Part 1: You’re Growing, and So are your Technology Needs
Most construction businesses select Intuit QuickBooks when they first launch operations. At that point, it is a good choice. QuickBooks is a great accounting platform for businesses in their earliest stages of growth. It’s affordable and easy to set up. And because it’s an industry-standard product, it’s easy to find accounting staff who know the software. QuickBooks Enterprise (QBE) does offer a host of useful features and characteristics, and there’s even limited functionality designed specifically for construction businesses.
But there comes a time in the lifecycle of every growing contractor, developer and commercial real estate owner/operator when that “standard” accounting product is simply not enough – a time when a full Enterprise Resource Planning platform (ERP) makes sense.
In this two-part blog we will explore 13 common signs that your business is ready for a full ERP system. Here are the first six.
1. Your company has become multiple entities.
There are many reasons why your corporate structure may need to become more complex. For example, a property manager with multiple buildings, property types or relationships may want to keep track of those entities under diﬀerent business names. A developer who manages properties after a build-out, in diﬀerent phases of construction, and later ownership may track them as separate entities. Or you might want to diversify oﬀerings to hedge against inevitable industry downturns. Your business software should allow you to track these entities separately while still allowing an overall view of your business finances.
2. You want a customized solution for the way you do business.
“Customization” has almost become a dirty word in business software – but it’s also necessary for most companies. After all, you want your software to reflect the way you actually do business. This isn’t just a matter of tweaking the user interface to look the way you want. Your business software should adapt to your business, not the other way around. You should be able to customize your own inventory valuation methodology and dictate processes such as purchase requisition approvals (configuring details such as who needs to approve each requisition, and how requisitions should be approved).
3. You need to manage customer relationships more closely.
A robust ERP system with a fully integrated customer resource management (CRM) platform should function as the single storehouse for all documents and agreements. For example, you can store information about billing milestones, work order submittals, change orders and other compliance records that impact a project. Additionally, ERP integrates with email, so all related conversations and transmissions are in one shared repository. Then you can see the history of communications, easily find related documents, and cease the endless searching for important documents, compliance forms and reports. You can maintain a constant view of estimates, leases, work orders, and other relevant information. You can also manage a tenant relationship from the time you begin working together, through lease execution and renewals, to ongoing maintenance and billing.
4. You need greater control over production and inventory.
The capability to track your inventory across all locations is essential to timely delivery and eﬀicient operations. For example, your business may perform inventory valuation using the average cost method, or with the more common first in first out (FIFO) or last in first out (LIFO) methods. Your software should give you the flexibility to choose your method – and to change over time. Your business software should support your toughest decisions around inventory. If you have a complex product structure, your system needs to support item class hierarchies. And to help you avoid costly stockouts, your system should make proactive inventory replenishment suggestions. Construction firms report as much as 10% improvements in gross margins as a result of improving inventory management.
5. You’re wasting time on duplicate data entry.
As companies mature, they often need to add more powerful payments processing, CRM, marketing automation and business analysis tools. This is especially true in the real estate and construction industry, where new proptech innovations are emerging every month. A robust ERP system built on open application programming interface (API) standards enables dissimilar software applications to communicate with each other and dynamically share data (i.e. “talk” to each other), eliminating the need for duplicate entry. For example, you might want to integrate Procore bids, submittals and punch lists into your accounting system. Or, you might want to connect Honest Buildings to integrate project and bid data. Many in the construction industry also want to integrate systems like SmartSheet, ProEst Construction estimating, electronic signature applications and barcode options. This type of interoperability and integration allows you to eliminate extra data entry and access relevant information without duplicating data in multiple platforms.
6. You need greater insight into your business.
Your accounting system should help you manage the business and improve performance. Look for ERP software that lets you set up visual, intuitive dashboards containing widgets that track key performance indicators (KPI) and applications from inside and outside your organization. It’s much easier to gather the business insight you need if you can fully customize your reports to present the exact data you want in the format you prefer. Users should be able to drill down to quickly access critical project data, material arrival timelines, invoice approvals and actual expenses applied to a project. Ideally, your employees should also be able to customize their dashboards to give them instant access to the information they need to know to perform their job.
Tune in for the second part of this discussion – we’ll be focusing on the ways cloud ERP can be leveraged not only for better functionality but as a tool for business growth. Or – if you just can’t wait, we’d love to have a conversation with you and answer your questions today. You can also download our free white paper on this topic.