APIs in the Storage Industry: Gate Keepers
Dear Reader...we wrote this article 3 years ago but sadly were unable to release it. Ironically, today it's more timely than ever. Click for a pdf of the entire Storelocal API series. Grab a cup of joe & enjoy Part III:
At the end of the day, it’s all about your bottom line. Data, and the APIs necessary to access your data, affect your NOI. API issues make it even harder for you to compete against the Big Five. The Big Five have scale, market share, and the benefits of large amounts of data they can utilize to make better decisions. Private operators are less efficient, lack market share, and perhaps even have a vendor with the power to dictate what they can and cannot do with their data. Sure you can innovate! If your vendor continues to give you permission. APIs affect your bottom line.
With that said, it’s time for the API finale, folks. Part I of Storelocal’s API series covered the basics of APIs – what they are and their importance to storage companies of any size. Part II gave us a glimpse of API heaven – the potential to increase efficiency and profits when API access is unfettered (be sure to read Part II…it’s fascinating to see the ways the REITs use data). Now, with Part III we’ll get to the punch line.
The Punch Line
The storage industry’s infrastructure is inadequate to meet today’s market demands - forget about tomorrow. Due to the fragmented nature of the storage industry, no single player will solve these infrastructure shortcomings. Instead, a multitude of vendors are necessary to deliver proper solutions. These vendors need consistent and dynamic API access and support in order to provide industry solutions. However, many of the industry’s property management software (PMS) companies currently have the power to grant or deny such API access to data. The startling truth is that many of the PMS companies have the power to act as the industry’s data gate keepers - promoting or stifling innovation as they see fit.
That punch line packed a lot of punch, so let’s break it down piece by piece.
A Fragmented Industry
*figures compiled from MiniCo Publishing’s 2016 Self Storage Almanac
The storage industry has 41,443 facilities. The Big Five and the next 95 top operators only account for 9,777 of these 41,443 storage facilities. Are you surprised that the Top 100 Operators only account for 24% of the industry? That’s including the Big Five!
You’ll be even more surprised to hear that the Top 100 Operators only account for 19% of the industry when you deduct third-party managed facilities. Again, that’s including the Big Five! If you really want to be shocked, then consider this statistic: if you remove the Big Five (which are extreme outliers) from the Top 100 Operators, the remaining 95 operators only account for 8.5% of the industry. The smallest operator on the list has 5 facilities. Therefore, when excluding the Big Five, roughly 91.5% of the industry has 5 facilities or less.
Ranked by number of storage facilities as of fall 2015, the Big Five are Public Storage (2,466), U-Haul (1,317), Extra Space (1,312), CubeSmart (626), and Uncle Bob’s (531). The Big Five are Real Estate Investment Trusts (REITs), with the exception of U-Haul which is a corporation. Note that given intense industry consolidation, the number of facilities owned/managed by each entity has risen since this data was compiled roughly eight months ago.
Why is Storelocal belaboring these statistics?
The fragmented nature of the storage industry has profound ramifications. Whether you own 1 store or 100 stores, your bottom line is affected by the industry’s fragmentation. Fragmentation means that your small portfolio competes against the Big Five. This might not have left you quaking in your boots when AAAAA Self Storage was at the top of the Yellow Pages, but things have definitely changed in this digital age. Today, when the vast majority of new tenants initiate their facility search online, it’s all about Google rankings, pay-per-click ads, directories, and most importantly – data.
What’s more, not only do the larger operators have greater means to capture new customers, they are also more strategic about how they acquire tenants - and at what cost. As we discussed in Part II, this leads to higher margins. Public Storage’s cost per acquisition (CPA) is roughly $30 for each new tenant. Extra Space spends about $50-60 per tenant. The small operator on the other hand, at the extreme forks over as much as $300 for a new tenant.
You may not be seeing it yet since occupancies are high, but your costs to acquire new tenants are rising. Consider this apples to apples example. If Public Storage spends $30 per tenant, multiplied by 30 rentals a month, multiplied by 12 months - they spend $10,800. If you spend $300 per tenant, multiplied by 30 rentals a month, multiplied by 12 months - you spend $108,000. That’s no bueno! At a 6% cap rate that means your higher costs to acquire new tenants just cost you $1.6M in value. That’s muy no bueno!
