Accruent Fills a Gap in Real Estate Management

Published: February 20, 2007

by Alex Woodie

Aside from salaries and related people costs, real estate typically accounts for the biggest expense on most companies' balance sheets. However, most ERP suites lack the capability to bring all the necessary elements together to get the most out of their investments in buildings and land, according to Accruent, a real estate performance management (RPM) software developer. Now Accruent says it's on the cusp of taking RPM to the next level thanks to the new graphics capabilities in Windows Vista.

There are several factors driving the adoption of RPM software like Accruent's, says Steven Wong, director of technology for the Santa Monica, California-based company. In the retail industry, narrow profit margins add pressure to open new stores faster and more efficiently than the competition. Secondly, the real estate boom (or what's left of it) has driven up the cost of real-estate, making it important to manage that investment more intelligently. Lastly, new regulations like Sarbanes-Oxley and FASB mandate that companies treat their leases and real estate purchases in certain ways.

Companies may have much of the information needed to maximize their real estate positions, but since it's scattered across different systems and departments, it doesn't help them make the right decisions, Wong says. "Those [ERP] products don't really handle real estate lifecycles," he says. "They may handle specific facilities, leasing, or acquisitions. But each of these departments generate lots of information, leading to lots of financial compliance obligations."

Accruent's answer to this problem of disparate and incomplete real-estate information is its self-titled Accruent suite of RPM solutions. At the heart of Accruent is a Windows Server 2003-based database (either Microsoft SQL Server 2005 or Oracle 10g) powering the Finance and Compliance Engine. On top of this database engine sit five Accruent modules that serve specific parts of the real estate lifecycle, including Site Selection, Project Management, Facilities Management, Lease Administration, and Market Planning.

Accruent is designed to work with data housed in major ERP systems, including SAP, Oracle, PeopleSoft, and legacy systems, including OS/400-based ERP systems, company officials say. In its most powerful setup, Accruent will be hooked into a geographic information system (GIS) that provides a database of location-based information. Users interact with Accruent through either Web- or Windows-based interfaces.

The Accruent software addresses many real estate issues facing companies. For so-called "hypergrowth" retailers--or those retail chains whose success is tied closely to how quickly they can open up new stores, such as Home Depot, Wal-Mart, or Best Buy--the business processes and information that Accruent provides as it pertains to finding the best sites and building new stores or remodeling existing buildings, can mean the difference between opening a store in 60 days versus 90 days. "That's huge," Wong says.

The software also helps companies looking to minimize the amount they pay in lease and rent costs. For example, small changes in a lease or rent agreements can have a big effect on the bottom line of a company with 6,000 locations. By combining internal information about the companies' portfolio of lease or rent agreements with outside information provided from a GIS, Accruent can calculate what charges are appropriate for a given location. "We help customers to analyze trends and patterns across a portfolio . . . using very complex calculations that determine what you should be paying," Wong says.

Regulatory compliance is another area where Accruent can pay dividends to a company adopting its software, Wong says. "When retailers go and acquire a 10- or 20-year lease, there are certain things that have to show. They have to treat it pretty much like an owned property, an asset with a liability," he says. "But a lot of companies don't have practices or software in place" to treat properties in that fashion.

Accruent has found some success selling its software to large customers. The company says that 20 percent of the Fortune 500 uses its software, along with 35 percent of the 100 biggest retailers. The company was founded in 1995 and has acquired many of its competitors, thanks to profits and cash from its venture capital backers. The company now has 350 customers and ended 2006 at a $40 million run rate.

Now Accruent is looking to take its software to the next level, using the fastest and easiest path to end-user satisfaction: the graphical user interface (GUI).

The next version of Accruent, which is due by mid year, will use many of the new graphical capabilities Microsoft has made available in Windows Vista, including the WinFX developer model and .NET Framework 3.0. "When we started working with Microsoft, we asked how we could start leveraging some of the rich graphical possibilities and bind it to business data and see trends that are difficult to do with charts or grids. That's really where our whole Vista initiative started," Wong says.

Instead of using charts and graphs, Accruent version 7 will enable power users to view important data about their current and planned locations from a map streamed down to a Web browser. In one demo that pertains to new store site selection, census track information is superimposed on a map of San Francisco to tell the user where his customers are located, where his current locations are, where his competitors are located, and what his costs and potential successfulness will be in new areas.

The color-coded icons quickly give the user a useful overview of the best locations. "It provides a very rich experience for the user," Wong says. "No way we could have provided this kind of experience with Windows XP."

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