• About
  • Winners
  • Ceremony
  • Target
  • Selection Process
  • How to Apply

Winners

Property Data Bank, Inc.

2009 9th Porter Prize Winner Software
Specializes in software services that support property management; offers high-quality services at very low prices

Industry Background

Managing real property, including land and buildings, efficiently, was not easy to carry out. This was because the objects were often located in various places, and each one required the participation of many parties, such as commissioned realtors at the sites and their branches and headquarters, so it was difficult to gather property information in real time. Under these circumstances, the industry had not started to introduce information technology yet.

Building maintenance firms used to help property management by providing information processing services, while construction companies delivered relevant equipment when they built new buildings. However, as J-REIT, Japanese Real Estate Investment Trust, was formed in 2001, the securitization of real estate became popular in Japan with the rise in corporate rehabilitations and the disposal of bad debt by financial institutions, led by foreign investment funds. Foreign real estate management funds brought major changes to the operations of real estate management, such as: 1) the evaluation of real estate holdings based on cash flow; 2) growth in property management undertaken on behalf of owners; and 3) increased information disclosure for investors. All of these changes required new IT tools.

With the introduction of asset-impairment accounting in 2006, property owner companies started to install a new information processing system in order to manage and examine their property's financial values and risks, and control their information in an integrated manner. Large companies were especially keen to boost their property values, so there was a huge demand for an information processing service that helps property management.

Property Data Bank (PDB) was established in October 2000 through an intra-corporate entrepreneur contest organized by Shimizu Corporation. Around that time, Salesforce.com in the United States had just started to offer a service based on cloud computing, but it took some time before large companies introduced it as their major property operating system.

PDB offers a cloud computing service known as @property, which is the industry standard and used by more than 800 businesses.

Unique Value Proposition

PDB provides customers with products and services to support property management, all through @property. It is not a software product sold in the market, and PDB offers various services via cloud computing. The customers are given the right to use those services stored at the company's website and asked to make payment according to their use of the services.
Property Data Bank's service, "@Property," covers virtually everything about the real estate management business, which consists of the following four areas:
1) Basic information management --for the management of asset values and risks, as well as important information related to due diligence. Basic information includes 500 items, such as address, dimensions, type of land-use, building structure, prices, construction record and related documents, blueprints and photos.
2) Property management --for the management of leasing agreements, profits and construction investments. This covers 1,000 items, such as stacking plans, tenant lists, budgets, income and expenses, taxation and insurance information.
3) Building maintenance --for the management of real estate and related facility equipment, and the support of maintenance work. This covers 500 items, such as routine daily maintenance, registration of facility equipment and components, complaints from tenants and customers, and energy expenditure.
4) Portfolio analytical function. This extracts and analyzes every aspect of real estate information from the above three categories, which are useful for the assessment, management and planning of asset strategies. These four functions are standardized, and selected according to the needs of each customer.
PDB customers aim to improve their operations easily and fast and cut down on their development and maintenance costs by introducing information technology services. PDB accepts orders from customers who ask for software applications which are not only fast and inexpensive but also completely fitted to their individually different operations.
PDB concentrates on doing business with large real-estate investment funds and major corporations that own big corporate assets (property custodianship section). To manage their assets effectively, these businesses usually rely on outside enterprises that can provide correct financial accounting and swift information disclosure services. In this industry, however, human resource mobility is relatively high, so businesses need to adopt a de facto standard software to control the cost of education for new employees. Manufacturers and other large corporations who own or lease their assets in various places (around the world) also ask their affiliated companies to manage those assets. These property owners want to centralize their property information, but asset management is not their core business, so they ask for a system that does not cost much nor has risks.

Its target customers are companies that are interested in the long-term value of real estate, not those seeking to make only short-term monetary gains. This is why @Property does not have an investment evaluation function.

