George Nelson moved into his role as Toll Brothers' first chief information officer (CIO) three-and-a-half years ago. Life sure seemed much simpler then. In a sense, though, 2003 marked the tail end of IT's halcyon days–high on promise, but somewhat iffy when it came to delivering on all those expectations. Still, it became clear to the $5-billion public builder that a high-level tech person was no longer an option but a necessity.
As if there wasn't already enough work for Nelson to do, Toll's IT systems were housed in a facility that had hardly enough electricity to power the headquarters computer system. The notion of IT playing a real role in helping drive sales existed as a mere pipe dream.
Not for long, though. Nelson shepherded the Toll enterprise out of its dark ages, ushering in a 21st century technology system that works around the clock, seven days a week. His integrated repertoire of enterprise services includes a customer relationship management solution that captures information about every potential customer online across Toll's entire constellation of operations–50 markets across 20 states. The program generates customized e-mails to cultivate clients and "hold their hands" while going toward the sale.
And Nelson also led a charge to develop a relational database that digitally charts and tracks a myriad of information that can help make a sale, from the news that a company is moving into town with plenty of employees needing housing to identifying the customers and scoring them on how serious their interest really is.
The advent of a tech tool that tracks the details, influencers, and drivers of home building industry trends and identifies who the customers really are comes, perhaps, in the nick of time. As Nelson launched a new e-mail system last year, Toll, like most big builders, began to see a correction (almost 30 percent) in the new-home universe that is still unfolding, leading to fewer sales, bigger inventory, and more hesitancy from buyers to follow through on their preliminary indications of interest.
Nelson and his counterpart CIOs represented the ability to work a triple-threat contribution into enterprise home builders of all sizes: They could help drive revenue, cut costs, and mitigate risk. "You need to take advantage of the technology and tools and embellish them as you go forward," Nelson says. But the moment to move from theory to practice had come. It was time for tech to put up or shut up in light of rapidly deteriorating market conditions.
Looks like the CIOs have done more than talk the talk.
When Nelson arrived on the scene, Toll was behind in developing application systems. He had to create a seamless method of dealing with back-office functions, as well as reaching the individual customer. It was not an easy path. In addition to building a system that would log and classify every point of contact between sales associates and potential customers, Nelson had to develop a response program to keep the sales staff on alert.
In 2006, he rolled out the new system. When a potential client visits a Toll model home, and expresses interest, information begins to flow into the system–how soon the potential client is looking to move, whether or not a house has to be sold first, and what type of new house the client is looking to buy.
Nevertheless, the challenges were complex, according to Nelson. The system had to filter every single customer touch point into usable information, aggregate it, and organize it into user-friendly reports that Toll's staff can use to woo prospects for its $650,000-plus homes. And although it is impossible to determine how traffic changes relate directly to sales, Nelson asserts it is a good thing that Toll decided to look to technology when it did. "Fortunately, the timing was right. We did it before we got into the slowdown," Nelson says.
By integrating information into one centralized system, sales personnel from every office have access to the database. It also gives sales staff important information that allows them to move quickly. "We focused on the ultimate customer. We started looking at the point-of-sales system. The strategy changed. Now, he says, the company focuses on the revenue-generating process and saving costs.
Toll is hardly alone in turning to technology to deal with a tough economic climate and the need to get information to a salesforce as fast as possible. As the market gets more challenging, builders are doing what many other businesses have already incorporated. Technology has emerged with the tools necessary for increased visibility, management, and results–whether you are retail or wholesale, or if you want to chart business expenses or employee hours.
For any company building more than 150 homes a year, technology has steadily evolved into a must-have. "Even the small guys have to connect their sales offices and construction trailers with their back office. Prices can add up by using a third party," says Sean Ryan, CIO of Capital Pacific Homes in Newport Beach, Calif. For builders with more modest heft, off-the-shelf software can help them manage their back-office issues such as payroll, overtime, and expense payments, he says.
Steve Pardee, who was the first CIO at Standard Pacific Corp., and then, in 2004, became the first CIO at Meritage Homes, says a transition to high-tech is an essential move for builders to make if they are to succeed in the kind of climate that builders face today. "I think that CIOs provide significant value, particularly now in the current market," Pardee says. "Without a CIO leading a charge and a common strategy, you lose."
While Meritage is now e-mailing customer information to salespeople, it hopes to launch a telephone link by the end of March that a potential home buyer can call an 800 number to connect with the local Meritage market sales associate.
Other companies are tapping into technology at various points to help cultivate a high-tuned sales staff and go after leads in a dramatically new way. Pulte Homes CIO, Jerry Batt, says the CIO role has become a catalyst to create technology that works in a production builder's arena. "We are all together going out of the spreadsheet era. We are all mechanizing at the same time. I don't think you can do it with a committee. I don't think you can do it decentralized. I don't think you can reach agreement to build without a central officer," he notes.
Like Toll, Pulte is working on giving its salesforce the automation tools to keep track of potential buyers. According to Batt, when Pulte purchased Del Webb in 2001, automation became a priority because "selling to active adults was a longer sales process." In addition, he recalls, "when Del Webb would open up a new community, thousands of people showed up. [Salespeople] had stayed in touch through letters."