Once upon a time there was a castle on a hilltop surrounded by fertile lands. One day an old man knocked on the gate and told the inhabitants that he owned seven books which stored all the knowledge in the world and, for a bag of gold, he would sell the books to them. They sent him away, saying they did not need to learn anything; crops were abundant and they lived well. The old man took a book from his bag and set fire to it.

The next year, he returned and offered the remaining six books for two sacks of gold. Again they turned him away. If they had not wanted to buy the books the last year, they reasoned, it would be foolish to buy fewer now for more money.

This continued for some years. The old man would arrive, offer to sell his books of knowledge for higher sums, then destroy one when he was turned away.

Time passed. The crops began to fail, people moved from the countryside into the castle to share the food still being produced. Each year, as the castle became more impoverished, their need for knowledge increased, but the books offered by the old man became fewer and more expensive.

Eventually, he had only one book left which he offered to them for seven bags of gold. The people were now desperate for any knowledge but could not afford to pay so they turned him away one last time. During the cold winter that followed, the people perished.

Property companies sometimes behave rather like the inhabitants of the castle. Whilst times are good, there doesn't seem much point to buying expensive new IT systems. The market is improving, we are making lots of money - why worry about dull things like systems? But then, when times are hard, it is difficult to approve spending significant amounts of money when there are so many more pressing calls on the budget - or so they think.

In addition to this typical business conundrum is the fact that few property specialists know how IT works and even fewer care to find out. They are forced to trust an IT specialist who they secretly fear is dead set on distributing their hard-earned profits to hardware and software companies.

The property specialist is faced with a series of questions. "How should I manage the following?:

- my IT,

- the amount of spend,

- what I spend it on, and

- when I spend it, especially when there are more important things to spend it on?

As with any aspect of business, IT needs to be planned strategically. In some circumstances, such as when new technology allows a dramatic decrease in cost, IT can drive business improvement. However, in most cases, the business should drive IT. At the development stage, the questions should focus on the business. Some initial questions to ask which will help to start formulating a strategy might include:

- Which processes when automated will directly impact the client/ customer/ tenant? Research shows that the closer an automated process is to the customer, the greater its Return on Investment (ROI). Hence many companies forego investment in back office systems and instead concentrate on client portals which will give the client easy access to all their information.

- What will make the most difference to the business? Would an improvement in investor reporting yield a greater return than a project to collect rents more efficiently?

- How should key business processes be supported by IT? Would it be more effective to implement a document management system or to provide all managers with handheld computers?

- What size will the business be in 5 years? Will it be possible to link together all your current systems with a browser interface or should you start planning to implement a large integrated system?

These are but a few of the questions which will begin to allow an understanding of the structure of your IT strategy. At this stage the questions deal with the business and not IT technicalities. In this way, the business managers are setting the framework for the IT strategy and the key measures for the success of the IT function can be defined. Only after determining the business drivers and requirements can the technology solution be structured effectively.

Once we have a vision of what the new business systems need to deliver, how can we ensure that current systems are maintained without a hitch whilst the new IT system is successfully developed? In other words, what is the size and profile of the team required to deliver the improvements and maintain the current infrastructure?

An important statistic to be aware of is one produced by IBM's research labs. Contrary to the popular perception that an IT support team is comprised of techno-obsessed geeks, 95% of an IT Manager's job is communication and only 5% is "twiddling knobs".

Communication skills are also important for the people responsible for the help desk. It is counter-productive to use techies who can be impatient with users and overly technical in their approach, but it is also inefficient to allow managers to become overly involved in front-line enquiries.

It is clear that a wide variety of skills will be necessary to structure the support necessary for IT in a typical company.

We use a template diagram to show an overview of the different types of function in a typical IT team. The diagram has colours to represent the distribution of different skills required by the roles. Each box covers a functional area and the role of members of the team may encompass more than one area.

In a small team, roles will have to encompass more than one area. Each functional area will need to be structured in turn and this model can be used to delegate responsibilities and monitor performance.

The wide range of roles is a problem for the majority of property companies who have very few staff and where the overhead of several IT staff is too much to bear.

There are a number of alternative approaches to solving this problem. The first is to contract an IT support company to supply the required services.

The "Planning" stage identified the structure and detailed the functions required; now it is necessary to define the services within each area and agree service levels with the business managers for each area. This can be used as the basis for tendering and negotiating the final contract with suppliers.

It is important as part of the service level definition to discuss with the Business Managers the change management issues which will result from a new regime of formal service levels, rather than ad-hoc requests to internal staff.

The tender and negotiation phase is the key to long term success. The supplier is in a position of knowledge and expertise in comparison to the client who may have limited and infrequent experience of tender situations. The client may do well to obtain some external experienced advice to ensure that the contract is really going to deliver the services he has identified. At this stage it is probably also a good idea to consider whether there should be more than one contractor. Having just one may be more cost effective in the short term but can leave the client exposed if service levels are not maintained.

An alternative, and sometimes supplementary, approach is to use the services of one of the increasing number of Application Service Providers (ASPs). Here the supplier provides the software which the company uses and this is accessed over the internet using a standard web browser. Using this approach makes the supplier responsible for a far greater range of functions and increases the client company's dependence on one supplier. However, the benefits can be significant if the right contractual balance is found and the contract is well drafted to minimise risks.

With a number of contracts to manage and an ongoing requirement to ensure that the delivered services continue to support the changing requirements of the business, it will still be necessary to maintain an in-house management function. However, the supplier will be responsible for providing the right number of staff with the relevant skill sets, either on or off site to do the day to day work.

If our castle dwellers had thought carefully about the knowledge they might need in advance of the drought, they would have been better placed to use the knowledge they were offered. IT in particular can provide significant advantage over competitors if used effectively. Next time you are offered solutions to all your problems, take the time to work out what you need and take advantage of the offer.

By Melita Thomas and Mark Jones
This article appeared in the Winter 2004 edition of the Property Systems Review
Melita Thomas and Mark Jones are directors of Remit Consulting:

 
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