How Big Do You Need to Be to Use the ‘Big Boy’ Software?
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Randy Collins, President of The Strategies Group
Although most profiles you read tend to focus on the biggest design and/ or construction firms, the majority of today’s companies are small- or mediumsized businesses. If you fall into this category, you probably find little relevance in articles touting examples of big firms flawlessly integrating enterprise resource planning (ERP) systems and how such solutions streamlined efficiencies and improved profits. However, lessons can be learned from the victories won by big firms, both in terms of process implementation and a new breed of software designed for the mid-size market. Today, even the smallest firms can effectively implement IT solutions that support their vision, improve performance and streamline their overall infrastructure. Simply put, any size firm is big enough to benefit from today’s new software options and lessons learned in process management from the industry’s big boys.
Garbage in, Garbage out
No matter the size of your organization, workflow management software can be beneficial. Although software programs once catered only to big firms with multiple users and large IT budgets, these same concepts and programs have finally trickled down to the smaller firms. The key to success, however, is looking first at your processes. Technology is not simply a toy, rather, a means to automate existing processes. Unfortunately, too many companies look at software as a means to fix current procedures, failing to recognize that software actually automates such practices, so bad processes get faster, and their inefficiencies are magnified. In fact, when a company implements a software solution and then claims defeat, it is likely a result of either automating bad processes or avoiding the necessary training needed to use the new software.
While processes differ depending on your role in the design-build industry, everyone has repeated process-oriented activities that cause wasted resources if not identified and quantified. The larger a firm gets, the more important streamlining becomes. If an identified process, such as approving purchase orders (PO) or responding to a Request for Information (RFI), can be improved to save five minutes for each PO or RFI processed, this small improvement is magnified by the number of times the activity is repeated daily. Back-office process improvements also show a hidden profit opportunity. Industry analysts say that handling one piece of paper costs the average company $7. For a smaller firm, the paper trail’s actual cost may be higher if an owner is involved in the process. Knowing this to be true, what if you optimize the process to reduce your paperwork? How much time and opportunity cost would you save if you reduced your actual hard paper flow by 50 percent? Today, many imaging solutions are available o assist small to midsize firms accomplish this goal.
Marriage of Data
Although the leaders of today’s smalland medium-sized firms are more techsavvy than ever before, many still duplicate data entry or function using different, uncommunicative systems and process. For example, in the architectural and engineering market, the inability to properly track time and materials causes inefficiencies from onset. Even small firms can benefit from a time-tracking system that is married to accounting software. The importance of accurately tracking time and materials to a project is equally important on a fixed fee job as it is on a time and material (T&M) contract. Accurate time and expense tracking is obviously crucial to the profitability of a T&M contract. On a fixed fee project, the results of inaccurate expense tracking may not manifest itself fully until you start to bid the next project based on the cost (incorrectly recorded) of a the previously completed similar fixed-fee bid. As such, accurate data is the key to ensuring profitability on similar projects over time. Fortunately, there are good entry-level systems available today for as little as $3,000 that will enable a one-entry process — a key to success, as one-entry removes the chance of data entry error.
In contrast, general contractors typically see the biggest productivity gains by integrating a database of pricing items and assemblies to improve estimating capabilities. Once again, the software pays for itself quickly. Entry-level estimating software products — based on the Big Boy models — start at just $8,000, including training. While this may seem expensive, consider the following scenario: If you are preparing 20 bids per year and receiving contracts for 20 percent of the work, what if process improvement allowed you to increase the number of bids by 30 percent? If you maintain the same job hit ratio, this would mean acquiring one new project per year. What does one additional secured contract mean in terms of net profit?
True Cost of Ownership
While the case is easily made for savings resulting from a better process, small firms are often gun-shy to make a purchase, as they aren’t familiar with the true cost of today’s software options and the differences between them. This is where a consultant can provide insight. While the thought of hiring an IT, computer or software consultant may leave you guarding the corporate checkbook, it is worthwhile to investigate the options. An effective consultant can assist your organization by developing strategies to either outsource process oriented activities such as estimating, initial material takeoff and accounting or by assisting you in evaluating technology options to improve the processes internally.
The first step in finding the right consultant is to investigate local resources. The right consultant will be able to offer a variety of software solutions, explain how different software packages and processes come together, as well as share information on the latest products in the works. Many consultants specialize in a particular industry, so look for a partner that already knows your business.
It also is important to make sure you get an outside perspective once in a while to ensure you aren’t stuck with a homegrown software program or, in the case of many small firms, held hostage by a single employee who has complete control over all things computer-oriented in your company. There are few things more dangerous to the health of a small business as total reliance on a single employee’s knowledge of internal systems.
With improved processes and a commitment to using new software tools in your organization, you are positioned for improved profitability and growth. However, like anything else, support from the stakeholders in your organization is key to successful integration.
Randy Collins, is the President of The Strategies Group, a leading provider of software and hardware business solutions in the Southeast for the construction, real estates and A/E industries. Collins can be reached at 678-684-1170 or
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