Spreadsheets are useful, but only to a point. It's just a tool, but when that tool becomes the master, you're the slave.

For smaller low-income housing tax credit (LIHTC) asset managers, it's easy to control data volume and integrity on spreadsheets. But as companies such as Wentwood Capital Advisors rapidly grow, the only solution is to throw those spreadsheets out and go with a dedicated database.

And Wentwood grew by leaps and bounds all in one fell swoop. In 2007, Wentwood's asset management portfolio numbered 29 assets. Just a year later, that portfolio increased 900 percent, to about 400 properties, when the company bought the upper-tier general partner interests in Capmark's unguaranteed funds.

As Wentwood grew, Boston Capital was getting ready to market a proprietary software solution, dubbed Fusion, it had developed to manage its own portfolio. Boston Capital had also struggled with a Rube Goldberg-like jungle of spreadsheets for years—using thirdparty vendors to generate reports—until it took the problem into its own hands.

Whenever Boston Capital needed a new report it had to contact its vendor, describe what it needed, and wait in line for its report. If there were issues with the end product, the company would go through the process all over again.

“I think almost everybody else in the market still does it that way, where you're really beholden to your vendor to get your reporting,” says Brian Madden, COO of Lexington Solutions, the Boston Capital software subsidiary. “But we wanted to give the client control over their own data, so they no longer have to pay a vendor to create reports—it is their data, after all."

Notably, Fusion was created using Agile software development and testing methodologies, the same software approach used by the likes of Google and Motorola.

Price versus value

In 2008, Wentwood was busy evaluating a number of different software products and adopted one—with unfavorable results. One of its investors wanted some projections and historical information on a tight deadline, and Wentwood put its new solution to the test—and found the solution to be the problem.

“We basically went for the best deal in town, but we found out very quickly it was not a good deal at all—if we added more than two users to the platform, it would crash,” says Kent Mehring, senior vice president and head of asset management for Wentwood. “So we were working simultaneously with the database to the extent that we could, and we were also still using spreadsheets as a backup, since we couldn't trust the data integrity of the product we'd licensed."

The company needed something reliable, scalable, and designed specifically for LIHTC portfolio management. It had evaluated Fusion before and found the price a little too high. But Wentwood decided to revisit what was available on the market in 2009, and, by that time, Lexington Solutions had adjusted its pricing to a more feasible level.

The cost of admission to Fusion is $75,000, and then it scales up depending on the number of properties being managed. At first, it was tough for Wentwood to get over the idea of sunk costs—they had already invested so much in their previous choice.

“But there are real costs with continuing to do it with spreadsheets, or with a system that's unreliable,” says Madden. “They may be hard to see, and not as obvious as the bills you already paid, but if you keep doing what you've been doing, you're incurring additional costs."

After a year of using Fusion, Wentwood is hooked. Anyone in the company can pull up real-time “vital signs” like audited numbers, tax return information, quarterly filings, and critical filings to report to their LIHTC stakeholders. And they can do it themselves, no matter how many users are logged in, without the need for third-party vendors.

The end result is increased productivity. The company's asset managers can focus on managing properties instead of aggregating data. And relying entirely on spreadsheets is a thing of the past.