Cybersecurity challenges and a disciplined approach to technology adoption were the focus of conversation for a group of apartment executives on day one of the National Multifamily Housing Council’s 2020 OPTECH Virtual Conference.
The executives from Lincoln Property Co., KETTLER, and GID Investment Advisers LLC discussed the results of a new apartment industry technology survey at a session moderated by Kevin Thompson, senior director at multifamily consulting firm One11 Advisors. The survey, released by NMHC and One11 Advisors, canvased 46 technology leaders at apartment firms that own or manage a total of nearly 1.4 million units.
Most multifamily firms outsource information technology (IT) functions like managed infrastructure, security monitoring and help desk support, including 60 percent of smaller companies and 86 percent of the largest companies that responded to the survey. Smaller companies were defined as those with 100 to 10,000 units, while the largest companies had more than 60,000 units.
“Outsourcing does give us that capability to be nimble on the things that are our core competence, that are really critical and that we need to drive, and not on the things that we really can outsource,” noted Cindy Fisher, president of KETTLER, during the session.
Functions like infrastructure are not part of the multifamily investor and developer model, she added. “We’re not a technology shop.”
Margette Hepfner, COO for Lincoln Property Co.’s residential management division, said that the “busywork” should be outsourced “so that our teams internally can be focused on integrating all the different technology platforms to make our teams more successful.”
According to the survey, the head of IT—whether defined as the CIO, the Senior Vice President of IT, or another title—reported directly to the CFO at 33 percent of the companies, to the CEO at 23 percent and to the COO at 21 percent.
Fisher observed that the prominence of the CFO role probably relates to the fact that many of the technology systems that multifamily companies rely on sprang from accounting functions. “I think that was a natural progression where the CFOs probably got involved in the technology a lot sooner than in some of the operating areas.”
“Technology is shifting very rapidly, as we all know, to the front end,” she said. “So it isn’t all about middle- and back-office anymore. You’re seeing that COO role coming into play because technology and process cannot be separated.”
Cybersecurity has taken on even more importance following the sudden shift to remote work during the pandemic.
“We’ve seen an exponential rise in the fishing attacks and ransomware attacks,” noted Fisher, whose company decided to reassess its cybersecurity strategy and double down and testing and training. “There are constantly new tools and techniques to fight this battle. You can’t bury your head in the sand and think, I’ve got this all in place, I’m done. There is not a done part.”
In addition to fishing, multifamily operators face reputational risks from the huge amount of information they collect on residents and prospects, according to Shawn Mahoney, senior vice president, CIO & CTO of GID, which operates the Windsor Communities brand.
Depending on its closing ratio, renewal rate and data retention policy, a company with a 10,000-unit portfolio may have information on more people than the population of a medium-sized U.S. city, he noted.
Most companies in the survey said they have internal staff designed to manage cybersecurity, including all of the largest companies and 57 percent of the smaller companies, but only 37 percent of medium-sized firms, defined as those with 10,000 to 25,000 units.
“We have the same challenges as other industries, but we generally have less people and less money to solve them,” said Mahoney. Adding to the complexity, he added that the multifamily industry encompasses both a consumer product and a real estate asset class.
“Eighty percent of what we do is really sell consumer products,” he said.