Utilization Of IT In Property Management Information Technology Essay

Utilization Of IT In Property Management Information Technology Essay Information Technology, or IT, has become an enabler in multiple areas of human life, including professional practice of all kinds. The practice of property management cannot be accepted. With a case study of estate surveying firms in Lagos, this paper investigates the level of utilization of IT in the professional practice of property management. Data was collected using questionnaires, which were administered using the cluster sampling method. The paper shows that IT is not being significantly employed in the practice of property management in Lagos. It further reveals that the relative high overall cost of its adoption is most probably responsible for the foregoing. In this wise, the paper recommends that the Nigerian Institution of Estate Surveyors and Valuers, the custodian of the profession, should provide leadership in the utilization of it, while individual and collective efforts of the firms should be geared towards this area. Key words: Information Technology, Property Management, Professional Practice, And Estate Surveying Firms INTRODUCTION The world of today is being propelled by information, in profound proportion, via the agency of Information Technology (IT). Information, in these present times, more frequently described as a fourth resource, is as essential as land, labour and capital in the production process; and advances in IT have tremendously facilitated the processes of gathering, storing, handling and utilizing this vital resource (Brady, 1991; and Olawore, 1999). The foregoing underlines the aptness of terming this 21st century the Information Age (Emeagwali, 2003). Significant changes have come about due to the rapid growth of IT; the outstanding change being the increasing globalisation of the world. There is the increasing transmutation of the present-day world into a more homogenised geographical entity with no boundaries, hence, the famous clichà © the world is a global village (Owasanoye, 2001). The most revolutionary agent of this development is the Internet, an offshoot of modern IT. The Internet h as lowered the cost of doing business; made it possible for a consumer to access goods or services without leaving the confines of his home or office; and has given its users an opportunity to advertise and operate across frontiers, across borders and beyond the control of national governments. IT has been, and will continue to be, applied to the multifarious facets of the life of the ubiquitous modern-day man. It is common knowledge that virtually all categories of professional service providers are now leveraging on the cutting edge afforded by modern IT so as to progressively leapfrog competitors, proactively respond to the ever-dynamic demands of their respective clientele and ultimately add value to their bottom line. Modern IT has changed business landscapes and expanded the frontiers of service delivery (Osadolor, 2002). For example, banks and financial services providers have created their own system of electronic funds transfers; the travel industry uses electronic informat ion services for booking, time tabling and pricing; stock exchanges have evolved automated trading systems; while estate agents now utilize the platform of the Internet to market real estate in their portfolio (Owasanoye, 2001; and Akomolede, 2002). Situated in the context that property managers are also included in the category of professional service providers carrying on the practice of ensuring that a clients property investment is kept in a state to enhance its functionality, prolong its lifespan, yield an optimum return and achieve the investors general objectives, hence, IT is of useful purpose to the practice. Similarly, central to proactive property management practice is an efficient system of record keeping in its entirety. Against this backdrop and given the myriad of responsibilities of the property manager coupled with all sorts of complexities presented by properties and their occupants, an enabling tool as IT cannot but be deployed. Furthermore, if the foregoing is critically examined in the context of the emerging milieu of increased client awareness and requirements, it reinforces the imperative of property managers substantially leveraging on IT to drive, and step up the quality of, service delivery (Longe, 20 01). However, even in the absence of an in-depth inquiry, by casual observation, it can be conjectured that there is a yawning gap between the levels of sophistication that are being attained vis-à  -vis the adoption of information technology in the contemporary professional practice of property management in both the developed and the developing economies. The practice of property management (like its umbrella practice of estate surveying and valuation), in most developing economies, inclusive of Nigeria, is lagging behind that in the developed economies (like the United Kingdom) specifically in terms of the application of modern enabling tools of information technology. Though, it cannot be said that there is blanket non-utilisation of IT in the practice of property management by estate surveying firms in Lagos, Nigeria, as a typical example of a city in the developing world, but to what extent is IT adopted in the practice? This is the central question that this paper intends to answe r with the aid of an empirical study carried out in 2005. INFORMATION TECHNOLOGY AND PROPERTY MANAGEMENT The term Information Technology has been variously described. IT, being the acronym for Information Technology, has been broadly defined as a term that encompasses all forms of technology used to create, store, exchange, and use information in its various forms (business data, voice