You don't need an engineering degree to create an IT plan for your company. But you do need a map. By Charles Wardell
According to pop wisdom "if you don't know where you're going you probably won't get there." That saying could have been penned by a builder standing in the ruins of a failed technology adoption. Home builders that want to use information technology (IT) to streamline their business processes must begin with clear goals and a deliberate plan for reaching them.
Yes, that's stating the obvious. But for a surprising number of builders, it's a hard-won lesson. People who would never start a home without blueprints often buy software or sign up for an ASP without a plan for implementing it or the business processes needed to support it, says Keith Kallen, vice president of business development at Crosswinds Communities in Detroit, who spent 15 years consulting with home builders on their IT needs. "I was amazed at how often I asked builders where their software plan was, and they had none. It was costing huge sums of money."
Whether you create an IT plan yourself or use a consultant, here's the process needed to do it right.
Are you ready?
Before starting an IT plan, make sure your company is ready for it. Here are three dos and don'ts.
1. Do define your business. Can you explain your business objectives to a 10 year old? "With us, it's timely, quality construction and customer satisfaction. And we will hopefully make a profit," says Mark Upton, president of Engle Homes in Arizona. That should be a no-brainer, but everyone we've spoken with says you have to pound it into employees' heads, then pound it again to keep it there.
2. Do standardize processes. "Process has to lead technology," says Upton. While the act of standardizing processes (known as change management) can be difficult and time consuming, it's crucial. Jackie Hart, a Jupiter, Fla.-based consultant who helps builders develop Internet strategies, has found that companies building between 80 and 400 homes per year have an edge. "These companies have fewer people, so it's easier to educate them on the new processes than it is when dealing with a builder of Engle's size."
3. Don't rush. Implementing new technology isn't like driving from Baltimore to Las Vegas, where you can (in theory) get there faster by stepping on the gas. It's more like a holiday feast: You'll be in better shape at the end if you chew slowly, letting each course digest a bit before moving on to the next.
That's how Engle automated its accounts payable and scheduling. Its goal: When trades completed a task, the builder would electronically note the event, automatically updating all the company's systems.
Engle's first step was to enter base and option costs into its job cost system, so that costs could flow through to accounting. Then, rather than signing off on subcontractor invoices and passing them on, supervisors authorized payments by signing line items on a computer printout. Once everyone got used to that, the company began making automatic payments to vendors without invoices.
Then Engle put computers in the field, so builders could go online to note completed items. Next they were offered the option of using wireless PDAs. Finally, the company put all the data generated by the electronic signoffs on the Web, so that builders and subs could check their accounts at any time. It took about a year to get the entire system in place. "At each step of the way, the analog process was introduced before adding technology," says Upton.
Of course, automating tasks like accounts payable should happen as part of a wider IT strategy. Creating that strategy means setting priorities, the first of which should be a strong infrastructure and a solid job cost and accounting system.
"Say you're using a financial management system that's no longer being supported," says Mark Callin, a Newport Beach Calif.-based partner in Real Foundations, a consulting firm that helps medium and large builders with technology. "Updating it may be a top priority." Callin also recommends an infrastructure assessment. Are you still using 486 computers? Does everyone on staff have e-mail? "Fix the foundation, fix the financial management system, and put in a solid infrastructure."
You also need a compelling, easy-to-use Web site. A brochure site is a minimum: Some builders let visitors choose communities and site plans. Some use customer relationship management (CRM) software to let customers choose house models and options, which allows salespeople to track customer actions at each step. Even if you pass on these capabilities now, you may want them later. Design your site with that in mind.
Creating the plan
Though IT plans will vary by company, there are commonalities. Callin developed a baseline-operating model for a production builder. He starts there with new clients, then examines each part of their business--land acquisition, sales, construction, accounting, customer service, warranty work--to see what they do differently.
He uses that information to develop a set of business requirements. Does the builder need to manage contracts for raw land? Does it need a sales management system? Then he meets with each functional group (sales, construction, etc.) to discuss the company's current state, compare it to other builders, and review available technologies. Next they set goals and prioritize tasks.
Hart also begins with a typical hierarchy of tasks. A sample hierarchy might look like this:
- A content management system that gives you more control over your Web site.
- A limited, scheduled integration to the back office, such as a system to manage Internet-generated leads.
- A CRM or sales management program. (But only after salespeople start taking e-mail leads seriously.)
- Scheduled uploads of inventoried homes.
- An intranet for dealing with employees.
- An extranet to manage relationships with trades.
- A project management system.
The hierarchy should include milestones--deadlines for the completion of certain tasks. For example:
One month: Define what you want to achieve at each step.
Two months: Create a project budget.
Three to four months: Start implementing the first parts of the plan.
Six to eight months: Have the project up and running.
Hart suggests running checks and balances after every step. "Crawl, walk, run," she says, adding that builders who set a too-ambitious timetable never get started.
Which tasks get automated when may depend on who can best lead change. Upton believes you need "champions" who believe in IT and will make it work. In large companies, they could include an executive to lead the overall effort and specific task champions. If your biggest geek is your project manager, that might be a good place to start.
You also need to decide whether to begin with the customer or the back office. Either focus should benefit the other. Heidi A. Harkins, vice president of The Michaels Group, a home builder in Malta, N.Y., put a priority on using the Web to communicate with buyers. "People's worst fear is not knowing what to do and not trusting that the builder knows what it's doing," she says.
Michaels' system addresses both by automatically notifying customers when it's time to order tile, bathroom fixtures, or whatever. This keeps projects on schedule. "It helps us manage relationships rather than numbers."