But wait, there’s more. Your bottom line isn’t just affected by fragmented ownership.
The industry fragmentation does not end with ownership. Vendors are fragmented. Technology solutions are fragmented.
Therefore, after we fork over $100-300 bucks for a new tenant, we don’t even have proper tools to manage the tenant for which we just paid a premium. Meanwhile, Public Storage only paid $30 for their new tenant and they handle them with laser-like precision! What’s their rate and their discount? How and when do they upsell? Is the upsell boxes and masking tape - or insurance? What’s the email marketing strategy? The referral program? How frequent, and how steep, are rent raises? How long is this new tenant likely to stay? What is their long term value? How can you get them to post positive social reviews? Should you be concerned about negative reviews? What is your margin on this tenant given current and projected occupancies?
I know – it’s overwhelming. That’s why the REITs automate all of this. Sorry if you just choked on your coffee. You’re right, it’s totally unfair. There’s a huge gap between the Big Five and the rest of us. And it’s largely the result of a fragmented industry. Not to despair. We’ll make some lemonade.
All of this will make a lot more sense if you read Part II on the REIT Advantage. Storelocal’s quite proud of that article, and we’ll implore you to read it until you do!
We’re beating the horse now – you get it, self storage is a fragmented industry. Not only that, but until recently, owners were essentially autonomous. Each company was a closed-circuit in a sense. You had your PMS, your managers and a few consultants. What more could you need? But no man is an island, and as the Big Five became increasingly sophisticated, smaller portfolios were forced to adapt. Technology flourished. Consumer expectations skyrocketed. Google and Siri became everyone’s best friends. Suddenly everything was about SEO. The Big Five began snatching up your customers. Your business got complicated seemingly overnight. What?! Now your tenants want online rentals?! They want to manage their gate code with a mobile app?! Auctions are online all of a sudden?! What just happened?!
Technology exploded and customer expectations surpassed our “build it and they will come” industry.
The problem is, we weren’t ready. We were a fragmented industry of autonomous operators. Each company was a closed-circuit system. We operated bare bones – me, my PMS, and I. Then technology came a knockin’ and we started adding bells and whistles, expecting our PMS companies to accommodate us. The problem is, the system wasn’t built to support bells and whistles. PMS companies aren’t to blame, they’ve been trying to help us (more on this in a minute)!
What’s good for the industry is good for all of us, so it’s time for owners and vendors to put our heads together and tackle our industry’s infrastructure problem.
A Broken Infrastructure
So how is our infrastructure insufficient? The problem is largely the lack of centralized data. Each owner has their data in a variety of places – operational data is on one platform while gate code data, marketing data, and revenue management data are all on different platforms. As Yardi (a storage PMS company with a background in multi-family) points out, decentralized data is a “huge barrier to additional revenue and efficiency gains.” Not only that, but communication between the various platforms that house your data is difficult and perhaps unreliable.
As the Internet and computer technology advances, industry enjoys tremendous innovation, but this innovation precedes the infrastructure necessary to tie all of these innovations together in an organized and efficient manner. As a result, owners are less profitable and are constantly banging their heads against the wall as they attempt to work within an inadequate system. Not only that, but there’s a lack of incentive for new vendors to enter the market with new and better products since their profits would be depleted by the efforts necessary to work within the broken infrastructure. It’s a vicious cycle. By the way, this problem is not unique to storage. Many industries have tackled or are currently facing this same problem – travel (Expedia), restaurants (OpenTable), and finance (PayPal). Together we can triumph as well.
So, who’s going to solve our infrastructure problem? The Big Five primarily use their own proprietary systems and software, so they are largely irrelevant when discussing the infrastructure the rest of the industry uses to operate. Remember the shocking statistic we discussed? Roughly 91.5% of the industry has 5 facilities or less when you exclude the Big Five.
So tell me, who exactly is financially incentivized to develop a sufficient infrastructure? I’m not talking piecemeal technology solutions. I’m talking big bucks, big picture, industry-wide infrastructure solutions.
