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Scaling for the Future Why Contractors Are Turning to ERP Software Systems to Manage Business

Regular users of today’s varied construction software programs have probably heard or seen the acronym ERP. In simple terms, ERP, or enterprise resource planning, refers to a set of software applications that work together to create a platform to manage all aspects of a business.

This means software applications that previously were run as standalone programs are now integrated with other applications to create a larger, more productive software package. Data generally flows freely between different features or applications in an ERP system, having been standardized and integrated to provide end users with a seamless information flow, while ensuring data is still relevant to their individual work.

In the construction industry, an ERP software platform typically will include a complete accounting solution, payroll and human resources functionality, purchasing and inventory applications, reporting capabilities and project management capabilities. More complete systems likely will include functionality for managing service operations, equipment tracking, document management and more. In the best ERP platforms, the data moves freely among all of these functionalities, with automated processes and dedicated workflows built in to make working in the software as simple as possible for the user.

As the amount of construction data and the need for business intelligence in construction increases, more contractors are moving to single-solution ERP packages. For contractors making this move, the reasons are obvious:

  • ERP solutions save time by streamlining processes through one system and eliminating the need to enter data multiple times into different programs;
  • they reduce errors and mistakes that come with manual data manipulation between different standalone programs;
  • they increase collaboration by getting every end user working from the same page with regard to data;
  • they are much easier to scale for future growth and business needs; and
  • they provide a single vendor to work with and build a relationship with versus having to stay on top of multiple software vendors.

Although the price points of ERP solutions can elicit initial sticker shock, the better systems provide a much higher return on investment in the long term and reduce the overhead of running multiple, disparate systems—reducing the overall cost of ownership.

Operating in the Cloud

Cloud computing has proven that it’s here to stay. People rely on the cloud for everything from social media to music to storing and accessing important documents. Two key reasons cloud and mobile computing solutions have grown in popularity are that they provide convenience and accessibility.  So it not surprising that today’s computer users have become savvy enough—and comfortable enough—with their workplace software operating in the cloud as well.

ERP software that is specifically designed for the cloud takes advantage of the increased accessibility that the web provides. By streamlining construction data, web-based ERP systems allow users to access their data and get work done from any device, anywhere.

With more software moving to the cloud, integration among applications is actually becoming easier, resulting in a more customizable environment for the end user. Even the most comprehensive ERP system may lack certain functionality that a contractor needs. Or, as is often the case, a group within a firm is reluctant to move away from an existing application. ERP systems designed specifically for the cloud can make use of web-based integration protocols—referred to as “web services”—that link and synchronize data between the ERP and third-party applications.

Another area where ERP systems are benefitting from cloud deployment is mobility and the ability to integrate with task-oriented mobile apps. Many ERP providers are creating their own integrated mobile apps to serve as extensions of their software functionality into field operations. For example, payroll can be entered in the field from a mobile device and immediately posted to a company’s payroll system; equipment tracking or usage data can be entered and instantly update equipment management functionality or update job costs; project plans can be shared out to all team members in a remote location, and so on. Driving data to and from mobile devices via the accessibility afforded by cloud-based software allows team members to work more efficiently and know where their projects stand—in real time.

Cloud computing is becoming the accepted (and expected) way of managing business among contractors, and now the pressure is on ERP providers to redesign their software to take advantage of the efficiencies and accessibility of cloud computing. Moreover, this redesign is leading vendors to address the ease of use of their software as they now must anticipate that users may be accessing applications from practically any device with a web browser. Traditionally complex ERP systems with elaborate menu structures are being replaced by systems with features such as automated workflow, context sensitive navigation, and graphical dashboards that anticipate users’ needs and make work even easier. Some of these features, such as workflows that move data and processes across multiple disciplines, do not work with standalone software. So an ERP platform is needed to reap their benefits.

Six Tips to Finding the Right ERP Fit

Following are six things to consider when evaluating which ERP package to purchase.

  1. Identify needs. Those evaluating ERP packages should note all of the areas in which their current software is under-performing. Pain points that indicate a need for new software include: missing functionality that necessitates workaround solutions; lack of accessibility to data and applications by team members in the field; use of a large number of applications that do not talk to one another; or consistent job performance issues related to a poor flow of information, such as lost revenue opportunities, project delays and added costs.
  2. Create a checklist and prioritize needs. The most successful software searches occur when buyers are prepared. Prioritized checklists, a scoring system and even writing down specific needs and desires in detail can help potential buyers communicate their needs better to software providers, ensuring the users get software that will match their needs. It also helps to identify non-critical features that can parse software searches when removed from consideration.
  3. Get company-wide buy-in. Without proper buy-in and expectations that everyone will use the software to its full potential, contractors will not get the results they hope for. Getting input from all areas of the company is critical, because if a handful of employees or an entire department decides not to use the software, it negates the collaborative purpose of a feature-rich ERP platform. This also helps set expectations during the software’s implementation and training/ramping up periods.
  4. Be prepared to do the research. To ensure they’re fully educated on their software choices, leading contractors will visit websites, review software forums and message boards, thoroughly read the company’s brochures, attend webinars and more. One word of caution: When evaluating ERP packages, most will claim they are web- or cloud-based. Make sure to establish that the software was specifically designed or redesigned for a cloud computing environment. Too often, legacy client-server systems are simply dropped into a web portal, allowing remote access but not providing for the accessibility, scalability and ease of use of a true cloud-based system. Once a handful of qualified providers have been identified, savvy buyers will sign up for personal demos and engage in product discussions. Having a better understanding of the products will provide a better idea of how to best address needs.
  5. Get referrals. Peer reviews and referrals can provide some of the best feedback. Software buyers have better luck fulfilling their needs when they talk to a variety of companies to gauge their experiences with the software. Learn how easy or hard a particular ERP platform is to use and navigate. Know the providers that listen to—and treat—their clients best. Understand how dedicated software providers are reinvesting in their products or continually upgrading their features to stay ahead of the technology curve.
  6. Budget accordingly. ERP software packages provide much more than standalone programs, and will cost more than single-function applications. To properly evaluate costs and ROI, savvy buyers consider the cost (and time) of maintaining multiple software packages versus the single ERP platform. That said, most buyers have a dedicated spending range, and being clear/upfront about budgets and whether they are moveable can have a significant impact. Understanding how budgets match up with needs can provide a viable moving target that both contractors and software providers can attempt to hit.

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