5 Ways to Harness Big Data for Better Property Management
Updated: May 2016
Whenever anyone talks about data or information gathering, the words “big data” always come up. It’s been one of the buzziest of buzz words for every sector of business around the world for the last four years—especially for multifamily and apartment market research.
Big Data is as essential to successful property management businesses as having the right people and best assets. Through Big Data, companies can gain better insights into their businesses, help make better decisions and breed a proactive rather than reactive culture.
But, Big Data shouldn’t replace an organization’s ability to make a decision, but merely become an extension of expertise and know-how. So what exactly is Big Data, how can property management companies take advantage of it, and why do we all still care?
What is Big Data?
McKinsey says Big Data refers to datasets whose size is beyond the ability of typical database software tools to capture, store, manage, and analyze. So when you think about data, usually you think of structured data like your hard drive or the stuff stored on a server somewhere for you to access when you need to. But that’s not the case anymore.
Big Data comes from everywhere, both in structured and unstructured forms, from free text, audio, video, click stream, and log files, and even data created by something other than a human being.
And, because systems can talk to each other in real time, Big Data is moving and multiplying at a much greater speed. There is no shelf life to Big Data. Analytical systems must capture data today, or it quickly becomes yesterday’s news.
In the 2016 Big Data: Getting a Better Read on Performance update from McKinsey, they share that “many companies have avidly pursued the promise of big data’s benefits—many making significant investments in data warehouse and analytics programs.” But now questions arise about the “magnitude and timing of the returns on such investments.” The results find the return on these investments substantial, while also finding that “data-analytics investments significantly increased value-added or operating profits, the simple revenue impact for consumer companies was considerably lower.
How to Harness the Power of Big Data for Your Properties
Again, Big Data is used to help identify the biggest opportunities for value within a business. However, not all of the data generated is worthwhile, so some culling is necessary. Many software solutions are available to assist in drilling down to achieve the most value. Being able to synthesize the data down to a property’s unique needs is a big benefit. According to McKinsey here are five ways that property management companies can harness Big Data for big benefits.
1. Create Operational Transparency
Transparency helps create a kind of “truth” for your business. It’s this truth that powers your applications, operations, dash boarding, and internal benchmarking against your multifamily competitors. Utilizing Big Data offers the opportunity to measure up to the competition without surprises at the end of the financial cycle.
2. Enable Experimentation for Better Outcomes
With the variability of Big Data, discovering the best solution – what works and what doesn’t from an operational standpoint or for different property asset classes and geographies – is more revealing. It’s testing different hypotheses like they do in hard science, and refining operational practices based on what you learn from those experiments. As software configurations and policies are married with results, drilling down to a final decision based on known variables is more realistic for better managing your property portfolio.
3. Use Smaller Segmentation to Produce Bigger Results
Slicing the whole into different actionable subgroups and creating a different strategy for each subgroup is the true beauty of Big Data. Different strategies for prospects, stakeholders, renters and communities may be more precisely implemented rather than by broad-brush approaches. For example, a property owner may identify one high-paying segment and determine whether to create a product to meet the needs and wants of that segment.
4. Augment Human Decision Making with Automated Algorithms
The multifamily housing industry already uses automated pricing and screening models to assist in daily property operations. These models are objective, empirical, data-driven tools that remove emotion and human bias and allow many more variables to be analyzed than even the geekiest property manager would attempt when making a decision. The future will see similar models being used in other facets of community life, such a scheduling labor, allocating marketing dollars and even creating advertising about your apartment community!
5. Let Big Data Drive Innovation
Pairing Big Data with business intelligence can help drive new products and services, enhance existing ones and invent entirely new business models. By using Big Data and drilling down into what’s relevant and important to your property management company, you can gain many more insights than beating the bush and trusting industry chatter. There’s a data science maxim: “the plural of anecdote is not data!”
A Vital Supplement for Property Management Companies
Big Data can be an amazing supplement to your property management company’s business analysis diet. But it isn’t enough to simply gather the data. A structure must be put in place to make sense of it and to capitalize through tailoring the unique business needs of a property and act quickly enough to generate immediately actionable decisions.
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