Integrated ERP Keeps Track of Your Construction Business

Construction executives often make decisions based on their “gut feeling,” supported by years of experience and expertise.

However, today’s fierce competition and troubled economy require precision and process improvements to avoid any, if not all, risks associated with construction financial and project management. Construction executives must rely on technology solutions that use key performance indicators, trend analysis and other business metrics to ensure that they make the most precise and educated decision to avoid unnecessary costs, reduce waste and improve productivity.

Critical business decisions are reached by reviewing reports provided as stacks of documents in many construction companies today. These reports are derived from multiple applications, organized in a variety of formats and compiled by many different people within the organization. One of the key challenges is that the data is coming from disjointed, standalone applications.

This situation results in the data points that are needed to make an intelligent decision being scattered across multiple locations. Also, the data available in different applications may be inconsistent or outright contradictory. These inconsistencies can result in the misinterpretation of business-critical data by different teams and different functional roles in the organization. The cost and risk of making an incorrect decision can be considerable and can impact a company over the course of several years.

A means of pulling together the information into a single interface for comparison, analysis and decision support is required. There are several technologies readily available in the market today that will accomplish this goal of unified, consistent and coherent data presentation that will support all aspects of your operation.

Table 1-Decision-Support Applications

Integrated ERP

Integrated enterprise resource planning (ERP) solutions pull together the financial and operational aspects of your business, integrating the two key functions of any construction company into a unified package. The key financial and operational applications in an integrated solution are tied into a single data source, eliminating the need for data to be rekeyed or synchronized between systems. In this situation, operational data is available to financial applications and supports the financial data used for generation of purchase orders, paying of invoices, etc. Likewise, financial data can be made available to the operations applications, allowing project managers to monitor expenses related to their projects. Integrated ERP promotes seamless integration of all the information flowing through a company, eliminating inaccurate data and saving time and effort.

As information is entered or updated in one location, that information becomes available in the other locations, ensuring that all parts of the solution are up-to-date. As hours worked are entered, they can be updated automatically to payroll. Likewise, invoices received and paid can be used to affect pricing changes for materials. With a single data source supporting the entire application suite, business processes can be streamlined and simplified across the entire organization.

In addition, the single data source ensures that the data used in any single application is consistent with that used elsewhere in the product suite. Information displayed from one application will be labeled the same in another and presented from the same location. This helps to minimize confusion in both the information that is available and associated communications. In particular, having a single, consistent data source increases the accuracy and usefulness of reports and other data displays.

Business Intelligence

Business intelligence is more than just a collection of reports. Reports need to support and reflect the information pertinent to the industry as well as standard reports needed to manage any business. In addition, effective business intelligence applications will provide a context to understand the data being presented in light of organizational performance, strategies and goals.

Standard business reports are included with most business intelligence packages. These reports help manage everything from balance sheets to payroll and often provide the information needed for key business disciplines such as finance, accounting and human resources. Of equal importance, industry-specific reports often require customization of generic reports or the creation of new ones. However, these reports are necessary to ensure that the appropriate information is available and can be extracted from the different data sources being used to ensure that decisions are being made with the most accurate information possible. Business intelligence applications also serve as decision-support software, providing immediate insight into the current status and performance of the company and assisting in the setup and configuration of best practices for the enterprise. Historical and real-time data can be conveniently compared for improved trend analysis and forecasting.

As a simple collection of reports, business intelligence has its uses and provides a different way to access the data that is available in ERP and other sources. Advanced business intelligence solutions  present key metrics, strategies and goals. This additional information puts the data into context that supports intelligent decision-making.

Portals

Another means of providing context to the data that is available through business intelligence applications, ERP solutions and other data sources is through the use of a portal application. Portal applications deliver a single access point for divergent sources of information and support critical workflows by allowing users to seamlessly transition from one application to another.

Portal applications promote a unique user experience by drawing together different applications, data sources and web pages into a single unified interface. This makes it possible to view diverse sources of information side-by-side for easy comparison and updates as required by the situation. One such example for the construction industry is the ability to have your project management solution open in the same window that displays images from webcams, local weather and related traffic information, providing the complete context for a jobsite in a single location. In this example, the site manager can quickly and easily monitor local conditions and capture the data back into the site report within the project management solution without ever having to change screens.

