CREJ

February 2022 — Multifamily Properties Quarterly — Page 21 www.crej.com Management I f there’s one thing I’ve consis- tently heard about at confer- ences for the past 10 years, it’s the importance of data. Buzz- words like “big data” often are thrown out without much thought given to what it means to the rental housing market. Yet after more than 22 years in the industry dedicated to driving more analytical decision making, I continue to be frustrated by how much more we could (and should) do with data. A good data (aka business intel- ligence) platform helps us make better decisions, more quickly. It brings to life the notion of “working smarter, not harder.” With that in mind, let’s talk about what business intelligence is, what the challenges are with the indus- try’s current approach to BI and several key things to look for when evaluating your BI options. According to CIO magazine, “Busi- ness intelligence leverages software and services to transform data into actionable insights that inform an organization’s business decisions.” In growing order of sophistication, that includes: • Reports that tell us what hap- pened; • Analysis tools that allow us to figure out why something hap- pened; • Dashboards and scorecards that tell us what is happening now; and • Predictive analytics to tell us what might happen. The reality is that, while everyone talks a lot about this, most opera- tors and asset managers often are drowning in data yet struggling to get actionable insights. This data- rich, actionable- data-poor para- digm is driven by an explosion in the number of real estate technology solutions, each with its own set of data, some of which integrate well with other systems and some that stay quite siloed. Add to that the fee management model (representing more than two- thirds of professionally managed rental housing) where an owner’s portfolio technology stack is often spread among multiple property management systems, customer relationship management and other technology tools, and you have a very complex and cumbersome data environment. Thus is born the need for a BI platform that extracts data from multiple systems of record, trans- forms that data into a normalized model for the entire portfolio and then loads it into a “single source of truth” – a data warehouse with an associate reporting and visualiza- tion layer that serves as a “one-stop shop” for all analytics. Unfortunately, most owners and operators in our industry still rely on Excel for most, if not all, of their reporting and analysis. Simply put, Excel is not an enterprise system. It’s great for many things, but keep- ing and (more importantly) sharing a formal set of data from multiple sources is not one of them. If you’ve ever experienced two different reports having two different num- bers for one key metric, or if you’ve ever seen an Excel report where a calculated field has been overwrit- ten with a set number, then you have experienced the repercussions of this limitation. Many of the largest operators have overcome this by building their own bespoke BI systems. This can, and often does, deliver sophisticated capabilities. However, this comes at the expense of a long-term project typically taking two to three years and at least $2 million to $3 million to come to fruition. It also leaves the company with responsibility for maintaining the application and the cost of any future enhancements, not to mention the “key person” risk should the primary designer move on to another job. There are a growing number of options in the commercial real estate technology world attempt- ing to solve this. While many other industries have robust and mature options, these still are early days in rental housing, so it is important to know what to look for. Here are four key questions to ask when looking for a good BI solution: • Is the data modeled at the unit-day level, or are there any pre- aggregations? The former “future- proofs” by allowing you to slice and dice in ways you may not anticipate today, while the latter constrains the future. • How flexible is the user inter- face? Best-in-class solutions allow you to modify existing dashboards and reports and create new ones however you want. • What kind of back-end access can power users get? While more than 90% of users will consume data exclusively through published dashboards and reports, a small number of power users will need to access the entire data warehouse directly to answer ad hoc questions. Good platforms make this easy to do. • How does the solution handle important data that isn’t in a sys- tem of record? In a perfect world, everything needed in the data warehouse would exist in a sys- tem of record and be pulled into the BI platform by an automated system. Of course, the world isn’t perfect. For example, you might want to include date built (and/ or purchased), last date renovated, construction type, etc. A good BI platform provides the ability for a “data steward” to enter and main- tain important data that is not in a system of record. A well-chosen business intel- ligence solution can last a decade or more, while the alternative is something that may move you a bit forward but will leave you wanting more in just a year or two. Use the above to help choose wisely and you will be on the way to improved productivity and smarter decision making. s ddavidoff@getreba.com Avoid the data-rich, actionable-data-poor paradigm Donald Davidoff CEO, Real Estate Business Analytics