Now's the time for a sweet deal in commercial real estate

by Joel Shore

June 7, 2007 —

Services is where the money is and it's the key remaining area where you can differentiate yourself from the competition. A service offering in which you do little, but reap the benefit of a monthly check would seem even better. If you agree, read on.

We've all been reading about various Web services offerings, essentially where you configure for your customer an application from a third party that actually resides in some far away server farm. Good deal; you make a sale, the software is often private labeled with your systems integrator logo, and the customer need not invest in any hardware.

When it works (which it nearly always does), everyone benefits. The customer gets a sophisticated, usually highly configurable application that can be implemented in relatively short order. For you, administration, when necessary or scheduled, need not involve a trip out to the customer site. A key downside, of course, is if the application goes offline. Salesforce.com had to deal with this a while back at significant short-term cost to its reputation and raising larger questions about subscription-based services in general. It would seem we are largely past that.

It's fair in 2007 to recognize that hosted applications and Web services are here to stay, so why not get in on the action?

One area where little has been done in this regard is in commercial and corporate real estate, specifically landlords and management companies that bill tenants monthly for various provided services. These often include basic building services, such as HVAC, and may include various utilities as well. With the explosion in enterprise-class IP telephony, some commercial buildings (we're talking small to mid-size, not 80-story skyscrapers) are installing network backbones, leasing bandwidth, IP phone, video, and other services to tenants. As commercial buildings are remodeled with "going green" in mind, and as new buildings are erected, building managers are finding these services not only essential for retaining tenants, but as a revenue source, too.

The issue is billing tenants for these widely divergent services in some aggregate -- and accurate -- way. That's where solutions integrators come in.

Earlier this week, during the Realcomm 2007 conference in Boston (more about that later), I chatted with a vendor that has developed and is rolling out a hosted application for building managers who need to quantify the services delivered to clients and then issue one aggregate invoice that lays it all out. IRIS, developed NACT of Provo, Utah, (no, it's not a Novell or WordPerfect spin-off) may be the first true converged billing system for voice, video, data, and anything where usage can be sniffed out and quantified.

Though NACT has little name recognition among data networking integrators (the "Ethernet guys" for lack of a better term, the 25 year-old company has been providing prepaid application solutions and has more than a million active telecommunications ports under management in 26 countries. To support its vast volume of telecom traffic, NACT long ago developed an industrial-strength (I guess we can't say "on steroids" anymore) billing system. And who knows billing better than the telecom industry?

The pieces all are there: Tens of thousands of small commercial buildings. Services that are being billed to tenants in piecemeal, and probably inaccurate fashion. Building managers trying to consolidate services to reduce administrative costs (and waste) while dealing with inevitable staff churn and retraining.

And then there's you, an integrator who knows everything about networking. You're already dealing with tenants in dozens of small and mid-size office building, and perhaps with management companies as well. And, of course, you know absolutely nothing about commercial real estate management.

NACT is looking for integrators able to bring in customers and deploy a private-label, custom-configured version of IRIS, allowing management companies to simplify, automate, and aggregate billing services. It's your technical expertise they're after, not your meager knowledge of building services management. For your efforts, you get a monthly check. You might call it recurring revenue, guaranteed cash flow, or a commission. Put enough of these deals together and, well, you get the picture.

I learned about this at Realcomm 2007, a conference and exhibitor expo that bills itself as "the intersection of commercial real estate, corporate real estate, & technology." Converged billing is turning out to be a hot topic and there's a real shortage of integrators capable of delivering solutions.

What kind of opportunity does this represent? Consider the names of some companies that were sponsors of Realcomm 2007: Cisco, Oracle, Panduit, SAP, Microsoft. Enough said.

ITworld.com