Real estate leads in 'renting' online software

Copyright: David Lawson

First published: Property Week Feb 2008

Bill Gates, the most influential figure of the computer age, has given a chilling warning to the next generation of Microsoft managers as he prepares to hand over control. Prepare for the end of your world.  Fast internet connections mean users may no longer buy software but ‘rent’ it online. Google is already threatening Gates’ legacy by offering word processing and analytical programs. It is only a matter of time before others follow.

   The ultra-conservative property sector normally trails years behind such changes but, for once, it may be among the pioneers. Agents, valuers and investors released from the shackles of the office by wireless networks are beginning to taste the benefits of instant information and analysis at the touch of a laptop button.  Data such as rents, market trends and details of individual leases are already stored on computers which may be half way across the world, and called up when required. It seems a logical step to move the software which manipulates that information.

  This would save time and money because virus checks, updates and new installs would be limited to a handful of servers rather than the slow and expensive rollout across countless desktops and laptops. Outsourcing heavy processing tasks like payroll and rent schedules could become the norm. Google claims it can perform such tasks for a tenth of the cost to an average user. Former Harvard Business Review editor Nicholas Carr sees this as a natural evolution into ‘utility computing’. It parallels the way companies moved from supplying their own electricity to giant power stations, he says in his latest book The Big Switch.

  But the future is not that simple. Centralisation is entangled with another revolution in how property software is used. KISS [keep it simple, stupid] is the rule that underlies all business success, and computer kissing disappeared long ago in a blizzard of complexity. There is also the tangled question of Web 2. For the uninitiated, Web 1 simply doled out information: Web 2 involves applications ranging from form-filling to the truly interactive. Combine simple with interactive and remote working comes into its own.

   Companies like Amazon pioneered the idea that software should be easy, says Andrew Waller, a surveyor and technology guru at management advisor Remit Consulting.  ‘Most people can buy a book online even though many would find Microsoft Excel difficult. In the same way, there are many potential applications which property professionals could use occasionally and would benefit from the Amazon approach.’

  The Swedish program Datscha claims to be an indispensible online source for analysing Nordic property.  Closer to home, Aperio is swiftly building a market niche among UK investors and analysts [see panel].  The precedent these pioneers are setting could swiftly move into letting agency, research and analysis, says Waller.

    There are barriers that still need to crumble. Remote data storage is tenable only within the confines of a firm’s own security walls. Few trust an outsider with sensitive financial data.Property advisors are also reluctant to abandon programs used by clients, while web technology is still not good enough to provide ‘rich functionality’, according to    Angus MacFadyen, a director at Aperio Systems. At end of the day, the revolution in remote working depends on whether a program is any good. Technical wizardry palls if tools don’t do the job properly.

Aperio claims to have broken the mould by offering programs online but is not following the trend to application service providers [APS], which enable work to be done on their computers.   Web software is not yet powerful enough to perform the kind of tasks analysts and valuers demand, says director Angus MacFadyen. Instead, they download programs to run on their own PC.

  The key difference to other internet-based delivery is that users pay a modest rent of £5/ day rather than a hefty up-front fee. This daily charge also covers multiple computers. Aperio saw a gap in the market with the proliferation of laptops. Software houses normally demand a licence for each computer, which can be a crippling burden for small businesses.

   But large ones are also being attracted, purely because they like the software, says MacFadyen. The firm has more than 300 users in around 200 companies and hopes the rental approach will give an edge in the cutthroat market for property software. Its current range includes Analyst, Prime Developer, Prime Investor and IQ (formerly known as Prime Search).

  Remit Consulting’s Andrew Waller feels Aperio is taking the right approach entering a market dominated by big names and where users are often tied into software used by their big clients. Competing on the basis of selling traditional licences would be difficult. ‘Google has shown that offering cheap, flexible, pay-as-you-go software might take enough of the market to gain critical mass,’ he says. ‘The old guard in property software may have a significant new set of rivals, especially in the price sensitive, small property company sectors.’

Large companies will need policies for ‘maverick’ use of this new software but that is unlikely to threaten traditional software in the short term. Small companies and individual investors might find the flexibility attractive and allow a new company to develop a strong, ever changing, client base.