I hear crickets. Clearly not owners with 5 facilities or less. So, the 91.5% is out of the picture. What about the largest owner or operator after the Big Five? At around 300 facilities, they may be able to boot-strap a system for their own internal use, but that doesn’t help the industry’s infrastructure – that only helps them. What about the leading industry vendors? They are in the same predicament.
Given the fragmented ownership of the storage industry, even vendors are challenged to gain market share. I’m beating that dead horse again, but remember that 91.5% of the industry has 1-5 facilities when the Big Five are excluded? That means that even if a vendor secures a significant share of the Top 100 Operators, their average customer still only has 3 or 4 facilities (we’re spitballing here folks). Think about that. Can you imagine how deeply sales costs cut into their revenues? After vendors woe the Top 100 Operators, they’re courting mom-and-pop facilities. On top of high sales costs, owners are real estate developers, not technology geeks, so vendors expend even more money just to communicate the value of their product. We feel for them! Self storage vendors should be applauded for their ability to make money under such circumstances.
Hold on, you don’t know the half of it. Not only are vendors faced with extremely high sales costs and huge obstacles to capturing market share, their profits are also capped due to low transaction volume. For technology providers, transaction volume does not proportionally affect costs. It takes roughly the same amount of resources to develop and manage a product or service, regardless of whether there are ten thousand transactions a month or ten million transactions a month.
So storage vendors aren’t financially incentivized to provide solutions either.
And enterprise-level technology providers have not yet penetrated self storage to provide the solutions we need to properly operate our businesses precisely because of this combination of fragmented ownership and low transaction volume. The numbers just don’t add up. The margins are higher in other industries.
Consider this example: Storelocal’s goal is to grow the co-op to more than 5,000 facilities. At 5,000 facilities, Storelocal would be approaching the same size as the Big Five combined. Yet even at 5,000 facilities, Storelocal would do as many transactions in a month as technology providers for the travel industry do in one second. If you were a technology vendor, which industry would you choose?
To be fair, there is another train of thought here. Some would argue that yield per transaction is the critical factor. While the average hotel transaction might yield $200, the average self storage transaction might yield $1,400. However, in order for higher yields to lure a technology vendor to self storage, they would have to charge a percentage of the lifetime value of the customer, and this isn’t always the case. Does the technology vendor charge a one-time flat fee? Or do they get a percentage of the rent every month? And which approach saves you money?
All that to say, no single player can economically provide the industry with an adequate infrastructure: no single storage company, no single storage vendor, and no single outside technology vendor.
We shouldn’t wait for a knight in shining armor to fix our broken infrastructure. He ain’t coming.
So our infrastructure’s lousy, we’re competing against the big dogs on an uneven playing field, and there’s no knight in shining armor coming to rescue us. Should we all sell and go on vacation (that could create some demand for RV storage!)? Let the grandkids fend for themselves? No! The solution is actually quite simple (well, simple in concept – until politics enter in).
We’ve established that no single player will provide us with all of the tools we need to properly run our businesses. However, if the industry opens its arms to multiple qualified players, then we can establish an adequate infrastructure. Better than that, we can enjoy a robust and dynamic infrastructure on which to run our businesses! Sounds great!
So why isn’t it happening? Well, the industry’s arms aren’t quite open. That’s why.
Clearly owners would welcome quality vendors, because they could improve their businesses and increase their profits. However, new vendors need reliable and consistent access to our data via the PMS companies and other industry vendors. Ah ha. A light bulb moment.
In order for vendors to provide add-on services to fix our infrastructure shortcomings, PMS companies must consistently expose their functionality to these vendors via APIs. Vendors and owners need reliable and consistent API access, not access that can be revoked at the sole discretion of a PMS company.
To get technical for a moment, an API is a set of programming end points that allow code to be created and sent to these end points in order to get a response back. Your vendors need information about your operations and your PMS houses this information. Therefore, your PMS company regularly creates these end points that give your vendors the information they need when they request it through the API. As an aside, PMSs expend resources to create and maintain these APIs, and the APIs are the PMS companies’s intellectual property.
