Multfamily Tech Providers Embrace Cloud Computing Platforms

If Klaus Schauser had his way, we’d all be talking about grid computing right now. Back in the ’90s, the former University of California–Santa Barbara computer sciences professor and his colleagues were working on a conceptual computing model that involved the use of Web-delivered software as a service (SaaS), likening the platform to the development of electrical power stations, where on-demand data streams to applications are comparable to consumers in an electricity grid, who access power generated and stored elsewhere with the flick of a switch. The only problem? On every other computer lab whiteboard across the country, similar flowcharts were centered around the word “INTERNET” encompassed in a big, squiggly dry-erase marker cloud.

Like it or not, cloud computing—at least from a terminology standpoint—was being born, and no amount of lexicon tenacity by Schauser or anyone else was going to get in the way.

“There were some academics for a time—and I was among them—who tried to call it grid computing, but people would always draw the Internet as a cloud, and so now, anything that you can access via the Internet becomes ‘cloud,’ and we’re stuck with that terminology,” says Schauser, who launched GoToMyPC and GoToMeeting before co-founding Santa Barbara–based Web-based multifamily technology services firm ­AppFolio, where he currently serves as chief strategist. “Even 10 years ago, there was a lot of confusion about what the cloud was. People were taking the ASP [application service provider] model and putting client-server applications on servers and calling that Web-based software and later software as a service. The term ‘cloud’ kind of encompassed all of that.”

Next month, Schauser and AppFolio step further into the cloud-computing arena via a collaboration with Costa Mesa, Calif.–based Experian RentBureau, which will offer applicant screening services (including a burgeoning rental payment history database) to opt in AppFolio clients via a SaaS cloud delivery model. And AppFolio isn’t the only firm cashing in on the silver linings: Since Carrollton, Texas–based RealPage and Santa Barbara–based Yardi Systems first announced their cloud-computing options (see “Cloudy Questions,” on page 42), a bevy of multifamily technology firms, from the brokerage to payment spaces, have been launching and marketing their own cloud-computing offerings. Sure, these cloud definitions and delivery methods may differ, but for multifamily operators—particularly smaller, more adaptable middle-market firms—the upshot is clear: This is an era of IT scalability and functionality that will level the strategic playing field.

Looking for Clarity

Before that happens, however, operators need to first figure out what they’re dealing with. “Cloud is the new ‘green,’?” says Ed Wolff, chief operating officer for Dallas-based Pinnacle, the country’s third-largest property manager, which moved the near entirety of its IT operation into the RealPage Cloud in November 2010. “Cloud computing came into vogue maybe two or three years ago, and it continues to drive decision-making for IT executives, but the danger is that ‘the cloud’ as a buzzword has become overused. There is a proliferation of the terminology, and depending on who you talk to, there may be different ­definitions.”

Indeed, cloud computing in the multifamily industry has come to incorporate virtually any non–premises-based IT solution. Basically, if you aren’t storing programming code or application data on a local server and are instead accessing the entirety of that system via the Web, you’re in the cloud. Still, even as die-hard IT veterans continue to argue whether specific cloud-computing examples are technically better described as managed services, software as a service, or platform as a service, it looks like the marketers are going to win the war of words on this one.

“Cloud computing really has become this broad term,” says Brannan Johnston, vice president and managing director for Experian RentBureau. “It’s really become anything that utilizes the Internet and Web services for the submission and delivery of data, so technically we do cloud work; we just don’t tend to advertise it that way.”

The Experian RentBureau collaboration with AppFolio, for example, will allow all ­AppFolio clients to plug into Experian RentBureau to access the firm’s database of rental payment histories. Property and applicant data flow is mapped from App­Folio’s core Web-based property management systems to Experian RentBureau, and resident payment histories likewise flow back into an operator’s AppFolio dashboard over the Internet.

And even though AppFolio president and CEO Brian Donahoo is quick to point out the cloudlike attributes of the collaboration, he’s not sure that apartment operators and property managers really care. “Terms like ‘cloud computing’ are relevant to marketers and investors, but to customers, I don’t think it is really relevant,” Donahoo says. “Customers want easy access to software that is updated regularly and not by them. What all of us are coming to expect from Web-based services is that we are using the latest, greatest version of the software just by virtue of logging into the website. The IT enterprise should be fairly effortless.”

Is Bigger Still Better?

That was the thinking behind New York City–based Actovia Commercial Mortgage Intelligence’s Actovia Explorer, which this year began offering cloud-based services for commercial real estate brokers, allowing Web-based access to its customized property database, which included information on market and submarket location, ownership and contact info, building class, sales history, lender, amortization and rates, and rollover.

“We want each broker to create their own individual platform where they can generate their own leads and create their own client management area but utilize our analytical tools,” says company CEO Jonathan Ingber, who likens Actovia Explorer to a “super” Salesforce.com cloud model. “The idea is to customize the database to the individual, and that’s ultimately what I think of cloud computing: It’s making Web-based technology personal.”

Scalability, in fact, has many cloud providers suggesting that cloud services need not be the purview of only the deepest-pocketed operators in town. In fact, those providers are finding that middle-market multifamily firms with between 500 and 5,000 units often have an adaptability that allows for a quicker adoption of cloud-based services in comparison with larger operators that are burdened with legacy investments into localized server technologies.

“There’s no doubt that SaaS provides the smaller operator enterprise-class tools that give them a lot of the same capabilities as the big guys,” says Ken Hodges, vice president of IT for Irvine, Calif.–based apartment owner/operator Western National, which has 27,900 units under management. “Does that make them better-positioned? I don’t know. I think you’ll find some of the bigger firms will ­utilize SaaS where it makes sense but complement those cloud services with additional in-house functionality to gain a competitive edge.”

Whether or not smaller operators have the nimbleness and desire to adopt cloud-computing type solutions should likely prove out over the course of 2012 as SaaS and cloud options proliferate across the multifamily software space. As AppFolio (customers of which are typically in the 500- to 5,000-unit, middle-market range) and Experian RentBureau deploy their offering, eyes will be on adoption volumes to see if smaller players indeed are looking to the cloud as a competitive edge against in-house capabilities of larger firms as described by Hodges.

Donahoo’s aim is to take apartment software to a place that ultimately makes that model unnecessary, if not totally archaic. “Is there anything in the apartment sector that absolutely has to stay as premises-based software? Ultimately, no,” he says. “We are absolutely moving to a paperless and cloud-based world. It’s happening in all parts of technology inside and outside of the apartment business. It’s here.”