By Doug Macnaught, The VRM Consultants & TomK, The VRM Consultants –Companies have a variety of reasons why they decide to change Property Management Software (PMS). If you can’t think of at least three, then maybe now isn’t the time to change. In the majority of circumstances your existing system will be like a pair of nicely worn-in shoes. You know you might not be able to sprint after a bus, but they are pretty good for wearing all day long.
You see and hear about all the shiny new things that are out there and available and think that you cannot compete unless you have them as well. Whether it is cloud based systems, dynamic pricing, mobile housekeeping, or just the next evolution to integrated accounting and tighter security, knowing that now is the correct time is the most important thing to decide before you embark on the process.
- Do you have the staff resources to select and change software?
- Are you prepared for the pain involved to change/migrate systems?
- Do you have the budget?
- Will you need a new website or new productivity tools, and can you afford these?
These are just a few of the questions that you should ask yourself before even considering to move forward with the selection and implementation of a new PMS system.
Few decisions you’ll ever make will have as much impact on the operation, profitability, and overall success of your business as what PMS you’ll use for the future. You need to do everything in your power to ensure you select and implement correctly.
The Four Pillars of a Successful Software Change
Consider the four pillars as equal contributors to the success of your project. Each represents a corner, and if any is weaker than the other the whole will probably fail.
1. Understanding Your Business
The first part of the process is to completely understand your business and the people that make it a success. It is essential to listen to all the people that make up the company and not just those that can get their point across in the most vociferous manner.
Using a non-partisan, data gathering approach to the process is the best methodology in establishing your business needs. You should look deeply inside every aspect of your company to determine how you do business and produce a document (spreadsheets are best) that concisely describes what each part of your operation needs or wants from new software.
- Start with each department head and have them monitor the existing system uses during a regular day, week, or month. You must understand what the system does or doesn’t do for you at all points of your business.
- Log every Feature/Activity/Process and be sure to note whether this is a Must Have feature or a Would Like feature as far as the department is concerned.
- Prepare a spreadsheet with the Feature/Activity/Process details from each department and consolidate the data in a logical flow by Department/Business Area. This becomes your Needs Document.
This should be a lengthy iterative process. The more data points that you collect, the less you will be surprised later on down the road. Include each person that is a stakeholder in the process. You will need their input and assistance to get through the process and have a successful transition.
2. Analyzing Your Needs
Once you understand how your business interacts and falls short with your existing systems, then it is time to analyze the results and determine the importance of each aspect.
- Establish the stakeholders. They may be your C Team, your department heads, or just the people you respect that should assist in the decision making process.
- Make sure everyone knows that this is not a democracy and that they are not going to get everything they want.
- Send a copy of your Needs Document to all your stakeholders and have them rank the importance of each item in the document (irrespective of whether they operate in that area of the business or not).
- Make sure there is a place to mark the Must Haves. If your business depends on this feature, then it is crucial to keep this to the fore.
- Once complete, collect the information from each person and overlay the responses into the columns of your spreadsheet. It is essential to know how highly each stakeholder ranks each aspect.
- Develop the Final Company Ranking of each aspect. Using a scientific weighting system is preferable, but no matter how you arrive at your final ranking, it is crucial that it reflects the true level of importance of each aspect to your company.
Meet with the stakeholders to review, explain, and adjust your final Needs Document. This should be a spirited meeting – the last chance for the shareholders to lobby for their priorities! This meeting is also where you get complete “buy-in” from all your stakeholders. Once the priorities are decided upon, they all need to commit to them as a team. It is now or never for you to get the correct level of commitment for the next two additional phases of the project. If you need to review and revisit, do so now.
3. Selecting Your Next Partner
The selection process is the most difficult phase to navigate because the information that you need to make your decision is not in your control. The vendors will not want to expose their weaknesses and will try as much as possible to paint a positive slant on features. (That’s not a bug, it’s a Feature!)
It is crucial that you approach this process with your eyes wide open and firmly fixed on the task at hand.
Separate this process into four stages: Search, Review, Negotiate, and Decide
3.1 Search —Return to your Needs Document and create a smaller initial Request for Information (RFI) that deals with the most critical requirements that you have. Review the software companies to see which ones meet your core criteria. As there are at least 25 different software vendors in our space this will require significant effort, but it is a worthwhile and necessary effort. In many instances the initial review process will narrow down the list of potential vendors quite quickly, for example:
- If you need real estate commission approval.
- If you must have distribution links to a particular channel or partner.
- If you require access to your native data.
- If you want to have your system in the cloud.
You must be dispassionate about the search. At this point in the process you are not selecting your system, you are preparing a shortlist. Focus on how your business operates. Do not be swayed by the things that do not matter:
- It is not important how shiny their booth was at the tradeshow.
- You wouldn’t buy a house based on the restaurant your realtor took you to, so don’t buy software that way either.
- Don’t assume! Things change very quickly in this business and what was true last month is not necessarily the case today. Reach out to see what they offer today.