Here’s where things get complicated. Most (if not all) PMS companies welcome outside innovation. Yet there are two hurdles: the resources PMSs must exert to accommodate new vendors, and the fact that PMS companies are increasingly in competition with non-PMS storage vendors.
Let’s punt the first hurdle for a moment. For now, suffice it to say that without “standards” it is quite cumbersome, expensive, and potentially pointless for PMS companies to accommodate the myriad of new vendors that come knocking on their doors each week.
Let’s dig deeper on this second hurdle. Many PMS companies increasingly want to be one-stop shops for the industry. Who can blame them?! It is in a business’s interest to layer new products and services over its core business. More revenue, diversification, and perhaps most importantly, they entrench their client deeper and deeper by providing them with more bells and whistles. The storage company becomes more reliant on their PMS company. It would be cumbersome to switch to a different PMS. Therefore, the more services a PMS company provides for a storage company, the more likely they are to stay.
Many PMS companies have evolved beyond inventory control and customer relationship management to merchant processing, reporting, analytics, call centers, revenue management, and electronic lease services to name a few. Kudos to them (seriously) – they are finding additional revenue streams and locking their customers in all at the same time.
PMS companies are filling in the gaps. They are providing the self storage services you need to operate your business. Remember what we discussed before – outside technology providers might not be motivated to enter self storage given fragmentation and low transaction volume. The PMS companies are giving you what you’re asking for. They are providing the bells and whistles you’re requesting. But if they provide a shiny silver bell then they aren’t exactly incentivized to provide API access to new guy that’s also got a shiny silver bell.
And how have storage companies contributed to this conundrum? Remember how fragmented we are. You may have the figure memorized by now. Roughly 91.5% of the industry has 1-5 facilities when you exclude the Big Five. Many just want to automate their operations and watch their bank accounts rise - from their lounge chair in the Bahamas. Passive income with very little active management. The more facets the PMS companies handle, the happier these owners are. Do they care what their PMS company does with their APIs? Perhaps many do not. I, for one, cannot blame them. They can save me a chair and order me a margarita.
Extra Space is banking on this mentality. Look at their third-party management ad.
So there you have it. Fragmentation + Low Transaction Volume + Lack of Standards = Lack of Enterprise-Level Solutions. A lack of enterprise-level solutions = you losing money + unimpressed customers. Equals nobody’s happy. The PMS companies aren’t even happy because they’re constantly dealing with API issues and fighting the misconception that PMS companies are the bad guys.
PMS companies are not the bad guys. The situation is what it is. There’s no malicious intent on any side. As owners and vendors we’re all just grappling with the consequences of the storage industry’s unique evolution and its unexpected collision with technology along the way.
Some PMS companies have the contractual power to gate-keep your data.
And yet the overwhelming majority of the industry isn’t concerned. The Big Five aren’t suffering because they largely have their own platforms and software systems (CubeSmart is an exception – they use Yardi). The owners with 1-5 facilities are snorkeling in the Bahamas. It’s really just 9% of the industry that’s making a stink about APIs and innovation. For the most part, the owners concerned about contractually guaranteed API access have 10-300 storage facilities. And recently many of these owners have focused on their core strength, expansion, and haven’t had the bandwidth to focus elsewhere. With record high occupancies and revenues, who would imagine a storm is on the horizon?
In the short term this approach might work (if you don’t care about leaving money on the table). However, eventually “API access” and “broken infrastructure” will be concerns for the entire industry.
You’re already paying 5-10x more for new tenants than the REITs. They have unfettered access to their data and are utilizing it to optimize every facet of their business – primarily through automated processes that don’t require extensive man-hours or brainpower. They are gaining market share. They are getting smarter and bigger. Meanwhile, we’re coming up with hack after hack just to run our businesses.
Judgment day is nigh. How many people do you know that have turned their companies over to third-party management by Uncle Bob’s or Extra Space? The gap between the REITs and the rest of the industry will continue to widen unless we do something. You cannot compete when you’re handicapped by a broken infrastructure. It’s like running a marathon on crutches. Eventually we’ll have to accept lower margins, sell our portfolios, or opt for third-party management.
