Apartment Firms Cut Discretionary Technology Spend, But Boost Outsourcing Dollars, Survey Finds

Washingon, D.C.—Apartment firms have changed their IT spending habits in recent years, cutting spending on discretionary information technology (IT) projects, according to a just-released survey from the National Multi-Housing Council.

The report, an update of a similar survey done in 2008, examines three aspects of IT spending: IT outsourcing (contracting with an outside firm to handle IT or a particular IT task); IT consultant spending (hiring an outside IT professional rather than using staffers); and discretionary spending on revenue- increasing IT investments, such as document management systems and lead tracking/lead management systems.

The survey found that spending on discretionary projects fell to 14.3 percent of apartment firms’ IT budgets, down from 19 percent in 2008. Spending on consultants decreased even more steeply, falling from 20 percent of IT budgets in 2008 to 6.8 percent in 2009. However, outsourcing spending nearly doubled, from 12.6 percent in 2008 to 23.6 percent in 2009.

“While there is no right answer as to how much apartment companies should be investing in technology, this NMHC survey offers firms an updated benchmark that will let them compare their IT spending  and staff levels with their peers,” said David Cardwell, NMHC’s vice president of technology and capital markets, in a statement on the survey’s findings. “It also supplements our 2008 survey, to give firms a better sense of how IT spending has evolved.

Among the findings:

• Respondents spent 0.95 percent on gross revenue on IT in 2009, up from 0.7 percent in 2008. (These figures do not include telecommunication serves offered at the property level.)
• Smaller firms (those with fewer than 200 employees) are more likely to outsource their IT projects. These smaller firms spend an average of 42 percent of their technology budgets on third-party IT outsourcing, compared to less than one percent spent by larger firms (those with over 1,000 employees).
• There are significantly fewer IT staff supporting other apartment firm employees in 2009 compared to 2008. IT staffing has decreased from one IT staff person for every 110 employees to one IT staff person for every 162 employees, which translates to a 47 percent increase in the number of employees each IT staffer must handle
• The data also shows a significant decrease in the number of help desk staff. In 2009, there was one help desk staffer for every 282 employees. In 2008, on average, firms provided one IT help desk staff person for every 172 employees.