By Roberta Maynard. Now that the dot-com dust has settled, builders have refocused their technology priorities and gotten down to business. No more life-changing products, just a short list of applications that make the operation run faster, better, or cheaper ? or, with luck, all three. Even builders that didn't get lost in the perilous land of e-commerce have concluded that they've simply had too many tech irons in the fire.
"We're narrowing our focus," says David Miller, Shea Homes' EVP of operations and technology. The California builder, headquartered in Walnut, continues its strong emphasis on Web-based applications, particularly its push to get trades interacting online. Also on the front burner is a sales application that eliminates any other stand-alone sales system. Already operational in Shea's San Diego, Arizona, Colorado, and active adult divisions, the system is being rolled out companywide this fall.
Beazer Homes USA, which put its technological infrastructure in place five years ago, is looking inward to develop enhancements that add value. After delving into e-commerce in 1999 and 2000, its emphasis now is "entirely internal," says CFO David Weiss. Online scheduling, sales systems, and ways of marketing to consumers are top priorities for the Atlanta-based builder. "We're past the point of integrating," says Weiss. "It was a painful process, but now we can develop [additional] components in-house that are just plug-ins." The company's biggest challenge, he says, is getting people trained in the new technologies and, immediately on the horizon, rolling out the scheduling implementation.
"The leading-edge companies are definitely spending money in different ways than they did," says Mark Callin, executive director of RealFoundations, a business consulting firm based in Dallas. In recent years, big builders have implemented solid networking solutions and infrastructure, he says. Now, they're taking the next step, exploring such areas as customer relationship management and Web integration. That means changes in spending.
Tech-savvy Choice Homes, in Arlington, Texas, has shifted its spending priorities in an unexpected way. "We've developed many tools over the years," says CEO Steve Wall. "The unintended consequence of that is that you then have more to maintain." About one-third of the builder's tech costs go to upgrade and maintain its technology systems, and a staff of four is dedicated to that effort. That frees up the programmers to work on new applications and continue to "break new ground," Wall says.
Smaller builders, who typically rely less on internal expertise than do bigger companies, are a couple of steps behind the leaders. At Midland Builders, a Madison, Wis., company that will build 250 homes this year, systems integration is a priority, particularly integrating its new sales software with accounting and finance. The builder spent $80,000 on technology in 2001 and expects to nearly double that amount this year. That doesn't include the $40,000 tab for its revamped Web site, which debuted in May (www.midlandbuilders.com). Most of the added cost is for personnel; Midland hired two IT people this year to handle day-to-day maintenance.
The plain-vanilla Web sites that marked builders' initial Internet efforts are getting a remake. Hamlet Homes, for one, is updating its site (www.hamlethomes.com), which was designed five years ago. "It's a little archaic," concedes Susan Lister, CFO of the Salt Lake City-based firm. Future visitors will be able to view floor plans and more images of homes and interact online with the builder.
WL Homes invested eight months of planning and $175,000 in the redesign of its new site (www.johnlainghomes.com), launched this past summer. The aim was to give the site a more customer-oriented rather than a corporate focus, says Bill Probert, the builder's EVP of sales and marketing. The company, based in Newport Beach, Calif., wanted to create a fun and colorful, interactive resource for home shoppers, he says. "This site brings automation to what WL Homes is known for ? our customer care."
|"[Builders have] gone beyond the traditional sale of a home and are starting to leverage the relationship with a customer. [They] spend six or eight hours with customers." ?Mark Callin, RealFoundations|
Houston builder MHI plans to enhance its site's lead-contact management to allow prospective buyers to receive an electronic brochure. Future visitors will be able to receive e-mails in a Web-like format, complete with images and floor plans. Beazer is already there: Electronic brochures have been part of its standard e-marketing repertoire for the past year. The builder recently launched a Spanish version of its site (www.beazerenespanol.com) to tap a growing market, particularly in California, where 40 percent of its customers are Hispanic.
Lower prices for equipment have builders spending less on hardware, but that doesn't necessarily mean a net decrease in spending: They're putting those dollars into development and maintenance, instead. The end result is yielding savings in the form of efficiency and productivity gains.
Shea Homes went through a big buying phase four years ago and since then has operated on a replacement cycle that systematically staggers the purchasing of equipment. The company will spend perhaps 10 to 15 percent less this year on technology than it did in 2001. After going through two years of what Miller calls "heavy development," the company is seeing benefits in reduced costs. "We've reached a point where we've started to see efficiencies," he says.
Likewise for Hamlet Homes. Now that the builder is using NewStar, each sales contract pops up on the president's computer, prompting him to sign off on it, and the information is immediately sent to accounting and production. Lister says the new system means Hamlet won't have to add staff, even though the company is building and selling more homes each year. This year, production will top 300, up from 250 in 2001.
To the extent that they provide more timely and consistent data, intranets, also on builders' short lists, should drive productivity as well. Hamlet expects its new network to save time and money, though Lister says it's too early to tell how much. Beazer's intranet, to be launched this fall, will let management "push information out to all employees that in the past they had to pull down," explains CEO Ian McCarthy.
MHI's CFO, Gary Tesch, expects that his company will cut a week from its production time thanks to its new intranet, which will link 400 employees at 100 satellite offices and allow contracts to travel the chain of command virtually rather than in paper format.
And Steve Wall intends to use his intranet to remove production roadblocks. By giving intranet space to each of his crews, he will enable staff to see where work is being scheduled, thus allowing the entire jobsite team to work around delays rather than be stalled by them.
Final Frontier: Efficiency
Synergy and savings, the long wished-for pots of gold at the end of the tech investment rainbow, may be at hand.
"People tell me about how AutoPay eliminates line items and could eliminate a person," says Wall. It's not just savings in clerical and data entry. The benefits of taking that paperwork and extra communication off superintendents' plates, he says, mean more time spent in the home, which translates to better service and faster production. "There are so many efficiencies that could result," he says.
Wall sees fundamental changes ahead in how technology is used in building operations. "I think wireless is going to become the next real change in our business," says Wall, who is at work developing wireless applications in-house.
"As the hand-held devices get better, you're going to see the real value come through, allowing you to use ISPs [Internet service providers] to access automated systems, such as AutoPay, with hand-helds." At Choice, arguably the industry's most advanced technology user, the transition to wireless is just around the corner: "In the next 12 to 18 months," Wall says, "the majority of our superintendents will work and schedule and approve payments using wireless technology."
Also still ahead: scheduling, says David Miller. "I think as an industry, we treated it as a simplistic process, but it's extremely complex," he says. "It affects our pricing, design process, products, trades ? everything." Shea is looking at scheduling dynamics, Miller explains, with a goal toward determining "how quickly can you ramp up and ramp down to meet demand."
Business consultant Callin sees operational improvements resulting from technology in several areas, notably communication, scheduling, and options handling. Builders are very interested in giving buyers more time in the home to explore options, says Callin, citing added services such as Centex Home Services, which offers gardening and insurance. "They've gone beyond the traditional sale of a home and are starting to leverage the relationship with a customer. Builders spend six or eight hours with customers.
"Definitely, there's been a shift in the last few years," Callin continues. "BuildNet helped the executive group become more aware, as did the dot-coms. Where do we really make core improvements? What's doable? What's feasible? What can we implement that will make a difference? There's been a whole shift in focus."
Published in BIG BUILDER Magazine, September 2002