Customers can enjoy the following benefits: labor-saving in real estate management, the unification of real estate information, swift asset information disclosure, reinforcement of property management, easy accessibility for stake holders (limited scope) and reduction of training cost thanks to the use of the most popular application in the industry. PDB provides other cloud computing services, including monitoring and maintenance of equipment and systems, fault program modification and user support. All in all, PDB's system can offer various kinds of benefit never seen by traditional programs. For instance, the clients are all allowed to use innovative functions and sophisticated expertise without additional investment because PDB introduces advanced customer knowledge into its own program. A minor update is implemented twice a month and a major one has been conducted six times ever since the company started to provide services in 2000. Also, a significantly lower total cost of ownership; lower installation costs, with installation completed in a shorter time, and there is no need to have a system administrator to maintain and monitor the system; it is accessible from anywhere through a web browser; and no additional payment is required for upgrades.

PDB's income comes from three streams. The first is software as a service (SaaS). Customers pay an initial contract fee and a monthly fee for usage and maintenance services of the software. The monthly fee ranges between 1,000 yen to 30,000 yen depending on the number of facilities a customer manages with @Property. The second income stream is its customization service. In response to requests by customers, PDB adds new functions, integrates data with customers' existing systems, and customizes the system. The third income stream is package software. The package software is integrated into customized, large systems by leading system integrators for government and public offices, local governments and large-scale companies. Although PDB specializes in licensing the basic software (SaaS) and providing technical support, by selling the package software, it effectively minimizes the risk of managing projects that may run on too long. The 10,000 buildings managed by 180 customers are managed under SaaS (as of March 2009), and 110,000 properties are managed by the systems that use PDB's package software as a component.

Value Chain

Support service
@property is a standardized service and the users need to review and restructure their operations before the introduction. As the service is established based on the expertise of leading businesses, the users can review and improve their own processes. PDB offers a pay service to customers who want to restructure their infrastructure at the time of the introduction. By doing this, the company can promote more business and increase their fee-based profit.
PDB standardizes @Property, and does not customize it significantly for each customer. For unmet needs, it develops new options, which can be added without affecting the standardized part (under the modular architecture).

Service providing using SaasS
PBD operates data centers in Tokyo and Osaka, and backs up the customers' business data at these two sites in real time. Service is provided 24 hours a day, 365 days a year, and its service is up and running 99.99% of the time except for pre-planned halts in system operation due to maintenance work.

Marketing and sales
PDB conducts sales activities targeting top executives and property owners, not the operators of property management companies and building maintenance companies. Also, it targets leading companies that require the detailed and strategic management of properties. @property is a sophisticated property management strategy tool and its excellent usability is recognized by decision-making sections at many companies. Customers who need strategic methods and detailed techniques to manage their property understand this tool in particular. By dealing with major enterprises, PDB can absorb their sophisticated property management knowledge and earn great trust in the industry. Also, by serving the needs of customers, new and old, constantly, the company has successfully provided the service for as many as 110,000 buildings.

After-sales service (user support)
PDB accepts inquiries by phone at the support center. Since PDB owns the software and can access the customers' database, it can correct most problems without visiting its customers. But when they own systems at their sites (development/sale-type), PDB needs to visit the users when they have problems in their systems.

Technology development
PDB conducts unique development activities. For instance, it standardizes or optimizes functions. PDB standardizes @Property, and does not customize it significantly for each customer. For unmet needs, it develops new options, which can be added without affecting the standardized part (under the modular architecture). Also, PDB updates the program quite frequently. Through cloud computing activities and services for established clientele, ordinary users and prospective customers, the company adds new functions and modifies old ones as least twice a month. This frequent update is carried out by PDB's excellent development programming. To shorten development time, it does not employ a water-fall model (or a sequential model). It has come up with its own approach to software development, which is similar to agile software development, i.e., development of a module of the software by a team, frequently introductions to the market to obtain customer feedback, and continual improvement through frequent upgrading.

