Case Study: Key Considerations in Software Choice: Impact of Housing Software Ownership Changes on Social Housing

4 things to consider when buying software and…

Is the change in ownership of Housing Software Companies a good thing for the social housing sector?

I was recently asked by Dave Louden of consultancy firm Digital Bark if I would join a webinar to explore if recent changes in ownership of housing management software suppliers has been a good thing for the social housing sector. Aareon, Civica and Capita have recently made announcements about such changes and there have been many others over the years.

Far too many social housing landlords appear unhappy with the service they receive from their housing management software supplier and this can be particularly evident after there has been a change of ownership. Yet you would expect that by providing a great customer experience, the new owner would enhance their chances of being successful.

In my experience, the answer can be found in understanding motivations (which for me applies to most things in life). What are those in charge of these software companies being motivated to do? When they sit around the Boardroom table, what are their priorities and importantly, how are they incentivised? Once this is understood, much can often be explained.

The webinar took place in September, was well attended and facilitated some great debate. The consensus of opinion on the impact of changes to ownership was that it depended on what has justified the investment. For example, two potential drivers can commonly be:

1. Synergies and economies – Products and services can be improved by bringing two complimentary organisations together, providing access to skills, software and other resources that strengthen the combined offer and provide benefits and assurance to both shareholders and customers. A recent example of this could be the coming together of Designer Software (who own HomeMaster) and Housing Online (who own the MyHome customer portal). A few months after Designer Software took a stake in Housing Online, feedback from both these organisations along with comment from their respective customers suggests that this is generally considered a positive move for all concerned.

2. Shareholder value – This is where the primary motivation for change of ownership is a return on the money invested. There are many examples of this, with one I am particularly familiar with being Castleton’s acquisition of Documotive and Kyperia. Such acquisitions can provide great value to customers and staff, but too often achieving this is put secondary to generating shareholder return.

Having for 8 years been a CEO of a business that had significant institutional investment from banks and venture capitalists, I know how hard it can be to balance great service with ensuring you meet the requirements of the investor, but it is entirely possible. I believe my business was renowned for good service and it certainly enjoyed low levels of staff turnover and high levels of customer retention. This strategy was rewarded by both growth and profitability. Many however can take a different approach, focusing on profit at the expense of a good working environment for staff and great service for customers. The latter approach is often considered a swifter and more assured method of achieving 
a return for shareholders. It reflects the preferences and motivations of leadership.

So how do you decide if an acquisition is likely to be a positive move for the sector. Below are a number of questions that could be asked:

• Has the new owner acquired before and if so, what was the experience of those customers that found they had been acquired? 30 minutes on the internet will probably give you a good idea.
• Leadership is generally considered fundamental to service excellence. You can use LinkedIn to review the background of the senior team followed by an internet search to explore their track record.
• Often details of the new owners strategy can be found online. Do they have an ‘Investors’ web page? This may include details of the business mission, which in itself can provide an indication of what the organisation’s priorities are.
• Is the new owner likely to stay the owner or will they sell the business in a few years? Again indications of this can often be found online based on past track record.

Asking these questions will support the software selection process. The more concerned you are, the more customer referencing you should do prior to purchase. Buy based on customer feedback rather than the slickness of the sales operation. Utilising specialist software procurement consultants will help ensure nothing is being missed from a governance perspective.

It is a fact that good software businesses attract the attention of investment companies who are willing to offer shareholders large sums for their shares. Understanding how these investors have achieved a return in the past will provide a good indication as to what is likely to happen in the future should they invest. Consideration of this should play an important part in any procurement decision. The quality of customer service you receive will usually be dependent on organisational leadership. This is why it is commonly said that ‘People do business with people’. A change of ownership will often see a change in the senior leadership team and hence the people you deal with and their attitude to service.

So…. Buyer beware!