. Take a deeper dive and ask for references and contact other clients to understand their experiences. You will likely be familiar with some of their existing customers, so reach out to those companies and ask about their experiences. Always speak with current customers as these conversations will often unearth things of interest.
It is also important to speak with their investors to understand their financial position – who are their primary investors, what is their funding level, cash positions, staffing levels, next planned round, if they are bootstrapped, understand their MRR/ARR (Monthly/Annual Recurring Revenue), etc.
As you refine your search and get closer to identifying the right company, you may want to consider a bake off between finalists – you are the customer and will be making a commitment to a company, you should drive this process. This approach will require internal resources, including time and money, but will generally save you potential headaches in the long run.
Also, define a mechanism for measuring ROI – clearly quantifying expected benefits and capital outlay. The goal is for your benefits to be cost saving, through some type of efficiency, or revenue enhancing. It is helpful to benchmark and project future savings. What is your value? What is your current and future tenant value of these efficiencies? Sometimes the value is intangible and is more a measurement of projected added value that has not caught up just yet. Usually, there is a dollar amount attached to this value. Most importantly, you do not want to implement something that is harder to manage, maintain or costs more than your current solution. To ensure you are getting a complete picture of the true cost of a pilot project to your organization be sure to take into account the costs of implementation, licensing, ongoing costs, as well as internal costs. You want to ensure your ”solution” does not unjustifiably cost your organization more than your current approach. Also, remember that new technology is not the only method to solve a problem – always consider staff, process reengineering, etc.
Once the goal(s) has been set and the decision has been made to proceed with a pilot, it is time to assign an internal point person/project manager (if other than yourself) – there must be someone on your team responsible for overseeing the pilot from beginning to end. This is one of the most critical aspects of running a successful pilot/implementation.
Next comes the contract. This should clearly define items such as terms, pricing, milestones/dates for installation (if necessary) and implementation, training, support as well as contemplate these items for future expansion if the pilot is successful. A key consideration for any pilot is to start small, whatever that means for your business/portfolio. But you should also outline what defines success for both sides, that way if the pilot is successful, it is more seamless to expand the relationship.
Once the contract is ironed out and signed, it is time for installation/implementation and training. As aforementioned, the project manager will be crucial during this phase to ensure that all stakeholders are informed, kept in the loop and up to speed on the status of the project.
Now it is time for launch, but you have not achieved success just yet! Communication is key during all stages but will be most important now. As the engagement begins, ensuring that all stakeholders are communicating and on the same page, both internally and with the company you have selected, will be crucial to ensure a smooth launch and an effective and successful pilot.
There is no silver bullet to guarantee things go smoothly but following the steps above should go a long way towards promoting a mutually beneficial engagement and positive outcome for all parties.