We need consistent API access we can rely on! We need API access that is not subject to the sole discretion of our PMS providers.
We are so dependent on API access. We need API access so we can utilize our data to optimize our businesses. We need API access so our bell and whistle vendors can provide satisfactory solutions. Only then can we properly run our businesses. As owner Steve Mirabito wisely said, “Unless the 85% begins accessing and utilizing their data, the independent owner will slowly, but methodically, lose market share and revenue to the more organized and disciplined companies that thrive on data.”
But this is not meant to be fire and brimstone. All of this is so avoidable!!! Let’s talk solutions.
There are three possible solutions that could provide a sufficient infrastructure for the self storage industry: standards, a global distribution system (GDS), or individually centralizing data.
Standards is arguably the best way to fix our broken infrastructure. Currently, there is an utter lack of standards in the industry, beginning with our industry’s unique jargon. What do we call our product – units, lockers, bins, containers, doors? What qualifies as a medium size unit? What about our features and benefits – do we provide “video recorded surveillance cameras” or “24-hour taped camera surveillance”? How do we refer to portable storage – portable on demand storage, PODS, portable storage, portable storage units, portable containers? Is it climate controlled or temperature controlled? What about our auctions – are traditional auctions at the facility considered live auctions or on-site auctions?
These aren’t just marketing issues anymore. Different systems can’t communicate with each other because they aren’t speaking the same language. This creates tremendous inefficiencies – and lost profits.
Let’s consider a Google search as an example. Google’s aim is to provide their users with the most relevant user-friendly content. If someone searches “rent a storage unit,” the most user-friendly content would be a list of options near the user and a way to seamlessly rent a unit. A lack of standards (in conjunction with a lack of reliably open and robust API access to PMSs) prevents Google from offering this option. Instead, the searcher gets a map and a list of facilities. How unhelpful compared to these results when searching for a flight:Can you imagine a world in which you could convert someone straight from Google results? It’s not that technologically complicated, but it’s completely impossible unless we start speaking the same language (or unless we create an industry GDS, which we’ll get to in a moment).
You may be thinking, “Good! I don’t want Google to be a middleman!” That’s a topic for another day. The point is this: Standards would allow owners to leverage products and services with which their systems currently can’t communicate. Standards would provide you with more options. Things would operate smoothly – no more hacks. Systems would be compatible by design, not by brute force.
Remember we said that our infrastructure problem is largely the lack of centralized data – our data is all over the place. Standards would allow our data to communicate, even if it is all over the place. And as you’ve likely heard in marriage counseling, communication is everything.
Standards also benefit self storage owners in less direct ways. Standards reduce the API burden that falls squarely on the shoulders of PMS companies. With standards, vendors would have a common spec – they would have a roadmap. As Yardi’s Mark Smith notes, “this reduces the risks and barriers to entry for many vendors…It gives the power to determine how and where our industry operates, to the industry as a whole…” Standards could also keep your PMS costs in check by reducing the resources necessary to support API integration. Lucky for you, Mark elaborates on standards below. Thanks Mark!
A Global Distribution System (GDS) is another option. Since our data is all over the place, a GDS could serve as a hub for all the various data sources to plug into. Even in an industry without standards, a GDS provides a common nomenclature.
In the travel industry, for example, a GDS knows each company’s language and makes the necessary translations so the user has a seamless experience. To get specific, the GDS would know that a “premium” seat on one airline is the equivalent of a “first-class” seat on another. Therefore, if a user is booking a multi-carrier trip, they only have to select their fare/seat type once and the GDS does the rest. Not only does the GDS act as a translator, it’s also a booking service. Thus the name Global Distribution System.
A storage industry GDS would require “open” APIs from industry players in all categories (PMSs, vendors, and owners). And by open, we mean open – a PMS company couldn’t allow access for some but not others. API access would have to be reliable – not subject to a PMS’s sole discretion. With an “open” API, you can use the API if you meet the published requirements for access. There’s no room for discrimination or sole discretion. If your PMS company and vendors aren’t willing to participate, then you wouldn’t be able to benefit from the GDS…unless you switched to companies willing to participate.
