IT cuts could prove costly

IT cuts could prove costly in long term

Published in Property Week September 2008

Economic gloom has driven finance directors into a frenzy of cutting and IT is a prime target. But times have changed since the last downturn when technology was still considered a disposable cost. Imagine an agency trying to compete for declining business without cutting-edge web pages, or bidding for management contracts with software that cannot handle key new regulations? When the market recovers, as it always does, those making cuts could struggle to catch up.

Savings are feasible, as long as they are carefully planned rather than victim to slash and burn campaigns, says Peter Turner, joint managing director of Ulysses IT. One of the 250 small firms he supports in the East Midlands customer recently asked for a new server, which would cost more than £5,000. ‘We told them to improve their PCs and internet connections instead, as this would be cheaper,’ he says.

Another client was tempted to buy ultra-cheap printers but steered towards leasing a networked ‘do it all’ model, as it would not only save cash but provide better quality.

Software investment can be postponed, such as upgrades to Microsoft Vista, as this will demand extra training. A new version is due next year anyway. But some outlay is essential, including anything that squashes bugs or plugs security holes. Some upgrades will justify themselves almost at once. ‘One agent was advised to spend money on a new version because it would improve property details by allowing twice as many pictures to be displayed,’ Turner says.

The problem even among sophisticated larger firms is that many approach technology from the wrong direction. ‘People seem to forget that IT is a management tool and it is management that should be examined first,’ says Andrew Waller, a principal with Remit Consulting. ‘Look at your core business and see what may not be working. A new approach to IT may help fix things.’

For instance, most agents rely on email services run on a separate server in every office, requiring semi-permanent support staff. Yet email can be handed over to a ‘host’ such as Cobweb, which processes messages on its own machines.

Data storage and security is another hefty cost which can be trimmed by lateral thinking. It is common to make back-up tapes and take them home at the end of the day, yet services such as Iron Mountain can automatically back up material over the internet. Even the smallest firms and home workers can buy an automated system cheaply via a provider such as BT. But don’t go over the top, says Turner. ‘The important thing is to survive the next few years, so pick what will give a quick result.’

Leading property software suppliers disagree. ‘It is common when times are tough to take a short term outlook but it is vital to plan for the long term so you are in the best position when the economy picks up,’ says Neil Davidson managing director of Maconomy UK. ‘The key to unlocking profit in difficult times is through software which enables managers to organise staff, resources and projects efficiently,’ he says.

His firm specialises in resource management programs which monitors employees and integrates financial controls and project management. This reduces the risk of project overruns and lost time due to poor deployment of staff.

Other leading property software suppliers insist they are also geared to help ease the pain of recession by maximising returns and predicting where problems may arise. ‘Income forecasting and event modelling has been a standard feature for many years and was born out of one customer request in the anticipation of a downturn,’ says James Lavery, customer relationship team leader at Qube. ‘Customers frequently tell us how they are saving time and money through adoption of our software.’

The newest generation of property investors is increasingly using technology to combat recession. Buy to let landlords are often tarred as the most amateur players in the industry yet thousands have turned to IT to improve efficiency.

Amer Siddiq has a background in computer services and spotted the opportunity for software geared to smaller landlords when building his own property portfolio. He initially set up Property Tax Portal, an online financial advice service, but is now concentrating on a software package which helps organize all aspects of management.

‘People may have stopped buying property but are using the time to streamline administration,’ says Siddiq. Many are looking to cut costs by taking over tasks previously done by agents and financial advisers.

He aims to attract the 3,500 users of his tax portal to the new program, Landlords [CORRECT]Property Manager, but these could be joined by even more newcomers, as The National Landlords Association has listed his new venture, Property Portfolio Software, as a recognised software supplier.

Can this kind of IT make a difference? Is it worth laying out between £150 and £250 when times are hard? ‘Passive’ investors with a couple of properties can rely on a few spreadsheets but anyone with larger holdings and long-term ambitions beyond the recession might find survival depends on familiarising themselves with the possibilities these new software tools can open up.