With the aid of the magician's wand, the young builder was able to lift blocks of enormous size. As promised, he built the castle in one night. Only later would he discover the importance of a sturdy foundation. Best Defense: Do It Manually First.

The Tech Trap

What technological oversight will cause you the most grief? You may be surprised.

By Charles Wardell

What technological oversight poses the greatest threat to builders' businesses? "It has nothing to do with technology," says Keith Kallen, vice president of business development at Crosswinds Communities. That's a hard-won insight. Before joining Novi, Mich.-based Crosswinds in January, Kallen spent several years as a consultant to home builders, first with Deloitte & Touche, then as head of his own company. His specialty: helping builders automate their business processes.

Time and again, he found himself working with people who had turned to some new technology as a savior, only to be disappointed. What they should have done was create efficient procedures and processes first, then work on automating them. "Systems don't run the business. If you can't do something manually first, you have no business automating it," says Kallen.

Fatal FlawsContents

Kallen isn't the only one to discover this the hard way. Mark Upton is now president of Engle Homes/Arizona, but before joining Engle, he worked for a builder who implemented a new piece of management software. Moving the company's data from a spreadsheet to a database program required the employees to handle it differently, but they weren't given time to master the new processes. They had to learn a new system and adapt their processes to it at the same time. "We had a meltdown," he recalls. "It shut down the company."

In fact, builders who have successfully added technology to their businesses, and consultants who specialize in helping them, agree that the main consequence of adopting a software program before having the necessary business processes in place will be an ill-defined, undisciplined company that loses revenue. "Procedures and processes centered around systems is the defining part of what we're doing," says Kallen.

But that's not the way it always happens, according to Frank Ono, chief technology officer with Builder MT, a Denver company that develops software and does management consulting. He has seen many cases in which a CEO or CFO reads a magazine article about a great piece of software with what seems like some great features, then imposes it on the company. "It generally causes a large turnover," he says. "The people who have to operate the system don't have the competency to operate it; they get frustrated, and they leave." Solutions need to be built around the processes of management, not around features.

Aren't there some instances when software is what makes process change possible? Mark Callin, executive director of Real Foundations, a consulting firm in Newport Beach, Calif., says that may be true in some cases, especially with scheduling technologies that keep everyone up-to-date on the status of a house. "But being able to collect data is a business issue, not a technology issue," he says. "You still need the discipline to collect the information [needed by the program] on a daily basis."

Builders who have mustered the discipline to do technology right have found it worth the effort. One of these is The Michaels Group, a production builder in Malta, N.Y. Michaels has been Web-enabling its business a piece at a time for the past few years, and at each stage it's gone through the exercise of examining its business processes before automating them. "We've reviewed completely what we do from system to system," says vice president Heidi Harkins. The result, she says, is that everything runs more smoothly. "It has definitely created lots of efficiencies. It has improved communication with our home buyers. The benefits have been immeasurable."

Michaels' success shows that good communication among employees is key to a successful implementation. "If people don't know what they're supposed to be communicating," says Kallen, "they're just yelling at each other."

Warning Signs
An imploding system may telegraph signs of trouble.

Chuck Shinn once asked a home builder's staff how many homes they had under construction. "I asked five different people," he recalls. "I got five different answers." Shinn is a partner in the Lee Evans Group, a Littleton, Colo., management education firm. He sees such problems as the symptom of an inadequate management system. But while a good system will help builders get control of their businesses, many implementations get derailed by internal attitudes. Here are Shinn's 10 danger signals:

1. Incompatible software programs in different parts of the business (perhaps the result of an unthinking rush to automate)

2. Inefficient internal processes

3. Staff that's not committed to the project

4. Employees who resist trusting computers

5. Employees who won't share knowledge with one another

6. Employees who don't want to be held accountable for their actions

7. Management that sees technology as a "magic silver bullet"

8. The "dressing up of a pig," or the temptation to put a pretty Web page over a bad system

9. A "me-too" strategy, in which a company adopts a system just because other companies are doing it

10. A lack of commitment to keeping the information in the system updated

Why Technology Fails Entrenched bureaucracy can defeat the best new idea.

Company Politics/Inertia 30%
Organizational Change 29%
Lack of CRM Understanding 20%
Poor Planning 12%
Lack of CRM Skills 6%
Budget Problems 4%
Software Problems 2%
Bad Advice 1%
Other 4%
Source: CRM-Forum.com, Spring 2001
Human error?: A botched software implementation could have many causes, but the most common ones have less to do with budgetary or technology problems than with the difficulty of changing human behavior. The numbers above are for customer relationship management (CRM) software implementations, but they apply to other software projects, as well.