"The Cloud" certainly is creating a stir in the business world, and commercial real estate is no exception. That said, the meaning of this term and the value of its associated technology platform remain ambiguous. So what, exactly, is cloud computing, and how can it help multifamily, office, industrial and retail real estate owners and operators?
Most people are familiar with the concept of Software as a Service (SaaS), where software is purchased by subscription, and then delivered via the Internet. Cloud has that component - and more. In the simplest sense, cloud computing can be thought of as "infrastructure as a service" enabling a large pool of users to share the same resources. The cloud platform enables organizations to manage all of their technology over the Internet. This includes networking components as well as mail, productivity tools and enterprise software. Storage is a big part of it, too. Companies can perform backups, and store documents and data via the cloud.
This model provides a number of significant benefits. Among them:
Cost reduction. In the cloud environment, a provider administers the infrastructure, including automatic network and software updates. Users have immediate online access to application software and databases; they simply need to log in, and everything is up to date and ready to go. The industry is citing figures up to 30 percent when discussing the potential cuts in IT spending companies can achieve by no longer having to maintain in-house servers or the personnel to manage them. IT expenditures are reduced to a monthly, subscription-based operating expense. And that cost is kept low by the "shared" nature of cloud.
Agility. The cloud is completely scalable, enabling companies to use resources only as they are required. For example, the lease up of a new multifamily development may involve a temporary swell in the number of sales agents on staff who need access to the leasing application being used for the property. With the cloud, a company can simply procure added subscriptions to the application for that project. Or, companies can reallocate resources for peak flow capacity. For example, if rent payments come in during the first week of the month, computing power can be increased to accommodate more people entering cash into the accounting system.
Device independence. Accessing the cloud requires only a device - whether a desktop PC, laptop, tablet or smart phone - and an Internet connection. With technology devices and flexible commuting becoming a much bigger piece of our business environment, this is a significant benefit of the cloud. It will continue to grow as a priority as the emerging bring-your-own-device to work movement takes hold.
Security. The issue of security and the cloud has been among the most heated topics of discussion when it comes to the platform's pros and cons. Ultimately, cloud providers are incorporating the highest-quality security measures available to protect their clients. While security is an ongoing concern across the board and regardless of computing environment, the bottom line is that cloud security today is better than most corporate firewalls.
Disaster recovery and business continuity. Because cloud providers take responsibility for their clients' system backups - and those systems are backed up to multiple deployment points - their users have minimal worry about recovering their data in the event of a disaster. In the case of a power outage, cloud providers maintain multiple points of access with multiple Internet connections, batteries and generators. System users can tap into the system from anywhere they can find power and working Internet. As we in the northeast learned during Superstorm Sandy last fall, nothing is infallible. However, risk of a cloud-based system going down for an extended period of time is quite small.
In real estate, like most other industries, mail remains the single most popular use of the cloud platform. Second, demand is growing rapidly for onsite leasing applications delivered in a distributed computing environment like the cloud. The ability for geographically dispersed brokers and property managers to log into a common system is invaluable. The same can be said for accounting applications, where real-time data can be accessed, analyzed and transformed into reports at any time, from any place.
Is the cloud for everyone? Some CIOs of larger companies will tell you that moving everything to the cloud should be a top priority. Others will say that having more control over a corporate computing environment is critically important. Most fall somewhere in between. The choice to "go cloud" may be easier for small and mid-size companies, who can gain access to the same business applications as their larger competitors, at a fraction of the cost. Yet regardless of size, real estate organizations should be taking a close look at the cloud as a platform that is here to stay, and one that offers benefits that can make a real difference in the drive to increase efficiency and improve the bottom line.
Mike Mullin is president of Integrated Business Systems.