It would be a beautiful thing if the fragmented storage industry could come together and build a GDS. It would be a picture of efficiency. Think scalable distribution. Imagine streamlined operations, increased revenues, and protection from external disruption. Your customers would have a better experience. I doubt I needed to elaborate beyond “increased revenues.” A GDS would improve your bottom line.
[Let's pause for a fun fact: since writing this article three years ago Storelocal actually built this GDS. And it's pretty bonkers amazing.]
If all else fails (or shall I say, until the industry is victorious), storage companies can independently build their own data warehouses. This would allow a company to pull together all their data in one place. All things considered, you may have as many as 25 data sources you can bring together (PMS data, marketing data, Google analytics and paid search data, revenue management data, insurance data etc.).
I realize that doesn’t sound monumental, but if you recall the mind blowing examples of REIT data utilization from Part II, you’ll agree that being able to overlay your various data sets leads to really, really cool results. All these cool results lead to greater yields. Higher margins. By aggregating all of your data in one place, you not only increase your revenue, but you do so with only incremental increased costs. A 5% gross increase may mean a 25% net increase. Your increased revenue might go straight to your bottom line as pure profit! Now who doesn’t like the sound of that?!
Industry standards or a GDS are preferable and much more efficient, but we can’t know whether they’ll materialize in the short term.
Storelocal and many of its founders (like Travis Morrow of National Self Storage) have championed the cause of standards for years. The industry has thus far proved reluctant to jump on the band wagon, but things are in motion. An industry-wide GDS however is quite feasible. There’s just that small matter of cost that keeps rearing its ugly head. As we discussed, in our highly-fragmented industry no single player is financially incentivized to undertake such projects.
If you don’t want to twiddle your thumbs in the meantime, then start looking into a data warehouse. If you want a full service solution you don’t have to build on your own, look into DOMO (software that provides access to business data with minimal IT involvement). If you’re a do-it-yourselfer, look into Hadoop (free software that you build to). Hadoop is actually the backend DOMO uses (a fun fact about Hadoop is that its namesake is the developer’s kid’s stuffed elephant!).
“Cloud” storage and computing is also a piece of the puzzle, but it isn’t a solution in and of itself. Currently, the benefits of the cloud can be cost and scalability. Cloud storage and computing still utilize physical servers, so the cloud isn’t a radical departure from traditional hosting. The cloud can help owners gather all of their data in one place, providing a proper infrastructure on which to operate their businesses. Therefore, once other impediments to centralizing data are removed, the cloud will be hugely important to self storage owners. As Yardi’s Mark Smith aptly said, “the cloud is the playing field on which an efficient infrastructure occurs. If a property’s data has no presence in the cloud, how will the property ever expect to advertise, acquire leads, retain tenants, or exploit new revenue streams?…A storage property not in the cloud can still operate, but their prospects will flatline. Playing an analog game in the digital world is like bringing a knife to a gunfight.”
The Final Word
We’ve covered a lot today, and there’s a lot of meat on these bones. This is how Storelocal sees it: Owners need reliable access to their data – and enough data for enterprise-level solutions. The typical storage company doesn’t have their own data warehouse. This means they rely on their PMS for access to their data. Yet PMS companies understandably don’t offer the full array of products and services a storage company might want. Therefore, storage companies need to work with various vendors in order to utilize their data to run their businesses. Under your User Agreement, your PMS company may have the power to decide whether or not you can do that, by allowing or denying the vendor the API access the vendor needs.
Perhaps the vendor only works with one storage company, so it isn’t economically feasible for the PMS company to provide API access. Perhaps the PMS company offers a similar product or service and they understandably want to push you to their products and services and prevent you from using other vendors. Perhaps the PMS company has an arrangement to exclusively provide API access to only one vendor, or they may have rev-share deals or charge unreasonable fees for API access. Or perhaps there are simply personality conflicts – you didn’t scratch my back, so I’m not gonna scratch yours.
The issue is not just API use. The issue is also the Terms of API Use. Your PMS company has done a great job accommodating you, and often at great expense. But change is a comin’ and you’re going to need API access you can rely on. Do you have that?
