Case for Buying Construction Software in 2012

By Sheldon Needle

Consulting is pretty strong right now. Consultants are sending out a lot of proposals and getting new business. My associates report that there is a high level of interest in upgrading their clients’ systems. This is supported by improved demand for their services whether they are a General contractor, highway heavy or specialty contractors doing commercial and/or residential work.

Contractors who invest in consultants
When contractors retain a consultant, they are serious prospects. It is also a statement that they are willing to invest in their success. One current observation is that now that contractors have come most part way through a business downturn, they now have a much better idea of how valuable software (or lack of) is to their business and the future of their company. Consequently, more of them are willing to spend for a consultant in order to help insure they make the right decision.

Flat organizations, limited resources
Due to downsizing over the past few years, many contractors no longer have the staff to do what the construction software should be doing by using Excel/Access or a basic software product like Quickbooks for Contractors. They now understand they must either have a better solution or get more from what they have through more training on their current construction software solution. Many are realizing that in order to work effectively with their suppliers and customers they need to be in the sweet spot of software technology and connectivity through the Internet.

Enough with the Excel worksheets!
One of the easiest ways to justify a software purchase is to eliminate all the ancillary Excel worksheets used to supplement inadequate systems. One consultant did a revealing exercise with a client recently. They run legacy software with a lot of Excel worksheets. It is a $30M mechanical contractor that now has 5 people whose primary/secondary role is to just track purchases, inventory and do custom reports. Once they implement a new ERP, he estimates all these tasks can be handled by just 2 people with much greater accuracy.

Up and coming – cloud computing, an easier entry point?

A couple of years cloud computing was barely on the horizon ( no pun intended). But now it is becoming a more acceptable option for many users. There are several reasons why cloud is starting to take off

More vendors are offering it
Cloud systems usually offer canned, one size fits all configurations which can save time on installation and trainin
Users who have very old versions of legacy programs are often faced with major, expensive hardware upgrades to bring in a version of the same software or a new system. Cloud removes that issue entirely since clouds (AKA SaaS) can be run over just about any PC built in the past few years.
A lower cost entry point. With a cloud solution you pay upfront only for installation and training. After that, it’s a monthly charge based on the number of users that is usually in the $60-90 per user range per month. That number can be higher or lower depending on the number of users. Another benefit compare to traditional on premise is that the latter model charges 18-22% per year for maintenance.

Advancements in technology
.Net user interface and SQL server is still the predominant foundation with just about all vendors having close ties to Microsoft. Much effort has gone into making their applications web enabled and accommodating visibility on iPads, Android tablets, and iPhones and Android phones for remote connectivity to support project managers in the field.

Noticeable trends
Medium and larger contractors want to make sure that they can be connected to their suppliers and customers through their website depending on what the site is doing for the users of the site. This is typically customers who want to create or check on workorders, field staff who need to enter and time and billing data for service calls or maintenance work.

Another evolving trend for web connectivity is for various stakeholders such owners, architects and subcontractors working collaboratively with the General Contractor on cost tracking, document management and storage, engineering drawings, change orders, etc.

Contractors who look at vendor demos are becoming more astute at evaluating the software. Many vendors like to focus on trackers, dashboards, and business intelligence capabilities. Nowadays, prospective buyers want to carefully review process – getting the data into the system to “feed the beast” knowing that without the data in the system there is not much to analyze.

Summary
Owners put off purchasing new software when the economy tanked and now they are seeing that up-to-date Construction Accounting and Project Management ERP software is the new operating paradigm and they are accepting it. They want systems designed to support lean business operations, supplant Excels worksheets and meet increased supply-chain demands (from customers and suppliers).

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