Time to Deploy ERP
Embarking on the path of enterprise-software selection.
"It takes one bad experience (with an enterprise system) for things to really come into focus." These words sum up one contractor's struggle with ERP (enterprise resource planning) software. But with the investment—both time and money—that goes into an enterprise implementation, taking the proper steps to select and deploy the right ERP software on the first go-around can be significant.
But in many cases that is easier said than done. Contractors need to consider many factors when undertaking the task of integrating new software into a business. Deploying ERP software, in particular, is not only a hefty investment in both personnel and financial resources, but it also requires companies to look forward to what the business will look like down the road and ensure the technology has the capabilities to grow with the business appropriately.
There is also the matter of looking past the hype associated with certain pieces of technology in order to truly understand how the software will work for each individual business. But many contractors agree the first step—before even looking at new software—is identifying a process.
Establishing a roadmap
”Miron Construction, www.miron-construction.com, Neenah, Wis., has been using financial software from Computer Guidance Corp., www.computerguidance.com, Scottsdale, Ariz., for roughly 15 years, a system Edward Ruffolo, director of technology, Miron Construction, calls 'rock solid.'
But, now the construction company is looking to incorporate project-management software, which means a careful examination of the future and how the systems will work together.
Ruffolo says one of the key components of software deployment is to understand that it is more than just technology selection. "You really have to take the time and be willing, whether you do it through a lean process or Six Sigma or whatever process you want to use, to look at all of your procedures and be willing to modify those and be open to changing those to improve the overall operations of the company."
He suggests doing a detailed documentation of how procedures currently flow throughout the organization. From there, it typically becomes clear where opportunities for improvement exist within the process. This exercise can help establish a new procedure and identify needs and wants from a technology system.
Michael Reiser, business development manager, Computer Guidance Corp., says, "The first and most important thing that a contractor really needs to do in looking at ERP software solutions is to truly understand as best they can each and every one of the problems that they are attempting to bring resolution to. It is critical to know where the ship needs to be headed."
For Miron Construction, one of the biggest factors is how the process of collaboration will assist in collecting and disseminating information to the right people at the right time. Ruffolo says it is important to recognize the needs of design professionals and subcontractors as well as understand how the ERP system is ultimately going to work across the entire team.
Integration between ERP systems and other applications could be one way a contractor can better disperse information. For example, ERP systems can integrate with electronic-payment technology, allowing users to share items such as invoices with the ERP software. Another area in which construction companies can choose to transfer data automatically is mobile time-tracking software, meaning electronic timecards can be sent directly to the accounting department. Reiser of Computer Guidance says this has saved one of its customers roughly $56,000 in eliminated FedEx expenses alone due to no longer needing to mail paper timesheets to the office. In the case of Computer Guidance, for example, the product has project management and remote time entry applications built in, but also offers integration with third-party providers. Some construction companies choose an ERP system for the all-in-one functionality while others take the best-of-breed approach.
Another crucial element for Miron Construction is to ensure the technology provider is heavily invested in the construction industry and has customers of similar size and position.
How to differentiate
In the middle of last year, Summit Contracting, www.summitcontracting.net, Evansville, Ind., decided to make the switch to new ERP technology after a not-so-great experience with its existing enterprise software. The construction company provides a unique combination of contracting services through two primary corporate divisions within its company: environmental and civil.
"For our company, it started with our existing software platform," says Lisa Hancock, vice president of financial services, Summit Contracting. "The financial statements were sound, but the information that we needed to pass onto sales and marketing or project management had a lot of holes in it."
After making the decision to switch, Summit Contracting set out on the process of selecting new software, identifying areas for future growth within the company, and ensuring the software could grow as the company grows. First, Hancock and Scott Harris, controller, Summit Contracting, put together a list of must-haves and wants. Some needs for Summit include mobile data collection, dashboards and business intelligence, and document indexing and workflow, among others.
By doing this, the company was able to determine which items on which it wasn't willing to compromise. Next, it asked for recommendations from local resources—associations and other construction companies, among others. Any software that was mentioned by more than one resource was put on a list for a phone interview to solicit additional information. From there, Summit was able to whittle the list down to the top three contenders with which it went forward for presentations and follow-up Webinars.
During this time, Summit was cautious to make sure it wasn't just seeing a sales demo. Hancock says, "We had them go in and actually set up customers and ... write checks ... and set up employees. We saw from scratch that it would be a working system and we weren't going to run into headaches."
The construction company was also diligent in speaking with contracting references from the software providers. Harris says, "We identified the things that were important to us and then we specifically asked those references in those respective companies about how things were working for them, how they had things set up, and I think that was probably one of the most useful things during the selection process."
Hancock adds one final element was putting key items into the contract that were specifically essential for Summit Contracting.
Making the investment
Earlier this year, Summit Contracting signed with Computer Guidance and is currently in the midst of the conversion process with plans to go live with the software in November. Summit is not rushing the process, though. Hancock says, "It takes one bad experience for things to really come into focus ... We are giving it plenty of time to get it set up correctly and make sure we have the bugs worked out."
Ruffolo with Miron Construction concurs, saying contractors have to invest the time and the personnel resources into making it happen.
He says, "You have to be willing to put together a cross-functional team and then assign the other work that those teams are doing in such a way that they are going to have time to spend on the ERP system. It is not something you can do after five (o'clock) or when they have a little bit of extra time on Friday afternoon ... ERP systems are expensive, but I think the internal costs are sometimes even more so."
His advice? Treat the investment in technology like any other large capital tool—whether it is a crane or a concrete pump, among others. "Those tools can really drive a lot of profit and a lot of quality and service to your customers. So you have to think of it as any other large capital investment."