SLOW TO USEA home builder such as Gladstone Homes is a rare bird in this industry. If you spend some time reviewing the data, the survey clearly points to how home builders are unerutilizing information technology:
Low budgeting. Roughly 54 percent of big builders budget for IT, so that means that nearly half of all large builders don't plan an annual budget for a basic item such as IT.Lackluster use of the Web. Of the roughly 60 percent of small builders that have Web sites, about 80 percent still use the Web mainly to post brochure information. Roughly 22 percent of small builders with Web sites use them to offer home buyers a progress report on the construction of their new home; only 29 percent of big builders use the Web in that fashion. Just 14 percent of small builders offer a link to a community intranet for selected communities, and while 31 percent of big builders do, they could all be doing much better.Reliance on cell phones. Roughly 89 percent of small builders and 82 percent of big builders are using cell phones as their main source of mobile connectivity. Only about 25 percent of small builders are using handhelds, while 46 percent of big builders say they use handhelds. Consultant Schweikart says the high numbers for cell phones mean that instead of managing the work electronically and focusing on quality and customer satisfaction, project supers have their ears to the cell phone, juggling daily mishaps and logistical problems.Low Tablet PC penetration.As a follow-up to the low adoption of handhelds other than cell phones, nearly 94 percent of small builders say they still don't use Tablet PCs. A Tablet PC is larger than a handheld but smaller than a laptop. The units have handwriting capabilities and can run standard Microsoft Office applications. Roughly 22 percent of big builders use the Tablets, a bit better showing but hardly a ringing endorsement. These numbers have to be disappointing to Tablet PC makers, since so many builders say their supers don't like handhelds, mainly because the screen size is too small. Of those that use Tablets, in both groups the leading applications were business e-mail, word processing, and managing schedules.Low recognition of CRM software. Also referred to in our industry as sales-side software, it's one tool that can bring home builders into the modern era, giving them fingertip access to customer information they never had in previous years. Yet, more than 80 percent of the small builders surveyed answered “do not know/do not use CRM software,” and slightly more than 40 percent of big builders answered the question the same way.Either home builders are using the software in some form and don't know what it's called—a real possibility, especially for large builders—or the CRM software people are in real trouble trying to sell to this industry. The leading CRM software among big builders was Builder1440, with nearly 9 percent of our group—and not one vendor topped more than 2 percent penetration with the small builders (see “What's CRM?” page 424).
TOTAL DISCONNECTHome builders are clearly “guilty with explanation.” Although some of the arguments about home builder staffs being streamlined compared with other industries and the lack of an integrated solution are valid, home builders still experience a disconnect with IT.
“In other industries, we work with companies that have roughly $15 million in revenue, and they'll spend $100,000 on a new system,” says David Thikoll, a consultant with Cardamel Consulting, a group that works closely with builders on Microsoft Solomon deployments. “But home builders will get choked up about $50,000 or $60,000,” he says.
“The low IT spending numbers don't surprise me,” says consultant Joe Stoddard of SMA Consulting. “I always say we rank up there with fish hatcheries, and I don't really know what to do about it,” he says, adding that builders may change when the market slows down.
It's impossible to predict 2006 as the breakthrough year in which home builders see the light and adopt technology. But the aftermath of Hurricane Katrina, including increased gas prices and materials shortages, may slow the housing market this year, so it may finally be time for builders to take a closer look at the technology aisle at this year's International Builders' Show.
BUILDER explanations for the low IT spending and lack-luster deployment as an industry may be somewhat valid, but after the boom of the past few years, few people will feel sorry for a builder if his company can't cut it anymore. The technology solutions may not be perfect, but sitting still and doing nothing has to be unacceptable to home builders who plan to stick around.
NO COMPARISONHome building spends much less on information technology as a percentage of annual revenues compared with other industries.
SOURCES: BUILDER, FORRESTER RESEARCH
ONE BRIGHT SPOTA clear majority of the PCs at home building companies have Internet access.
WHAT'S CRM?Most small builders don't know of or don't use customer relationship management software. Large builders do better, but there's still a knowledge gap.
STILL MARKETING FAREFor the most part, builder Web sites are still used to post marketing brochures and company information, not for business processes. Nearly 60 percent of small builders surveyed run Web sites and all 147 big builder respondents have Web sites.
The BUILDER IT Survey is based on survey responses from BUILDER and BIG BUILDER magazines' subscription lists. BUILDER e-mailed online surveys to 50,404 readers of both magazines, yielding 633 responses from small builders and 147 responses from big builders. Online research firm Specpan worked closely with BUILDER to design the online questionnaire, collect the data, and deliver final reports. Copies of the PowerPoint reports for the small builder and big builder categories are available at www.builderonline.com.