conversations, still images, motion pictures, multimedia presentations, and other forms including those not yet conceived)1. However, in simple terms, the Oxford Advanced Learners Dictionary of Current English (6th edn) furnished a definition of IT as the use of electronic equipment, especially computers, for storing, analyzing and sending out information. It is common knowledge that IT has wide-ranging applications; it has been applied to virtually every aspect of human life. It has found useful application in science, commerce, engineering, education, recreation, entertainment, research, medicine, governance, religion, agriculture, real estate marketing, project management, banking, airline reservations and so on (Brady, 1991; Alile, 1997; Ojo, 2000; Ayo, 2001; and Akomolede, 2002). It is also of useful purpose to the various facets of the professional practice of property management. Property management à ¢Ã‹â€ Ã¢â‚¬â„¢ the other term under review à ¢Ã‹â€ Ã¢â‚¬â„¢ is an integral aspect of the profession of Estate Management. Thorncroft (1965) defined estate management as the direction and supervision of an interest in landed property with the aim of securing the optimum returns. These returns need not be financial but may be in terms of social benefits, prestige, status, political power or some other goals or group of goals. In consonance with the traditional aim of general estate management, property management entails the practice of directing, supervising and controlling interest in land and landed property so as to enable it yield an optimal return. Specifically, property management is that aspect of the real estate profession devoted to the leasing, management, marketing and overall maintenance of the property of others2. According to Olajide and Bello (2003), property management can be defined as the application of skill in caring for the property, its surroundings and amenities, and in developing sound relationship between the landlord and tenant and among tenants themselves, so that the property as well as individual premises would give value both to the landlord and tenant. Basically, its purpose is to secure for the property owner the maximum continuous net return on his investment over the life of that property and to maintain the physical aspects of the property for optimum efficiency and economy (Weich, 1967; and Kyle, 2000). In essence, the primary functions of property management are threefold: achieve the objectives of the property owners, generate income for the owners, and preserve or increase the value of the inve stment property (Kyle, 2000). Towards this end, comprised in the professional services rendered by property managers are: (a) rent collection and remittance; (b) selection of tenants; (c) property maintenance; (d) marketing of vacant accommodation; (e) administration of estate personnel and services; (f) administration (maintenance) of estate records; (g) routine management inspection and correspondence; (h) enforcement of lease covenants; and (i) any other function as reasonably expected of a property manager or as stipulated in the management agreement between the parties (the property manager and the client). All these services can be driven by IT. The following are some identified application areas where IT has been of beneficial use in the practice of property management. a. Filing: It is asserted that a property manager cannot survive without his records (Nwankwo, 2004). If he cannot maintain a good filing system, he will always be in difficulty. Hence, the hallmark of an efficient management office is a good filing system (Kyle, 2000). Data should be sorted and segregated into separate files for easy collection, retention and retrieval of records. Records can be kept manually by means of simple registers, record cards, schedules that are referred to often, reminders, files and so on; but the trend now is computerization (Nwankwo, 2004). A computerized data system has a number of advantages over a manual system including the ease of storage, the ability to retrieve large amounts of data as required, economy of space, and reduction of operational cost and time (Olawore, 1999). With a computer database, records relating to clients properties can be effectively maintained. Database such as computerized property management system (CPMS) e.g. EstMan is available in the market to all property managers desirous of computerizing their operations (Adebiyi, 2003). The CPMS comprises various elements such as data relating to the properties, the landlords, the tenants and the leases in a digital form. It is designed to aid the management and administration of commercial, industrial and residential properties. The software allows the myriad of information to be retrieved quickly, eliminating the need to refer to bulky files or having to refer physically to leased documents often by extracting vital information and making them ava ilable to be looked at or pointed out whenever needed. b. Financial Record Keeping: This is a crucial activity in property management that deserves a separate mention given that the cardinal aim of property management is securing the maximum return (Olajide and Bello, 2003). Accounting software programs allow tedious book keeping calculations to be performed automatically, including accounts receivable (e.g. rents and service charges), accounts payable (e.g. ground rents, rates and insurance premium), payroll, inventory and general ledger (Kyle, 2000). Accounting programs can generate various reports that are valuable for financial planning and evaluations, including monthly budgets, cash flow studies, profit and loss statements and reports to owners. Some even can write and print a cheque, while entering that directly into the bank balance summary, thus maintaining even more