Human resource management
PDB is trying not to increase number of employees but hires a few specially selected individuals with extensive experience in real estate, IT, and financial engineering. In order to utilize a small number of employees, PDB does not discriminate employees based on gender, educational background, and age. Fifty five percent of the employees are females, and two out of six bucho positions are occupied by females. Employees are evaluated based on competencies and performance. PDB defines the required competencies unique to itself, which enables it to appreciate those actions that do not result in performance in short term, yet strengthen the company in the long term. Employees of the system development firms are often forced to work long hours. PDB believes this not only destroys their balance between work and life but also affects the quality of products, so it monitors overtime work and the time employees leave the office, which is reported to the executive managers every month.

Fit among Activities

By carrying out cloud computing activities, PDB provides excellent services for customers. They can reduce their system investment and relevant expenditures to the minimum level, and PDB contains the prices that no software models have ever seen before. The company relies on its competitiveness entirely on these services.

While providing introduction assistance, operation services and support activities, PDB gains business knowledge and cultivates needs, and due to this, it can occasionally and effectively renew @property, in order to deliver so-called evolving services. By responding to the demands from leading property management companies, PDB is allowed to standardize its software applications and renew them from time to time so that they can work even more effectively.

As customers use @property to maintain their systems and manage their data, it is necessary for PDB to make its services even more reliable. The company has acquired the internationally accredited ISO27001 and the Japanese government's ASP SaaS information security and reliability certification, started to publish its own service level agreement (SLA) with a report on the performance, and established a data backup system. (Refer to PDB's activity system map at the end of this report)

Innovations that enabled Strategy

  • Developed SaaS system for property management in 2000 when only the SaaS application available for business use was salesforce.com from the U.S., which had just started offering the service in Japan. Even large system integrators in Japan did not have much experience in SaaS development.
  • @Property is the very first SaaS property management software in Japan, and became the platform for property management.
  • Uniquely controlled access to property management data: Managing property requires the participation of various parties as stakeholders, including the owners, administration companies, cleaning firms, security contractors, and equipment management and maintenance companies. PDB has developed a system that defines which property data they are allowed to access to and what authorities and functions they are given to use.

Consistency of Strategy Over Time

  • Since its foundation in 2000, PDB has been consistently offering systems to support existing property management, not the ones which are traditionally introduced as part of new buildings and maintenance-oriented. (The company has been improving the systems by featuring a profit-boosting method, a multi-language ability and an accounting function linked to property owners' main financial systems) Also, PDB has consistently delivered cloud computing services ever since its commencement.

Trade-offs

  • Does not sell software as an IT asset. Focuses on SaaS (lease) business model. (PDB pursues the cloud computing business and asks the customers to pay based on their use of services. The company develops programs swiftly and updates them in a timely manner, so their maintenance cost is kept low.)
  • Does not visit customers for maintenance services.
  • Does not develop software other than for property management. (PDB customizes programs based on its software package, so that the users can establish service areas and peripheral functions. The business flourishes despite a small number of staff and a little amount of capital.
  • Concentrates on the field of property. (Having pursued property management, PDB is now known as "the expert" in this field.)
  • Does not develop services other than @Property. (PDB uses all its business resources to improve @property)
  • Does not upgrade parts of software that are mature and proven.

Profitability

Both return on invested capital and return on sales exceed industry average.

Return on invested capital (ROIC)   (Unit = percentage point)
Difference from industry averag
over 5 year period
Difference from industry average, by year
2004 2005 2006 2007 2008
21.6%P 9.3%P 14.8%P 25.1%P 33.7%P 16.1%P
Inter quartile range (IQR) = 7.4%P
Return on invested capital = Operating income / Average invested capital

Return on sales (ROS)   (Unit = percentage point)
Difference from industry average
over 5 year period
Difference from industry average, by year
2004 2005 2006 2007 2008
4.6%P 5.3%P 6.8%P 6.0%P 9.6%P 1.5%P
IQR = 3.6%P
Return on sales =Operating income / Net sales

Activity System Map

Winners PDF

PAGETOP