Integrated business systems, or what is sometimes referred to as a Construction ERP, have struggled to meet the needs of the construction and engineering industry for some time. ERP solutions are meant to be an enterprise-wide integrated business system that covers a broad requirement scope across most functional areas of the business.
The primary goals of implementing an ERP solution should be:
- Simplify the business systems landscape by consolidating all business processes and having a reduced number of non-compatible business systems and reduce the use of Excel.
- Providing accurate and timely management information to make informed business decisions (one version of the truth)
- Enable the adoption of best practice repeatable business and project processes to improve operational efficiency and drive higher margins
- Drive improved business and project delivery performance – Some examples of the value that Construction ERP should deliver:
- Projects delivered on time, on budget, and at high quality.
- Projects timescales compressed
- Improved Project Margins
- Improved predictability of project delivery
- Improved Project Quality and Compliance
- Reduced Project and Business Risk
- Agility and ability to diversify and grow
- Ability to adopt new technology quickly and embrace modern construction methods such as offsite, modular, or prefabricated construction.
- Improved project estimating accuracy
The reality falls well short of the goals outlined above, which is a huge disappointment for many companies.
The norm is usually something like this:
The ERP solution is only used as a Finance or back-office Human Resources system. Many departments are still using Excel as their primary tool – for example:
- Commercial
- Contract Change Management and Variations
- Subcontract and client contract management
- Certification and application processes
- Insurances and indemnities
- Project Cost Control
- Sales
- Risk and Opportunity Management
- Quality Management
- Health and Safety
- Site Work Execution and Progress Tracking
In addition, there are usually many point solutions being used which are not integrated to a common ERP backbone. Examples typically include CAD, BIM, CDE, Quality Management, Estimating, Bid Management, CRM, Project Planning, Document Management, Plant or Equipment Rental or Hire, Facilities, and Service Management.
The result is a very complex, disjointed, non-integrated business system landscape that can cause endless data inaccuracies, delays, and increased costs.
In addition, this leaves employees with no other choice than to reinvent different ways of working on every project or business unit. It makes standardization and the adoption of new technology, best practice processes, and modern construction methods very difficult or impossible.
We are not suggesting that one ERP solution should replace every system in the business system landscape. The objective should be to simplify and reduce the number of business systems and reliance on Excel and have a digital ERP backbone that is integrated with the necessary point solutions such as BIM and CDE.
So why have Construction ERP solutions failed to deliver?
There are, of course, many factors that impact the success of an ERP implementation, such as the level of commitment the organization makes to implement the new system and business processes. Success can only be achieved if the project is driven from the top with strong governance and a fully committed team.
The other issue is whether the Construction ERP solutions used by many organizations do not fully support the necessary business processes required by the construction industry. There are many solutions out there and they vary by geography. They tend to fall into two categories:
- Construction Industry ERP solutions – e.g. Coins, CMIC, Viewpoint,
- General ERP Solutions – e.g. Microsoft, Oracle, SAP, Infor, Sage
Are these solutions good enough to deliver a successful ERP solution in the construction industry? Is the technology they are built on future proof?
We invite you to find out. IFS offers a real modern cloud native alternative to these solutions and as a recent company said to me after seeing the IFS Construction centric ERP solution.
“This is Game Changing”
Come and talk to IFS and see how the next generation Construction ERP solution can streamline and optimize your business like never before.
Check out our eBook as we explore how there’s never been a better time for engineering and construction companies to adopt a digital ERP backbone! See it here.
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