up-to-the-minute control. c. Word Processing/Generation of Notices and Reports: Word processing is used when composing and typing almost any kind of letter, report, or newsletter; it is easy to insert or delete characters, words, lines, paragraphs or even pages of text and correspondence can be merged with mailing lists to generate mass mailings. Drafting a document, letters to delinquent tenants for example, which can be time-consuming, will be made easier and faster with the aid of this software. According to Kyle (2000), at the very least, the new software programs offer a template for letters (for proper form) as well as pre-written form letters to meet all sorts of needs: late notices, eviction notices, lease termination and letters on all types of problems (e.g. excessive noise). If the software does not have a letter one needs, after drafting it, one can save it to reuse. Specifically, in connection with review and renewal of tenancies and other action dates, a completely automatic key dates system is available (Stapleton, 1994). Further, graphic software programs can produce a variety of graphs and charts to use in presentations and reports, and can also be used to create advertisements, brochures and tenant newsletters. d. Property Marketing and Tenant Selection: The World Wide Web, a network of interconnecting computers, is quickly becoming a vehicle for advertising, marketing and communication (Kyle, 2000). The Web enables users to create their own websites to display information easily accessible to the public. Adebiyi (2003) identified the benefits accruable to professional firms with websites: Information can be provided to the user free, or via subscription service, or for a specific payment; it provides the firms with shop windows available to any client or applicant 24 hours of the day; it can display an innovative brochure of the firms professional services, clients properties available for sale or letting and they market to the widest audience without any boundaries to working days. In particular, Alile (1997) identified that, with multimedia technology, a contemporary offshoot of IT, marketing rental properties has become more sophisticated in the sense that you can walk through houses à ¢Ã¢â€š ¬Ã‚ ¦ without leaving your room. Apart from marketing, the Internet can serve the purpose of tenant selection. Kemp (2000) reported a special Web property management solution, the Rentals.com on-line property management system. Through Rentals.com, rental property owners and managers can create a personalized website. From the site, one can show pictures/floor plans of all properties; access a private, virtual office; track site traffic; schedule viewing appointments; view rental applications; and obtain rental news and advice from experts in the real estate industry. The benefits of this system are obvious: a clutter-free workspace and a round-the-clock virtual, paperless office, amongst others. e. Office Automation: Office automation deals with acquisition and distribution of information, communication (internal and external), and information processing. It has, therefore, a variety of facets including communications, publishing, and data processing. Very few, if any, offices can run without the use of some automated equipment. The amount of automation needed depends, again, on the size of the operation and the type of properties involved (Kyle, 2000). Office equipment such as fax machines, typewriters, word processors, calculators and specialized accounting equipment (including computers) are fundamental once the business begins to grow. For communication purposes particularly, with a local area network (LAN), computer users in the same office can share data, including text or data files, whole programs, scanned images, incoming and outgoing fax messages, blueprints and voice messages. LANs increase the efficiency of computers, software and printers, which make inter-office communication better, faster and cheaper. LANs differ in speed, reliability, and compatibility with various computer hardware, so a wise property manager will consult a LAN expert before making a purchasing decision. Further, with a modem and a phone line, computers can communicate with each other over long distances, sending computerized data (e-mail) to another computer hundreds or thousands of miles away. Since the modem transfers information directly to another computer, there is no need to print out the information on paper first, which increases the speed and efficiency of the communication. The data can be viewed on the receiving computer screen or printed out on paper. f. Tracking Maintenance: According to Holmes (1994), IT has enhanced the planning and organization of maintenance. Software packages have been developed for most activities. There are 3 main areas which require IT support; the first for handling work recording and monitoring, the second for condition assessment analysis, and the third for cost predictions. Within these areas a range of linked programs can be used to supplement the process; for example, an asset register will greatly help with work ordering. On a general note, Stapleton (1994) described the benefits of the application of IT to the practice of property management as follows: Problems can be identified quicker and performance be analyzed in a more rigorous way. Information for regular review by policymakers is more readily available and more work can be handled by the same staff. He, however, attached a caveat that the application of IT does require a substantial commitment by the existing staff and considerable care is required in the way the concept, the technology and the system are introduced. In spite of the gains of the adoption of IT in the practice of property management (and estate surveying and valuation in