Smaller apartment companies spend a far greater percentage of their information technology (IT) budgets on outsourcing and consultants than large firms, according to a new survey by the National Multi Housing Council (NMHC).
Companies with gross revenues averaging $35 million spend nearly 60% of their IT budgets on external resources—30% on outsourcing and 27% on consultants — compared with larger firms averaging $377 million in gross revenues, which spend just 3% of their IT budget on outsourcing and 15% on consultants.
When analyzed on a spending-per-unit basis, medium-sized firms (15,000 to 29,999 units) have the largest IT expenditures, $243 per unit. The largest firms (70,000 units or more) spend just $75 per unit on IT-related expenses, and smaller firms (9,000 to 14,999 units) spend $71 per unit. This wide variance may occur because larger firms tend to be early adopters of new technologies, says David Cardwell, NMHC's Vice President of Technology and Capital Markets.
As a result, Cardwell notes, they have already absorbed the large start-up costs associated with deploying new systems and are now spending less on a per-unit and gross revenue basis to maintain those systems. Medium-sized firms may be closer to the roll-out phase, while smaller firms have yet to pursue large technology initiatives.
In the last 10 years, technology has become a core part of the apartment industry’s business model, leading firms to allocate a greater portion of their capital budgets to support new technology deployment, Cardwell says.
NMHC’s new Information Technology Investment Benchmarking Survey (http://www.nmhc.org/goto/4966) was designed to help companies make decisions about IT spending and compare their spending levels with those of peer firms. The NMHC members-only survey also offers a benchmark for comparing staffing levels. Among the survey’s findings, according to NMHC:
• Respondents spend .7% of their gross revenue on information technology (not including telecommunications services offered at the property level).
• Of that, approximately 19% is spent on discretionary projects intended to improve revenue. Nearly 20% is spent on consultants, and 12.6% is spent on outsourcing.
• Apartment firms average one IT staff person for every 110 employees. On average, firms provide one IT Help Desk staff person for every 172 employees.
NMHC has begun a follow-up survey, with responses due by Jan. 16. Additional information on the survey is available by contacting Lauren Dwyer, NMHC Manager of Technology and MITS Operations, at [email protected]. The organization also plans to conduct a survey on automated payments and issues related to paying rent and fees online, with the aim of studying ways to seek more uniform fees from credit card associations.
More than 600 people attended the NMHC’s 11th annual Apartment Technology Conference held in Atlanta in November.