Is stifled innovation a grave concern? Yes. Consider the context. The storage industry has a broken infrastructure, and there’s no financial incentive for any single player to solve all the major problems. Therefore, storage companies will need to rely on a multiple of vendors who provide piecemeal solutions. In order to work with said vendors, we need our PMS companies to provide sufficient and reliable API access.
“Owner operators are having to bend to the technology providers rather than the technology providers bending to the operators.” Dave King of Wentworth Property Company spelled it out very clearly at the spirited discussion in Napa that inspired this API series. You use your PMS to run your business – you need it to be dynamic and you need it to be reliable. You need to be able to work with your PMS, not at its mercy.
Don’t be held hostage.
That’s Storelocal’s perspective. However, to give you a more complete understanding, and to be fair to our industry vendors, we are giving them the final word.
Hear what some leading industry vendors have to say about our broken infrastructure, innovation, and possible solutions:
Yardi – Mark Smith:
We have a dire need of industry standards all around, in terminology to key metrics, etc. Technologically speaking, though, we need to establish solid API standards, and here’s why: Yardi, as well as likely just about every other PMS vendor, gets approached at least weekly by some new tech player wanting to enter our space. Usually they have some hair-brained concept that worked in another vertical and now they want to exploit storage. Our dilemma as PMS vendors is whether or not to give these guys the time of day. Sure, we have an API that they can code to, however, the API would be new to them, and maybe they don’t have a huge corral of skilled developers to work on it, so invariably we have to dedicate resources to help them out, or, in some cases, broaden our API to accommodate their needs. So in the name of wanting to help our customers, we do it. And then the product never gets any traction, so we get burned. We simply don’t have the bandwidth to accommodate dealing with all third-parties wanting access to our clients’ data.
But the other side of the dilemma coin is this: Who is to say what new product or idea is hair brained and what is actually an industry game changer? We are experts in software for storage, but not necessarily experts in storage operations. We don’t know what will fly and what won’t. And if a customer brings a new third-party to us and says they need the ability to rent storage on Mars because it’s the next big thing, it should not be our place to kibosh that project.
Similarly, when a vendor enters our space with an idea, they can usually only afford to integrate with a small number or even a single PMS platform because the API’s are all different – sometimes subtly, sometimes drastically. So they either choose the PMS platform that is used by a definite large customer, or they choose the largest installed based PMS platform. Either way, it does the industry a disservice because almost without fail, up to 90% of the industry cannot take advantage of that product.
Without a standard API, a new integrated tech service provider looking to penetrate our market would either need to develop their application against multiple distinct API’s, which is very costly, or obtain support from a PMS vendor with sufficient critical mass to ensure a reasonable target audience. This may be a challenge if the PMS vendor, for any number of reasons, determines it is not in their best interest to “play along”. In either case, the industry may never get the chance to evaluate the merits of the new product because it never came to fruition. API standards would ensure that all new product risks are borne by the providers, and the free market determines which products and services are beneficial.
The solution: Technical standards in API and information exchange. Every compliant PMS vendor makes their clients’ data available in a standardized format, and every vendor (and even storage operators for internal consumption) writes their applications against this common spec. This reduces the risk and barriers to entry for many vendors, it all but eliminates the need for PMS vendors to support myriad different hooks into their applications, and it gives the power to determine how and where our industry operates to the industry as a whole, where it belongs. It becomes a free market, and all but establishes Storelocal’s concept of a GDS. Speaking of GDS, I am opposed to the GDS being run by a single vendor. A GDS should be an open, industry owned platform.
E-SoftSys – Kat Shenoy:
“While our E-SoftSys software application and APIs are our intellectual property, we strongly believe that the data belongs to our clients, even though the data sits in our PMS. For SSM clients who have expressed an interest in building their own data warehouse and utilize tools such as QlikView, Tableu for developing in-house business intelligence and analytics system, we have given them unfettered direct access to the SSM database with the clear understanding that while they can retrieve the data from SSM for analytics and for interfacing to other applications, any information they write back to the SSM database is done through our APIs to ensure that the integrity of the data is maintained. Our objective at E-SoftSys is to make the APIs even more open to support additional type of transactions a storage operator would like to perform using a 3rd party application or from their website.
