I thought it would be interesting to take a trip back in time to look at and review articles from the past written about the use and future of technology in the self-storage industry. Fortunately, the Inside Self-Storage website (through the use of today’s technology) has archived articles published in the magazine back to the late 1990s.
In my search I found an article, "Self-Storage Software: Facility management becomes automated and auspicious," written by Teri Lanza in May 1998. It was fascinating to review the quotes of the numerous software vendors interviewed. Many of them talked about what the future held for the industry as it related to technology. I thought it would be interesting to share that information with you and put it into context of both today and the future as I see it.
Setting the Stage
The self-storage industry has witnessed a period of significant growth in the past 10 years, growing from 26,000 to more than 52,000 facilities as of 2007. Many owners/operators in the late ’90s worried more about how quickly they could develop and build their next facility, or how to identify and close their next acquisition than about how they could best manage and operate their growing portfolios. Self-storage demand seemed to have no limit, and market saturation and increasing competition was still in the future.
Pressing issues revolved around moving from a DOS-based to Windows-based applications, and what the impact of Y2K (Year 2000) would have on self-storage management software. In fact, much of the article dealt with the subject of "should I automate?" But for some of the more forward-thinking owners/operators, it was more important to manage and support the vision they had for growth, and how to leverage technology as a competitive advantage.
The perspective of the software vendors at the time might be summed up with a quote and the debate over automation. Glenn Hunter, owner and president of Berkeley, Calif.-based Domico, stated, "This industry has been terribly slow to deal with change of any kind but, fortunately, what’s happening now, with the large amount of outside investment companies involved, is that the industry itself is being modernized in a very dramatic fashion." Additionally, numerous suggestions indicated why owners/operators should automate and the benefits.
Fortunately, that debate didn’t last much longer as self-storage owners/operators accelerated their acceptance and use of the Windows-based rental-management applications.
Predictions and Outcomes of 1998
Prediction: Accelerated movement to Windows-based management software. Marcus Hecker with SMD Technologies stated the most obvious, "Users finally have a choice of Windows-based programs for managing their sites because DOS vendors finally had to offer Windows versions."
Outcome: Although a very small number of owners/operators still use DOS-based management software today (10 years later), those management software providers that either came into the market or released a Windows-based version of their software early in the game obtained a competitive advantage over those that were slow to market.
Prediction: Windows-based products will not be the end of the road for self-storage software. Hunter predicted, "I’ll make a future prognostication that, within three years, Windows-look products will appear as momentary bumps in the road to tomorrow’s software. I believe the most exciting, interesting, innovative and simple design work that’s taking place in the field of software is on the Internet. I think that’s where you’ll see the future of software design, at least as far as the look and feel and user complexity."
Outcome: In my opinion, Hunter was right on the money. By 2001, the first of a number of Internet-based rental-management applications were getting a start. Public Storage, for example, was running trials of its initial version of Web Champ application, StorageUSA was testing its PropertyMax solution, U-Haul was introducing its WebSelfStorage product, and Centershift had released its initial version of STORE.
Prediction: More service-oriented features. According to Space Control System’s Ramona Taylor, "Owners are leaning toward offering more and more service, and certainly software can help them accomplish that." The example was given of the interest of owners/operators to utilize their software to automate a "unified" reservation center where customers can call in to reserve units, with the reservation being forwarded to the appropriate site.
Outcome: Taylor was headed in the right direction, especially as it pertains to the broad use and acceptance of call centers, but perhaps did not envision the use of real-time data exchange between the call-center application and rental-management software that has been occurring for the past five years. As far as the broad category of more service-oriented features, this has been a significant area for many software vendors as they have offered clients services, such as e-commerce-enabled websites, kiosk integration, centralize mail processing, consolidated reporting, recurring automated payments, tax rate updates and many other service-oriented features.
Prediction: Website accessible statements and pay-at-the-gate based payments. Mike Richards, of Hi-Tech Smart Systems, was clairvoyant with his view of tenants being able to access a statement of their account: "I also think it will be possible, in a few years, for customers to go to a facility’s website, enter a pin code (password) and see a statement of their account." Eric Young with Quikstor indicated that pay-at-the-gate would become more prolific: "It’s the kind of integration where the industry is headed."
Outcome: Richards was right on with his forecast, and I suspect he knew it wouldn’t just be statements that tenants would be looking for online, but the actual ability to make a payment once they received an update of their current status. Young’s vision has come to pass as well, although kiosks are also providing that capability and more.