One benefit of the unified interface of a portal application is that complex workflows can be supported in a single window. Users can open e-mail, ERP solutions and other necessary applications within the portal and move back and forth between the various applications to complete all steps within a workflow without ever having to change their screen. Overall, effective portals are productivity enhancement applications and aim at bringing all of the tools a user needs to complete their job into one workspace.

Alerts

Another method of leveraging data into proactive information is through the use of automated alerts. Alerts monitor your ERP or other solutions for a predefined set of circumstances and notify the specified individual when they occur. Advanced solutions can precisely configure the alerts to be established by user, role, department, customer or even project type. Further, the alert function will use a method that can deliver the information in multiple formats to people regardless of location.

One of the key elements to using an alerts function effectively is to determine the circumstances in which the alert should be sent. In a flexible application, these rules can be defined to monitor for a specific data point, set of circumstances or threshold to occur before sending out a notification. Examples include triggering notifications to a site manager when materials are delivered, sending an alert to a project manager when expenses meet a certain threshold or displaying an alarm for a chief financial officer (CFO) when available cash drops below a certain point. Notifications and alarms from the alerts applications should be available in a variety of media, such as e-mail notifications and on-screen alarms. This allows for the alerts to be configured in a manner that is effective for the user in their normal work environment. It would be ineffective to display an on-screen alarm for a site manager who is rarely in front of a computer. Likewise, an e-mail notification may be missed by the CFO who is working within the ERP solution or other application. Configuring the alerts in the most appropriate manner allows the user to respond to the situation effectively.

Another key element when using an alerts application is to limit the use of notifications and alarms to the most pertinent and critical data. If alerts are configured for too many circumstances, they lose their effectiveness and become difficult to maintain. Limiting the number of alerts that will be issued to any single users ensures that they pay attention to the ones that they do receive and respond in the appropriate manner.

Dashboards

In circumstances where a broader range of data needs to be monitored, the most effective tool available is a dashboard. Dashboard applications allow data to be gathered from one or more applications and presented in a single interface. This provides a central point for monitoring company performance and operational status, starting from a high-level overview and then drilling down to additional detail information as necessary.

As a centralized view into a company’s key performance metrics, the dashboard provides an overview of the entire situation. An effective dashboard application will allow for customized views based on job function and work assignments. As an example, a CEO may have a dashboard that provides an at-a-glance view of the entire organization, including current financials, project status and other pertinent data; a project manager may have a dashboard displaying information for their current projects, such as a project hot list, past due and currently outstanding invoices, hours worked, RFIs, drawing logs, etc. While the dashboard application provides an effective overview, it should be tied into the business intelligence application, which provides drill-down capabilities to supporting detailed information.

Similar to business intelligence applications, the dashboard is most effective when displaying performance metrics in comparison to company goals and benchmark data. This additional information provides the context in which the data presented can be understood and acted upon. Benchmarks should be pertinent to the company’s industry, size and situation in order to provide a solid measure of performance. As the company grows, benchmarks will need to be updated to keep pace. Likewise, company goals should reflect the current operational initiatives that are in place and be updated as these initiatives change.

Table 2-Considerations for High-Impact Dashboards

While dashboards are largely passive monitoring applications, requiring the initiative of the user to review the information and make appropriate decisions, many include an integrated alert function. The combination of dashboards and alerts provides a highly effective tool for companies to manage their ever-changing situations and make effective, informed decisions based on the latest details available.

Conclusion

The importance of any decision-support application is the appropriate configuration of information and the accuracy of the data displayed. Using an integrated application suite helps to ensure that the data is consistent and accurate across the organization by removing the requirement to rekey or synchronize data. Regardless of the data source, decision-support applications need to reflect key performance indicators, desired goals and measure real-time, actual performance. In doing so, these applications can support decision-making, aid in workflow completion and increase productivity. In addition, decision-support applications provide different means of monitoring key performance statistics in both passive and proactive scenarios ensuring that business-critical data is available to support the decision-making process when needed. By embracing these technologies, construction executives can easily tap into the knowledge and best practices that were developed throughout the life of the company. With access to such business-critical information, executives can look at performance from the “birds’ eye view” and make informed decisions instantly.

Construction Business Owner, April 2010