The Difference in Open Architecture vs. Closed Architecture Technology Systems

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Daniel Levison | February 27, 2019

In technology, the differences between open architecture systems and closed architecture systems are complicated and confusing. However, in an effort to simplify the difference, a computer or software design that a particular manufacturer will not share or open to other manufacturers, thereby making it incompatible with other computers or software, is a closed architecture system.

One of the most well-known examples of a closed architecture computer system is Apple, a brand of computer that is developed and manufactured only by the Apple Company.

What is an Open Architecture System?

An open architecture system is a standard that describes the layered hierarchical structure, configuration, or model of a communications or distributed data processing system that:

  • Allows each layer to provide a set of accessible functionality and access that can be controlled and used by the functions in the layer above or below it.
  • Enables each layer to be implemented without affecting the implementation of other layers and functions.
  • Allows the alteration of system performance by the modification of one or more functions without altering the existing, procedures, and protocols in the core system.

Open Architecture System vs. Closed Architecture Systems in Commercial Real Estate

But how does this apply to the commercial real estate industry? Once they have created an acceptable roadmap for processes, managing brokers should then ask themselves several questions. The first, and the most critical issue is from a strictly financial perspective – should you create a customized system, or would it be better to utilize one of the real estate-centric products currently available in the market?

Regardless of what your ultimate decision on the matter is, industry best practices encourage the utilization of an open architecture software over a closed software architecture. Simply put, an open architecture system is more favorable because it will allow a more efficient and cost-effective migration of your data with financial systems and CRM’s systems that are utilized by your agents and administrative staff.

Why You Should Consider an Open Architecture

Open architecture is an application integration process that can be created, that only identifies and migrates transaction specific information from your agents’ private customer relationship management software directly to the company’s commission tracking platform.  

As a managing broker, it is crucial to understand that by utilizing an open architecture platform, you will enhance the ability to save your agents and administrative staff time by avoiding double data entry – which leads to an increase in productivity typically followed by increased profitability. Achieving these increases in productivity and profitability lead to an increase the acceptance and adoption of new technology in general – and that’s half the battle.

Any system you are considering should simplify your back office by managing receivables, commission split plans, invoicing and agent distributions all from one place. The system should streamline and remove the headaches, known as excel hell, by managing brokerage commissions and bookkeeping in a simplified and automated process.

The platform should provide simplified workflows and accounting journal entry automation for everything that happens after the deal closes. We suggest, an open architecture system because it will allow for an easier integration directly with other open systems, such as QuickBooks, general ledger accounting systems, and CRM’s typically used by CRE agents and brokers.  

CRE Technology

To find out how you can use technology to manage your individual receivables, commission plans, invoicing and distributions,  please sign up for the CommissionTrac blog and learn why Techstars Atlanta selected CommissionTrac as their first CRE application for their intense 90-day mentorship program joint-ventured with Cox Communications.

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Updated 02/27/2019

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