general), Adebiyi (2003) suggested that, by casual industry analysis of the use of IT, not a deliberate inquiry, it is indicated that there is low-level utilization and awareness by a significant proportion of estate surveying firms in the Nigerian real estate industry. He opined that IT is often seen by those who do not use it as an unknown technological threat, both complex and expensive, requiring extensive training and bringing an additional and unnecessary complication to professional life. In the light of the foregoing, Adebiyi (2003) offered an admonition thus: It is important for (Estate) Surveyors who do not use IT to consider the changes that have taken place over the last few years, the current speed of changes and facilities available to assist Surveyors. It is also advisable for them to have some understanding of the ever more rapid developments that will affect all practitioners in the foreseeable future. They need to consider how IT awareness and use can enhance not just their efficiency and business performance, but also the professional advise they give to property company and developer-clients or to tenants. THE INVESTIGATION Bearing in mind that it is an observable tendency for estate surveying firms to exist in pockets or congregate together in geographical areas around Lagos (i.e. the population of estate surveying firms is largely distributed in clusters), hence, it is apposite to adopt the cluster sampling method as the suitable approach to generating a representative sample for study here (Asika, 1991). According to Asika (1991), generally, a sample size of 10% of the population size is adequate enough to validate and generalize the findings of a study to the entire population. Given that there are 477 estate surveying firms in Nigeria as offered by Nwankwo (2004) and assuming that all the firms have an operational office in Lagos, then applying 10% to this number of firms and leaving ample room for safety, the total sample size for this study is therefore 50 and will be spread over four main identified clusters (convergence areas) in the Lagos metropolis. Response Rate As indicated in Table 1 below, an evaluation of the individual response rates of the cluster areas reveals that all areas are fairly represented (with the minimum response rate being 80%), and the average response rate being 84%. For all practical purposes, this is acceptable and valid for statistical analysis. Table 1: Response Rate According to Cluster Area Cluster Area Target Response Actual Response Response Rate (%) Lagos Island 20 17 85 Victoria Island/Ikoyi 10 8 80 Surulere 5 4 80 Ikeja/Opebi 15 13 87 Total 50 42 84 Source: Field Survey, 2005 Extent of Utilization of Information Technology in the Practice Seven specific areas of the practice are examined vis-à  -vis the adoption of information technology, namely: Preparation of schedules of letting; Preparation and communication of management notices and reports; Preparation of clients statements of accounts; Rental property marketing; Mode of receiving applications from prospective tenants; Mode of receiving complaints from sitting tenants; and Property record keeping. A schedule of lettings serves a major purpose in the practice of property management and it is frequently required. It aids rent collection. Hence, the mode through which it is drawn up is very crucial. Two modes can be identified: manual and computerized or a combination of both. Fig. 1 reveals that 64% (or 27 out of 42) use the manual means, 12% (or 5 out of 42) use the computerized means while 24% (or 10 out of 42) use both the manual and computerized means. It can then be reasonably concluded that the majority of the respondents still rely on the manual mode of extracting relevant data from rental payments register in order to draw up schedules of letting. This method is, however, adjudged to be inefficient and susceptible to errors. Table 2: Preparation of Management Notices and Reports Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) By handwriting By using typewriter 2 4 5 By using word-processors 42 84 100 By using property management software 6 12 14 Total 50* 100 119 Source: Field Survey 2005 * Note: Total number of responses is greater than the total number of respondents because each respondent gave multiple responses. The cumulative frequency count by the multi-response analysis was thus greater than the total number of respondents. Table 3: Communication of Management Notices and Reports Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) By staff hand delivery 37 26 88 By courier service 27 19 64 By postal service 15 10 36 By phone 29 20 69 By e-mail service 21 14 50 By short message service (SMS) 16 11 38 Total 145* 100 345 Source: Field Survey, 2005 *Note: See Table 2 for explanation In preparing management notices (such as rent demands) and reports, 4 methods are identifiable as shown in Table 2. Survey reveals that word processors are of general application, and used by all the respondents (or 100%) while 6 out of 42 (or 14%) use special-purpose property management software. 