3.2 Review —Ideally you should be able to narrow the field of prospective products to no more than three. This is a good number and you should expect to invest a minimum of a day on the initial review of each system.
Send out a much larger RFI to the three that you select, and make sure you include as many of the details as you can. This will help the vendor decide how best to demonstrate their systems and give them a good idea of how serious you are in the process.
Decide who your demo participants are, they could be all the stakeholders, or just a subset. No matter what you decide make sure every one of them sees at least their focus portion of the system from each vendor.
It is very important that each person get the same information from each demonstration. You don’t want to give an incomplete picture to anyone. Do not go ahead with a demo unless all the demo participants can be present for all demos.
The vendors will want to use the demo to highlight the features of their product that pop, those that help to sell their product. You need to focus the vendors on showing you how their product addresses the core functionality or Must Haves that your team has identified.
Rate the vendors on their responses and demos of the items that you identified in the initial phase. You have to be dispassionate and even-handed in your review, so don’t think badly of the vendor if you don’t like their tie or perfume. And don’t think more of them because they took you somewhere nice for lunch. At this stage it is all about their product. (You might think this is obvious, but you’d be surprised…)
Nominate at least one person to be involved in all the demos and collate the scores from the participants. This will be crucial when you come to the final review.
3.3 Negotiate — You should already know the business model each vendor is offering from the RFI they responded to. This will enable you to get a rough idea of what the costs will be.
Be sure to gather all the costs involved in the process. It may not be enough to simply get a good deal on the system. Don’t neglect the other costs involved:
- What is involved in changing my website? This can often be the largest additional cost and one that is often overlooked.
- How much is the cost of Training and Implementation? What’s included and what is additional?
- What are the ongoing costs of Support and Services?
- Are there any hosting costs?
- What about your existing IT infrastructure? Even if the system is hosted in the cloud, what are the costs likely to be to upgrade your infrastructure?
- Will your data be converted? What will the vendor convert? What will you need to manually convert? How much time and resources will you need to devote to review and double entry?
Knowing all this information will allow you to make the most informed decision and know the true cost of the process.
Cheapest isn’t always the best and neither is the most expensive. This is where you should negotiate the best price you can. Note that price should be a consideration, but you also need to consider the overall reduction in operating costs and increase in productivity that the new system may bring.
3.4 Decide — Once you have all the pieces in place, decide which vendor you are going to move forward with. The following should act as a guide to help with that decision:
- You will not find a vendor that gives you everything you want. Be prepared to compromise, but do not lose sight of your Must Haves.
- If you can’t see it, you can’t use it. If you have a feature that you need and the software company promises to provide it in the future, make it part of the contract now or you may never see it.
- Review all aspects of the vendor from best match on your features to price and your confidence in their company.
- Get references, talk to your peers, talk to their clients.
- Make sure all the stakeholders are on board. If you set the expectations correctly at the beginning, each may not be getting their favorite system, but it must be good enough to justify the change.
- Expect to spend at least 20% of the system cost on Training and Implementation.
4. Implementing for Success
The final part of the process is as critical to the success of the project as any of the other three. Do not minimize the investment in training; a poorly trained staff will destroy a successful software change quicker than anything.
- Nominate a project manager from your staff to manage the project for your company.
- Require the software vendor to give you a single point of contact and set up regularly scheduled meetings and calls to monitor progress both weekly and after key milestones.
- Ensure there is a written implementation plan. This can come from the vendor or from you, but it should include all aspects of the process from setup to data conversion to training and go live dates.
- Make sure dates are assigned to all milestones, and track those dates. Consider attaching penalties to missed targets.
- Don’t forget to include your external critical systems if they integrate to your PMS. What is the lead-time for them to change to your new platform?
- Expect to pay overtime to your staff during the process. In most cases, you are not adding to your staff, but they will be required to do their existing jobs as well as attend training and do data entry or double entry during a parallel switch over.
- Practice, Practice, Practice – make sure that your staff know your new systems and run mock sessions so that they can handle the system under pressure.
- Do not convert financial data! Expect to enter and verify it manually.
- Open a new bank account. This is essential in certain states and advisable in all installations. Balance the money between both systems and transfer that amount into the new account. What is left over is what you have to reconcile to your old system but will not impede the successful balancing of the new one.
- Review and measure regularly. Get help from your software vendor if you start to fall behind. They do not want you to fail! It is not in anyone’s interest for that to happen.
- Communicate, Communicate, Communicate! It is impossible to over-state the value of regular communication:
- Internally with your whole team to quickly see where the project is succeeding and failing.
- Externally with your software vendors and other people involved in the process.
- Finally with your homeowners, vendors, and incoming guests. Let them know you are changing; they may cut you some slack.
As can be seen, each of the four pillars is an intricate, complex, time consuming process. The level of success of any pillar is dependent upon the successful completion of the previous pillars. You should seek as much assistance as possible to ensure this success.
When selecting your team, consider working with someone who has extended experience in PMS selection and migration projects and has intimate knowledge of the numerous PMS products available. Between the complexity, scope, and impact of these projects, having people on your team who have “been there and done that” is invaluable.