How to choose the best commercial property management software for your business

Whether you represent a commercial real estate business or are an owner who self-manages commercial property, looking for the best commercial property management software can be a daunting process. This article will help you navigate some important considerations to make the best decision for your business.

1. On-premises (server-based) vs cloud-based

There has been a large move into cloud-based software in the past few years. The below gives compelling reasons why it should be the obvious choice.

On-premises software requires:

• The property management software to be purchased
• A server to install the property management program on
• The operating system software for the server itself
• Database management software such as Microsoft SQL
  

Thus, on-premises software is costly up-front. However, it is the ongoing costs that require closer scrutiny. The server requires constant maintenance by IT professionals to perform operations such as windows upgrades or security patch installations. The property management software might require upgrading or patch installations from time to time. Correctly managed, the server and database should be backed up offsite regularly, and you should have a disaster recovery plan.

Factor in the costs of electricity, rent for the space the server occupies, the above maintenance costs, annual licensing costs and depreciation of the upfront costs, and you will come close to the full ongoing cost for server-based software.

Cloud-based software normally does not come with any upfront cost associated with the software use. This is because the software provider has incurred all these infrastructure costs up-front and covers those costs through a monthly subscription fee. Additionally, as you will be relying on the cloud-based software provider to host the hardware and perform maintenance, upgrades, backups etc., they wrap all these services up into the monthly subscription fee.

As the infrastructure costs are only incurred once by the cloud-based software provider and are effectively amortised over a large client base, the cloud-based monthly subscription fee is invariably considerably lower than the equivalent comparable on-premises cost.

Cloud-based clients often experience much higher levels of protection over their data, and better systems reliability as the cloud-service provider manages this function considerably better than the average client opting for the server-based solution.

The cloud solution is more scalable and allows for more flexible working arrangements as it is accessible from any location with an internet connection. On the other hand, the server-based solution is only available on the local area network or more widely with additional expensive software such as Citrix.

The cloud-based solution also allows the provider to seamlessly add new features without clients having to install upgrades, which is required with the server-based option.

Cloud-based software has become the norm as businesses get used to the idea of their data being stored in the cloud and better protected than the on-premises option. Note there is a separate cost of migrating the data, but this would need to be incurred whether moving to a server-based or cloud-based solution.

In summary, server-based solution costs include:

Up-front:

• Server
• Server operating system
• Server database software
• Commercial property management software
• Backup software
  

Ongoing:

• Server maintenance
• Commercial property management software maintenance/upgrades
• Maintaining backup and disaster recovery systems
• Electricity for server
• Rent for server space occupied
• Annual licensing costs for software
  

Cloud-based solution costs include:

Up-front:

• None
  

Ongoing:

• Monthly subscription fee
  

In conclusion, the cloud-based solution is the obvious choice as its benefits far outweigh the server-based option.

2. Core functionality

Early on in your investigation into software options, you need to confirm that the providers you have short-listed will meet your core functionality and reporting requirements.

Before having a demonstration, you should compile a full list of required core functionality and tick these off in the demonstration when you see the software caters for it.

Speaking to existing clients can corroborate the above evidence and is highly recommended. This will give extra comfort required to make this important decision. The software provider should be able to provide a list of businesses similar to yours (in size and operations) using the software you can talk to.

Finally, you might want to take it a step further and use the software on a trial basis to confirm that it works as you have demonstrated. This step, however, normally requires some paid training before testing, which is normally a small price to pay to ensure you make the correct decision.

3. Type of commercial properties being managed

Many different types of properties fall into the broad commercial category. This includes retail, industrial, commercial strata, commercial (single tenanted), and multi-story commercial. These different property types might have specific operating and reporting requirements, for example retail requires foot traffic or sales figures to be captured and reported.

Ask the software provider specific questions about your requirements and get them to show you how the software handles them.

4. Owner report requirements

Many different owner types should be considered, as each owner type may have different reporting requirements. For example, retirees, sophisticated high net wealth individuals, syndicates and real estate investment trusts may be listed or unlisted.

Reporting requirements vary with each type of owner for example there might be a requirement to do accruals-based reporting, so you should ensure the software being reviewed has this capability.

Reports should be tailored to the audience receiving them. Sophisticated owners will expect more detailed reports, while some landlords will want very simple reports showing cash in and cash out only.

Make sure the software chosen is flexible enough to meet your different reporting requirements and that you don’t end up stuck with one option that does not support your clients’ needs. It is also worth asking if it is possible to develop custom reports.

Ask whether the software being reviewed has a general ledger on a cash and accruals basis built into it, as this will be important from a reporting perspective. The accounting grunt of the software is an important factor for audit and reporting.

5. Software support

Software support is an important buying consideration because the quality of the support can determine whether your team can operate a successful business using the software in question.

You should find out:

• How support is delivered
• Experience of the support team
• Size of the support team
• Support hours, SLAs and response times
• Whether additional support costs apply
• Whether the provider has industry awards for service excellence
• Client comments confirming support quality
  

Ask whether there are special arrangements during the first few months for example on-site support.

Other important questions include:

• Is there onboarding training/support and follow-up training/support after launching
• Is there further on-demand training available
• Can you quickly log a support request if you can’t locate the answer in the knowledge base
• How big is the support team
• Are support staff trained and experienced
• Is there a help desk, or do you have to rely on community forums

6. How efficient is the software to use?

Many property management tasks are repetitive, so it is important to assess how the software handles those tasks and what efficiency benefits can be derived. While automation helps increase efficiency, over-automation can be counterproductive.

Typical repetitive tasks and questions to ask include:

• Supplier invoice processing
• Tenant receipting
• Payments and level of user control
• Tenant invoicing workflows
• Arrears management
• Work order handling and integration
• Month end reporting
• Management reporting
  

Software designed around typical property management tasks or accounting operations is normally more logical and efficient. Enquire about the origins of the software and how the design came about.

7. Is the interface easy to use?

Easy-to-use software makes training smoother and improves ongoing use. One caution is that simpler interfaces can also indicate limited functionality.

A user-friendly interface with easy-to-navigate menus is essential. Web-based graphical interfaces are generally more intuitive for modern users than old server-based menu systems.

8. Migration or onboarding

Migration refers to moving data from your incumbent system to the new one. For commercial property management, this is not a simple task because of the nature and volume of data, and because different systems store data differently.

Questions to ask include:

• How long is the entire migration process
• Who manages the migration
• Critical dates and milestones
• Downtime expected
• How take-on balances are transferred
• How progress is tracked
  

A well-managed migration is highly important to instill confidence in new users.

9. Security over data

Because property management data can be sensitive, you need to ensure there is sufficient protection against unauthorised access. Cloud-based providers typically provide higher security standards.

Questions to ask include:

• User access controls including MFA
• Data storage policies
• Whether data is encrypted
• Backup procedures
• Redundancy features
• SLAs for uptime

10. SaaS pricing models and contracts

The most common SaaS pricing structure is the per user model. Another is the per usage model based on leases, properties or lettable area.

You will need to understand how the pricing model translates into your business and consider the contracted period, whether monthly or 12 months or longer.

Be wary of long-term contracts. Getting out early may be difficult or costly unless non-performance can be proven.

Additional pricing questions include:

• Payment frequency
• Contracted period
• Future increases
• Setup or onboarding costs
• Additional fees for add-ons
• Legal jurisdiction
• Whether the contracting party is registered in Australia

That is a lot of information to digest, but this decision is an important one you don’t want to repeat in the short term. Weigh up all the answers obtained from your enquiries, but remember one overriding factor that can give you comfort:

The software’s existing clients’ opinions.