5% (or 2 out of 42) of the respondents still use typewriters. And to communicate the notices and reports, a combination of 6 options are open to the respondents (see Table 3). Staff hand delivery features most prominently as the means through which most of the respondents communicate notices and reports (37 out of 42 or 88%). E-mail service, a main IT option in the context of this study, ranks 4th and adopted by 50% (or 21 out of 42) of the respondents. Table 4: Preparation of Clients Statements of Accounts Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) By manual calculations 27 43 64 By using accounting software 29 47 69 By using property management software 6 10 14 Total 62* 100 147 Source: Field Survey, 2005 * Note: See Table 2 for explanation Accounting software, a general application software, finds the widest use amongst the respondents in rendering accounts to landlord-clients (see Table 4), followed closely by manual means of extracting relevant data from account books and balancing the accounts (27 out of 42 or 64%). The use of special-purpose property management software ranks last (a distant 3rd). Table 5: Rental Property Marketing Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) To-Let board placements 42 31 100 Print media advertising 42 31 100 Property bulletin distribution 36 26 86 Internet advertising 16 12 38 Total 136* 100 324 Source: Field Survey, 2005 * Note: See Table 7 for explanation Table 5 indicates that all the respondents market available rental accommodation by board placements and print media advertising. However, only 16 out of 42 (or 38%) advertise via the Internet. Hence, it can be fairly concluded here that IT has not found popular use amongst the estate surveying firms in marketing rental property. Table 6: Mode of Receiving Applications from Prospective Tenants Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) By phone 39 47 93 By physical appearance at office 42 51 100 By applying on-line 2 2 5 Total 83* 100 198 Source: Field survey, 2005 *Note: See Table 2 for explanation Table 6 shows that only 2 out of 42 (or 5%) accept on-line applications from prospective tenants that intend to let advertised rental accommodation in spite of its benefits of round-the-clock accessibility. All the respondents dwell on prospective tenants physically visiting their offices. Applications through the phone are also accepted by 39 out of 42 (or 93%). Table 7: Mode of Receiving Complaints from Sitting Tenants Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) By phone 39 26 93 By letters 42 28 100 By physical appearance at office 37 25 88 By short message service (SMS) 13 9 31 By e-mail service 18 12 43 Total 149* 100 355 Source: Field Survey, 2005 *Note: See Table 7 for explanation It is not uncommon for sitting tenants to forward complaints about relevant matters demanding the attention of property managers. Different channels are created through which these complaints are received. Table 7 reveals that the multitude of complaints is received through letters by all the respondents while SMS is the least used mode. E-mail service is the 4th most frequently used mode of receiving complaints from sitting tenants (18 out of 42 or 43%). Table 8: Mode of Property Record Keeping Mode Frequency Count Percentages of Responses (%) Percentages of Cases (%) Cabinet filing 40 63 95 Electronic database 24 37 57 Total 64* 100 132 Source: Field Survey, 2005 *Note: See Table 2 for explanation From table 8, 95% of the respondents (or 40 out of 42) adopt cabinet filing while 57% of the respondents (or 24 out of 42) use electronic database. Both cabinet filing and electronic database are complementary; though the latter offers easier access to relevant information. Having examined seven salient areas of the practice of property management in Lagos in relation to the adoption of IT, it can be summarized thus: IT is being relatively put to use in all the examined areas of the practice of property management in Lagos; however, the extent of adoption, on the whole, is below average. Table 9: Respondents Ranking of the Reasons for the Current Extent of Utilization of IT in the Practice of Property Management Reason Absolute Frequency Weighted mean score Strongly Agree 5 Agree 4 Undecided 3 Disagree 2 Strongly Disagree 1 Relative underdeveloped state of the property management practice in Lagos 3 11 0 18 10 2.50 Relative non-availability of IT tools for property management in Lagos 5 5 8 19 5 2.43 Relative high cost of adoption of IT in the property management practice 2 19 5 16 0 3.17 Relative non-sophistication of clients served by property management firms in Lagos 3 8 6 22 3 2.64 Relative small sizes of the operations of the property management firms in Lagos 2 3 6 19 12 2.14 Source: Field Survey, 2005 Respondents were asked to score five probable reasons for the below-average utilization of IT in the practice of property management in Lagos on a 5 point Likert scale. The results as shown in Table 9 above show that the relative high cost of adoption of IT in the property management practice is the most probable reason for the current extent of utilization of IT in the practice. IT is widely viewed to attract huge costs for its application in the practice of property management. Relative non-sophistication of clients served by the property management firms ranks 2nd. However, ranking last is the relative small sizes of the operations of the property management firms. A possible interpretation of this is that the respondents see the sizes of their operations as substantial enough to warrant the deployment of IT. Further, to gauge the practice-wide perception of the adoption of IT, respondents were asked to indicate their degree of agreement or disagreement with this statement: The increased adoption of IT in the practice of property management in Lagos can have a significant positive impact thereon in terms of increased profitability, broadened client base and excellent service delivery. Out of 42, 28 (or 67%) strongly agreed, 13 (or 31%) agreed and 1 (or 2%) was undecided. On the basis of this, it can be said that, in the absence of constraints, the firms are willing to significantly increase the level of utilization of IT in the practice of property management. From the foregoing, it can be stated that the relative high cost of adoption of IT in the practice of property management, amongst others, is the most probable reason for the current extent of utilization of IT in the practice. Hypothesis Testing Research Hypothesis To be tested in t