Can Real Estate ERP Vendors Keep Pace with Industry Demands?

Posted on April 25, 2011 by

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You may well recognize this title – it appeared as a Realcomm Advisory on 21st April written by Tama Huang of NOI Strategies and you can read the original here: http://www.realcomm.com/advisoryweb.asp?aid=471.

I have enormous respect for both Tama and NOI. However, there were some misunderstandings in this piece that are interesting, including the following assertions:

  1. Mainstream ERP have minimal or no Property Management capability;
  2. Mainstream ERP have minimal or no Multi-entity Support;
  3. The fundamental difference between Mainstream ERP and Real Estate ERP is that Real Estate ERP systems allow cross-entity postings (for example posting rent payments across multiple properties).

I will explain below how each of these assertions is flawed, but first I declare my own interest here: Calvis is promoting an asset and property management suite called I-AM (Integrated Asset Management) based on Microsoft’s ERP solution – and you can read more about this here http://wp.me/pVypy-3m.

The characterization of all “Mainstream ERP” systems being roughly the same misses a fundamental difference in market strategy between Microsoft and other software vendors: Microsoft have a partner-centric strategy.

96% of Microsoft revenue comes through its partner channels. This is largely because software developers create thousands of applications on Microsoft platforms that in turn drive Microsoft product sales.

This also distinguishes Microsoft from Yardi and MRI. Both have tried to establish some form of partner channel for solutions, but the available independent consultants or software developers in the world for these vendors numbers hundreds, not the hundreds of thousands doing the same things for Microsoft.

So, to the specific assertions above.

Mainstream ERP have minimal or no Property Management capability – FALSE

Microsoft’s partner community has produced many excellent, highly industry specific solutions. In terms of Property Management, our I-AM suite incorporates the FlexProperty solution developed by global systems integrator Logica.

FlexProperty is one of only around 60 Microsoft Dynamics AX modules that is Microsoft certified. That means you can rely on it complying with the same standards and best practices as Microsoft’s own products.

But moreover it provides rich real estate industry specific capabilities that are in line with Real Estate ERPs. In fact, in many areas, the ability to leverage similar requirements from other industry sectors means that the Microsoft Dynamics AX solution actually delivers far in excess of real estate specific competitors. A good example of this is business to business trading partner integration and supply chain management, where the needs of development and construction are powerfully enhanced by similarities with manufacturing industries.

Mainstream ERP have minimal or no Multi-entity Support – FALSE

The Microsoft Dynamics AX platform has full multi-entity support and allows both shared or entity specific configuration – for example with respect to chart of accounts, tenants or service providers.

There is also sophisticated templating capability to allow very rapid addition of entities following standard regional or portfolio based rules.

Naturally, this globally capable platform is also very well placed to consolidate across these multiple entities, taking into account variations in accounting rules (for example between local GAAP and IFRS) and also multiple currencies. In fact, this is another area where the depth and richness of the solution actually provides greater flexibility and more out-of-the-box localization to deal with specific country needs.

Just like niché Real Estate ERP solutions, Microsoft provides extensible classification rules for transactions and ledgers that allow arbitrarily sophisticated classifications for consolidation (or other) purposes.

The fundamental difference between Mainstream ERP and Real Estate ERP is that Real Estate ERP systems allow cross-entity postings – FALSE

Whilst this has been the case in the past, today it is anachronistic. Cross entity postings are of course particularly important in real estate because of the need to perform cross portfolio actions – like posting rent – when each property has a corresponding entity (and often multiple entities in more complex fund structures).

But to suggest that Microsoft Dynamics AX can’t do this is simply not true. The standard product has advanced batch processing features to allow large scale cross-entity actions like invoicing.

The FlexProperty solution further simplifies some of the most common real estate specific scenarios, and others are easily and quickly configured at implementation time. And this is a key thing to remember – even this kind of configuration is quick and easy, not a time and money consuming “change request”, and ultimately might only make its way onto some seemingly endless list of “user requests”.

Summary

We have all seen how much functionality Microsoft have put into recent product releases – be it SharePoint 2010’s plan visualization, document management or application integration capabilities, SQL Server 2008 R2’s GIS/spatial data reporting, or Excel’s PowerPivot for self-service BI.

What may be less obvious is that similar major enhancements have been made across the Microsoft portfolio – including Dynamics AX – and that as a leading Microsoft partner in the real estate industry, we recognize how these enhancements change the rules of the game.

If this blog raises any questions, please get in touch – either by replying below, or e-mailing me at chris.lees@calvis.com.

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