While planning to introduce a tenant experience app in their buildings, many landlords question whether they should build their own tenant satisfaction software, or outsource it.
It may seem like building an app is an easy job. But it requires strong expertise in app development, security, user experience, and data management. Yet, are there cases when it makes sense to build your own software?
This is a tough call for landlords. Building your own software can be a good option if you have the necessary resources and expertise in-house; while it can also be a complex and time-consuming process, and may not be the best option for all landlords.
We witnessed C-level property operators waste more than 20% of their time trying to maintain the software that was developed in-house, receive an endless number of invoices for unpredicted maintenance costs, hire an entire team to help, or lose more than 2 years in the effort of launching the app. Then, this puts operators in a paradoxical position, as they are no longer able to outsource the software for the extreme amount of time and money spent along the process. They're simply obliged to make the solution work.
Let's elaborate on this with the minds that actually helped develop tenant experience software: Spaceflow's Engineering Consultant Tomas Papez, and Product Manager Sandra Munoz.
What does it take to build a tenant software? How do you identify specific needs?
Sandra: It's vital to define the tenant and portfolio needs as the first step. Needs vary from one asset type to another. Some software features that make sense for residential assets may be irrelevant for office buildings.
Especially for landlords who have multiple types of assets in multiple locations, the tenant experience software needs to be flexible enough to address evolving needs.
In addition to the size and location of the building or the whole portfolio, considering the cultural differences of tenants is important when creating a neutral, modular, and flexible solution. It is essential to start with researching user interests and requirements. Listen to the end-users and your team to create a product that meets their needs. According to that, you can define how complex or basic your solution will be.
What do you mean by cultural differences? How do they influence a piece of tech?
A very simple example for residential assets; in Spain, it is common to have your own washing machine in each apartment, but in the Nordics we observe that this is regarded as a shared amenity. While you may need a booking system for shared amenities in one part of the continent where you have assets, you may have different needs elsewhere.
What is the next step after identifying tenant & portfolio demands and needs?
Tomas: The next step for landlords would be to hire an innovation leader who will need to research the existing solutions in the market in detail.
You need a great CTO or chief architect to help make the right decisions and define goals for the short and long term. The innovation leader would then weigh both options deciding between building their own tenant experience software or outsourcing to a provider.
If the decision is to build in-house software, this will require hiring a team of experienced product managers, engineers, and UX designers. Defining the technology choice (the server or cloud where the software would run), team size, and order of hiring will follow. Maintaining the staff will cost a lot of money, and will take time as well. This approach is relevant to big corporations that have portfolios across cities and countries. If you are a landlord with only a few buildings, it doesn't make sense to build such a big innovation team.
If the decision is to outsource the software; it may initially seem a bit more expensive on paper, but will be cheaper in the long run, with a faster kickstart. You'll be working with an already-developed solution and people who already have experience in maintaining the app.
What are the technology layers that should not go unnoticed while building the tenant experience software?
Sandra: As we build an app for humans to use, we need to consider human factors – user behavior and psychology. This will help make the app as relevant and on-demand as possible.
The software world is changing extremely fast. As you design the product, you have to keep an eye on the entire technology scene as much as the real estate and PropTech scenes to always be updated on user behaviors and demands. These trends shape the world we live in and the language we speak. For example, a well-known app brought the words 'swipe right' and 'swipe left' into our daily language, meaning 'accept' and 'reject'. We can see how a single app changed our vocabulary, and there are countless examples like this.
That leads me to another important area which is the UI & UX design and improving it at a constant pace. Some operators assign their marketing teams to handle the app design, but this is a wrong approach. Your corporate brand may look great, but there are many aspects that are connected to user preferences that should be reflected in the app design.
If you don't have an experienced in-house UI & UX design team to cover all of these areas, you will need to keep paying external contractors, which will be very costly.
You should be communicating with users regarding how the existing features work for them, introduce your product and engineering teams' vision on upcoming features and collect feedback. You need to have dedicated time to do these. This is usually underestimated, but very important when it comes to the successful working of your app.
Lastly, you should be paying a lot of attention to the human factor, and have a strong customer success team. It is a key part of the business from the onboarding to making sure that users benefit from the solution in the intended way.
What is the cost of maintenance and keeping the Software updated?
Tomas: The maintenance and infrastructure costs for a software are significant, especially for landlords who have multiple buildings.
The back end needs to run on a server, which is usually the biggest expenditure after the payroll. Bugs and crashes are inevitable, and developers spend part of their weekly time solving them. A support team is necessary to make sure that users receive fast responses to issues raised. This is especially important if you have multiple integrations built within the solution, as sometimes issues may not come from your app; but from the integration partner.
Having a support system to detect the problems fast, doing regular compliance and penetration checks for security and data protection, and training staff is a significant expense. If you imagine that the software will work with the same quality for long years, you're wrong. Building an app is not a one-time task, as constant updates and evolution are necessary to maintain relevance.
Additionally, the app and support should be scalable. Everyone can onboard 10 or 50 buildings, but can the provider of choice onboard dozens of buildings, while still providing the same support and quality in maintaining the app? This is very important.
On the flip side, what are the benefits of building your own app?
Sandra: When you create your own app, it will naturally be a tailor-made solution for your demands. If you're looking into having an app with basic features, then yes, it might be the ideal solution for you.
If you want your app to cover several integrations such as keyless access, parcel management, facility management; offer high-end features and eventually digitize the whole tenant journey, it is better to work with an experienced tenant experience software provider like Spaceflow.
Especially if you are a landlord with many assets, and you have long-term digitalization and ESG aspirations such as getting certifications such as WELL or SmartScore for your assets, then well-established providers will guide you through the way.
Tomas: I believe that the ownership feeling is what appeals to landlords to build their own software.
It feels good when you own the product and the data, but outsourcing the tenant experience software doesn't mean that you lose the sense of ownership. Most providers offer app customizations to help protect the brand identity of the landlords, and importantly the owner of the data is still the landlord.
Some landlords don't see the point of having a specific tenant app when they can use mainstream messaging or social media platforms. What's your take on that?
Tomas: They might be observing tenant experience software for communication purposes only, but in fact, they enable much more than that.
With the right integrations and features, they can do the job of five different apps, and the user only needs to download one to manage everything – get the updates, book a meeting room, receive parcels, open doors and locks, track energy consumptions, gather important information and documentation, etc.
If you build your own app, though, you need to be in charge of bringing all of these valuable additional services and integrating them. Otherwise, the occupiers of your properties don't have a reason to use your app! You will most likely not have an open API that enables this. The challenge will grow if you have big and international portfolios, as you will need to find more and more integration partners. If you work with a tenant experience solution provider that has a big variety of integration partners already, this will be less of a hassle.
Looking at the pros and cons of developing your own tenant experience app from scratch, we learn that it is time-consuming, as it requires significant planning, expertise, development, maintenance, testing, and additional costs.
Even though an in-house app can offer greater customization and the benefits of owning your team (think compliance, certifications, SLAs), it comes with the risk of not being as effective, secure, user-friendly, and purposeful as a professionally designed and tested app.