A recent spate of articles and blog posts have done a great job chronicling the rise of technology usage in all areas of commercial real estate. However, an ancillary topic I have yet to see addressed is the recognition by CRE technology buyers of the implications of the relationships between their recently added and legacy technology purchases.
Some of the issues CRE tech buyers are wrestling with include conversions to cloud-based applications from client-server systems, data security, and all of the concerns related to the rise of mobility usage by their teams. One of the other considerations buyers and end users have is whether to select an “all-in-one” platform vs. “best of breed” solution for their systems. It’s a common debate in most other industries, but a relatively new one in commercial real estate.
An all-in-one system purports to deliver a tightly integrated suite of all functional components an organization might need to operate the primary functions of their business. Think along the lines of ERP systems like those offered by Oracle, SAP or Microsoft (Dynamics). On the other hand, best of breed systems tend to be tightly focused on a smaller, core operational subset and offer deep capabilities in those areas. Best of breed systems are also known as point solutions. Examples of these for the enterprise include SalesForce for CRM/SFA, Intacct for accounting and something like Workday for HR.
A while ago here at Building Engines, we evaluated moving off of our current core operational stack of individual accounting, customer relationship management (CRM), salesforce automation (SFA), and marketing automation systems, in addition to customer service and some HR tools, to doing it all through a single provider platform (NetSuite). The driving rationale for looking at a suite option was the same that most companies have: we thought that a tightly integrated, single application would create operating efficiency, reduce data entry duplication, and deliver better operational insight and probably reduce overall software expenses. We undertook a three-month evaluation and pilot program with each major department overseeing their piece of the platform.
After a long and arduous process, it was really a crystal clear decision for us. The deep and connected functionality we required in each of our core operational areas simply could not be met by the single platform. It would require too much compromise for our departmental end users as well as significant initial and ongoing professional services work to deliver anything close to the capabilities we had with our current providers. The decision to stick with a best of breed cloud stack that currently includes SalesForce, Marketo, Data.com, Jira, ZenDesk, and others was the right one for us and has proven to deliver even greater flexibility than we anticipated. This is clear trend in technology purchase decisions across all industries and a reason why many investors are lining up to throw money at companies taking on legacy enterprise applications.
This is in large part because modern systems built with open, flexible architecture have made it financially and operationally viable for enterprise buyers to pick the best application for every need, every user, and every business case. They do not have to sacrifice functionality for the sake of integration in large part because modern applications are designed to share information.
The cloud, with its open, flexible service-oriented architecture (SOA,) means that integration is far easier and cheaper to manage today. This dramatically weakens the primary – and in some cases only – reason that companies consider buying applications from suite providers.
Modern software is built with integration and sharing information between systems in mind. They write API’s (application programming interface) that allows access to designated data sets for sharing with other capable applications. A company can pick and choose applications from many different vendors, integrate them through their APIs or third-party cloud integration services and have the suite they always wanted in weeks, not years. And while suite providers may try to give away part of their functionality for “free” in order to stave off a competitive challenge from a best of breed provider, most companies find out that there is actually a very steep cost associated with that choice; and it’s paid by the end user who is forced to make do with incomplete, shallow functional capabilities.
There is also the associated business risk associated with suite purchases of putting all your eggs in one basket. What happens if the suite provider has a problem or stops to innovate or invest in a particular area of functionality?
Commercial real estate is becoming increasingly more reliant on property management software and a host of other systems to run their businesses. As competitive business and market pressure is likely to increase, putting pressure on teams, budgets, and resources, it’s important that companies stay nimble and responsive. Modern software systems and their vendors should assume some of that burden by proving they can integrate and share information with other systems as well as deploy quickly with minimal impact on client resources. But a business’ flexibility and adherence to change begins (and sometimes ends) with that initial software decision. Make sure you make the right one.