A storage operator can address the infrastructure problem of lack of centralized data by working with a co-op such as Storelocal to build a storage industry specific GDS. We are interested in working with Storelocal and other vendors in the industry for developing a GDS that would benefit the storage operators, vendors and PMS companies as well. PMS companies will have to scale up their operations to accommodate the additional load the large volume of API calls will have on the data centers, not to mention the ongoing enhancements, maintenance and support that go with it to cater to the ever changing and growing needs of customers and therefore vendors, as the technology evolves. The PMS company can cover any additional costs by charging API usage fee to customers/vendors, which will be based on the number of transactions, rather than on the number of storage facilities. It will be a win-win situation for everybody, as all parties involved will generate more revenue through this collaboration.”
OpenTech Alliance – Robert Chiti:
On Standards…“We feel that by standardizing terms the industry uses to describe units (space/unit, drive up/outdoor, etc), facility amenities (security/surveillance, on-site manager/live-in manager, etc) and processes (rental/reservation, vacate/move-out, etc.) we can make self-storage easier for consumers, other businesses to understand and ultimately easier for machines to understand. A lot of this all comes down to one issue, for years we have relied on our manager as the only channel for us to market and rent units. Today consumers are demanding to do it themselves online (no offense to managers), so it is critical that we develop standards and open infrastructure so consumers new to storage can find, select and rent units without having to talk to someone. In some cases the potential tenant may not be the person that driving the rental process, it could be a Valet storage service, moving company or retailer that is shipping something to the tenant.”
On a GDS…“OpenTech Alliance has operated and continues to invest in developing a GDS built upon our OpenAPI (REST) infrastructure. The GDS currently services the OpenTech suite of applications as well as other vendors such as StorageFront, PayNearMe, USStorageSearch.com, etc. OpenTech Alliance’s GDS is open to everyone to use. The GDS model provides significant value to our industry. Remember the PMS vendors, they have to invest heavily in development, training, and support for every individual application vendor (for example revenue management, CRM, lead generation, etc.) that wants to use their specific API. And the application vendor has to do the same thing for every PMS vendor. This brings innovation in our industry to a crawl, not to mention requires each vendor to endure heavy costs. If all the vendors worked together to use a GDS they would only have to develop and support their API in partnership with the GDS and the application vendors could communicate with all the PMS vendors by developing a single API with the GDS.
Hello again Reader...You’ve made it to the end of a lengthy three part series of APIs in the Storage Industry. Congratulations, and we hope you feel enlightened!
Storelocal is a co-op created to empower self-storage owners and operators with powerful technology and unrivaled access to the best products and services that increase their competitive advantage in the marketplace. Our members leverage new and existing resources to lower their operational costs and increase their profit and equity.
We provide access to best in class products and services through in house technology development, vendor partnerships plus Storelocal brand licensing. The knowledge and efficiencies we bring our members bridges the gap between the acquisition costs and occupancies of the top national operators and reservation systems. The co-op has more than 1,200 facilities with a value of over 3.5 billion dollars. At co-op maturity the real estate value will top 30 billion. A cooperative is equitable to all participants, has enough flexibility to accommodate members of all sizes, and fosters loyalty through ownership.
Today’s customers choose companies whose technology makes it easy for them to transact. Our Tenant™ suite of technology (including unassisted move-ins), customer acquisition tools and enhanced services will meet and surpass their expectations. In turn, occupancy rates will rise and customer acquisition costs will stabilize. Just a 2% rise in occupancy will increase the valuation of the collective stores by more than a billion dollars. We are ideally positioned to become the largest force in the storage industry worldwide.
We provide a scalable platform of products and services aligned to the needs of our owners. Member stores are listed in a sophisticated and fully transactional online reservation system that plugs into our GDS. The reservation system is complemented with an integrated rental engine, affiliate relationships and referrals system, and a suite of mobile applications and websites, including those of our members. The customer experience across the spectrum will result in significantly higher retention rates. Our customers will have access to online products that meet and exceed expectations.