By Julianne Goodfellow, Rick Haughey, Kevin Donnelly (MultiFamilyExecutive.com Article) — The Internet of Things (IoT)—very simply, the network of physical devices, such as smartphones, laptops, HVAC systems, and even cars, able to exchange data via the Internet—can create a competitive advantage for apartment firms that adopt smart-home automation. Such technology can fuel even larger business initiatives, as well, but only if operators understand the underlying security risks involved—risks that grow more dangerous the more sophisticated the IoT becomes.
The current state of smart-home adoption in multifamily ranges from “just starting to explore” to partnerships between a handful of apartment firms and technology providers designed to maximize the potential of IoT to benefit residents and owners alike. In some ways, apartment firms are playing catch-up to their early-adopter residents, one-third of whom already own five to nine Internet-connected devices, according to the nearly 250,000 residents who responded to the 2017 NMHC/Kingsley Renter Preferences Report.
Regardless of where owners and operators fall on this spectrum, at this point, there seem to be at least as many questions as answers. To help housing providers navigate both the potential and the pitfalls of these new technologies, the NMHC has published a new white paper, Smart Communities: The Internet of Things & the Apartment Industry.
The excitement among industry veterans about the long-term potential of IoT is undeniable. “If properly implemented, IoT can and will unlock the door to bringing operating costs lower than ever thought possible while also adding an ancillary revenue generator the likes of which this industry has never seen,” says Taylor Wiederkehr, software implementation analyst for Alliance Residential.
The early returns from smart-community investments are coming in the form of higher lead conversions and rental premiums, but most experts agree that the real potential lies in facility-based IoT, not consumer-facing IoT.
Well-deployed facility IoT provides opportunities to create whole-building operational efficiencies that can streamline and improve business functions as well as deliver smoothly running communities for residents. Facility IoT can automate important property functions, such as energy consumption, to lower property energy costs and maintenance needs. It can also help avoid catastrophic incidents by automatically turning off the water when leaks are detected.
Data from IoT can optimize asset values in the form of predictive maintenance programs that can prioritize high-ROI maintenance work over low-ROI routine maintenance. The data can also inform future development choices based on actual resident usage, a key weapon in today’s amenity war.
Ultimately, large-scale IoT deployments will provide the data needed to fine-tune staffing levels based on physical occupancy throughout the day; create comprehensive audit trails; more easily enforce hours of use of common areas; reduce or eliminate the need for maintenance teams to do lockouts; and more.
Shawn Mahoney, chief information officer for GID Real Estate Investments, says that once ROI is proved by early pilot programs, “all institutional-grade apartments will have some aspects of smart-home technology within a few years.”
But he’s also aware that all this potential doesn’t come without security risks. Mahoney explains that IoT is “just another technology that will be compromised with high-profile negative results for firms that don’t bake in security from the start.”
Renowned security technologist Bruce Schneier goes further, saying, “The Internet is dangerous—and the IoT gives it not just eyes and ears, but also hands and feet. Security vulnerabilities, exploits, and attacks that once affected only bits and bytes now affect flesh and blood.”
To evaluate IoT, apartment firms need to assess most everything involved: costs, potential savings, rent premiums, operational efficiencies, cybersecurity, data and privacy risks, ongoing systems maintenance, and market expectations.
For companies just getting started, the NMHC identifies seven steps to integrating smart-property technologies safely and securely:
1. Identify your IoT team. Clearly define each department’s IoT cybersecurity responsibilities.
2. Understand your IoT risks. Perform a thorough risk assessment.
3. Plan for big data. Implement a data protection strategy, including data recovery capability.
4. Prepare an IoT pilot. Develop a comprehensive asset and software management program.
5. Research your device options. Use devices certified by reputable organizations.
6. Select your vendors and devices. Establish a vendor risk-management program.
7. Execute your pilot and assess the results.
For firms that have already launched pilots or are getting ready to, the NMHC offers four important steps to moving forward.
1. Implement an IoT device-management program. Establish and maintain secure configurations for network, computing, and IoT devices.
2. Be vigilant with patches. Incorporate IoT into your robust vulnerability management program.
3. Think about where IoT fits in your network architecture. Properly segment network architecture.
4. Train your residents. Provide IoT security guidance to residents (and employees).
While the security concerns are significant and real, almost everyone agrees the mountain is worth climbing as long as owner–operators are both strategic and cautious. Fortunately, many firms already have strong cybersecurity platforms to draw on as they chart a course to smarter living.