Prediction: Integration with third-party applications, such as accounting packages and gate-access solutions. Hunter stated, "We don’t have a payables module. We didn’t want to reinvent the wheel. Instead we interface with all the currently available accounting packages." Regarding gate-access products, Tom Garden of Syrasoft pleaded with the gate-access vendors to offer an integration standard. "Someone has to develop a standard that people will comply to. A standard needs to be thrust upon the vendors who don’t seem to understand that open systems are positive and will enhance their sales. It’s the gate vendors that need to do this."
Outcome: Hunter’s direction for integration to accounting packages has become the norm in the industry. Unfortunately, Garden’s pleading fell on deaf ears. But the need was there and continues to be a hoped-for solution.
What Can We Learn?
It is my observation that when the software vendors listened to their clients’ needs and could see a clear path to a technological solution, they were generally able to find it. Their ability to predict the future was generally limited to three to five years, as none of them predicted a solution that was not implemented within that timeframe.
The one big miss for the industry was the request from the software vendors that the gate-access vendors provide a universal standard for integration to improve the information and capabilities of both the gate-access and the rental-management solutions.
Most important in the article was the discussion of choosing a software vendor based on the ability to form a partnership. I like the statement best from Jim Teske of O’Neil Software. "The primary things to consider are: How does this investment help me generate more revenue? How does it help me lower my operating expenses? And, how does this solution minimize my risk? By risk I mean both the risk that what I buy will do everything I want for the customer today as well as be able to provide the same solutions and competitive advantages five years from now."
What Does the Future Hold?
Since I quoted liberally from many of my competitors’ predictions from 10 years ago, it seems only fair that I take a shot at what the future holds and put my predictions out for others to evaluate in the future. I learned the accuracy of the predictions decline significantly after five years, so I will stick to that window.
Automation. Technology will continue to automate both operational processes as well as backend requirements (accounting, reporting, analytics, yield management, promotions, etc). I perceive owners/operators will find ever-increasing services to offer tenants or retail clients. As a result, software solutions will adapt to provide better ability to offer those services.
Second, I predict that operators’ requirements for reporting and analytics will be fulfilled in ways they haven’t ever imagined, and they will be able to collect, drill down and analyze data in new ways.
Integration. For those rental-management software vendors with data centralized in powerful data base applications—with access to third-party solutions via the Internet—integration will provide their clients access to more services that they can leverage to better support their tenants, be more competitive, and increase their profitability.
This might seem like a lofty prediction, but this was really an easy prediction to make because integration is already happening on an ever-increasing scale for some rental-management software vendors.
Certified-mail integration.Accountable Document Solutions is providing the industry ability to automate certified mail processes using technology already in use in the legal industry.
Payment-processing integration. Companies are offering the ability to provide Internet-based credit card and ACH processing as well as make phone and mobile device payments.
Verification integration. Using Internet-based partners, operators will soon be able to verify tenant addresses, phone numbers, e-mail addresses, credit worthiness and background checks in an instant.
Communication integration. Using Internet-based partners, users will also be able to communicate in more efficient ways in an instant at a very low cost per transaction. This would include automated "late" phone calls as well as collection calls.
Customer-relationship management (CRM), marketing and communication. This is a key area where the use of technology will be critical to remaining competitive in the self-storage market.
As competition increases as a result of increasing saturation or decreased demand for self-storage, it will be important for owners/operators to have good and timely data on tenants, why they choose to rent from them and why they come back. An increasing emphasis will be put into tracking and analyzing this information using CRM and survey tools.
It is increasingly important to have a method to measure the return-on-investment of your marketing programs by tracking the effectiveness and use of the programs, and the length-of-stay data generated at the marketing campaign level.
One of the key competitive advantages to marketing in the self-storage market today is search-engine optimization. Larger self-storage operators are using search-engine optimization vendors to increase lead generation off organic and pay-per-click searches. This will become more competitive and used by more operators. It may also shift marketing dollars from traditional Yellow Pages to websites and search optimization.
Another important trend is the use of self-storage call centers to answer all calls. With call agents trained and focused on selling techniques, armed with real-time facility data and a call-agent application, they can make sure every call is answered quickly by a professional agent over extended hours.
I could make many more predictions, but I sense that my odds of getting them all right would start to decrease as I add more to the mix. Clearly, if I can do as well at predicting the future regarding the use of technology as some of my competitors did 10 years ago, we are in for an exciting time in self-storage.
With new self-storage development declining over the past few years, along with increasing competition, I predict owners/operators will adapt to change and successfully implement the technologies on the horizon will be the long-term winners in this unique and interesting industry.
Terry Bagley is the president and CEO of Centershift Inc. Centershift’s latest offerings, STORE Enterprise and STORE Advantage, are the next generation of STORE rental-management solution. The programs are Internet-based rental-management and point-of-sale software for growing, multiple-facility self-storage ownerships. For more information, call 801.303.1300; visit www.centershift.com.
