Integration is the key!
A lot has been written on this subject over the years, but most of the verbiage has dealt with generalities. Homebuilders and construction project managers have asked me to explain some of the differences and I have tried to relate these differences to their business.
The Best of Breed (BOB) solution is usually interfaced together by one of the vendors involved in the solution. Indeed there are solutions available that require a vendor of accounting software for home builders, sales software, construction project management software and homebuyer customer service software. The system interfacer will claim that they have married together the best of all solutions on the market, by bringing together four databases. Let us consider this claim when it comes to a comparison the truly integrated Enterprise Resource Planning (ERP) software for builders.
Consider for instance an integrated ERP customer service module:
- Does it integrate to the purchase order module, in such a way that warranty staff are able to easily determine who did the original work on the lot?
- Does it integrate to the sales module so that all customer information and option selections are automatically transferred over?
- Does it integrate to accounting module to the extent that all work on the lot that cannot be charged back, is automatically posted to the warranty cost code in the costing module?
- Does it integrate to the accounting module to the extent that all backcharges approved by customer service, automatically reduce the payment to the errant subcontractor on the next pay run?
- Does it integrate to the purchase order software to allow warranty to issue customer service purchase orders that can be tracked through the normal process of the builder?
These are integration questions from just one module! Most or all of these will not be handled by BOB software.
Consider other more general questions that I have found important to the builder:
- Is the production software integrated to the extent that the closing entry to the general ledger with all the associated Work in process and Cost of sales entries (etc.) automated on a lot by lot basis?
- Can sales see the current status of all lots in a community by virtue of having the schedule integrated to the sales module?
- Can the approvers of an agreement run a margin report on a new prospective deal by virtue of having the budgeting and costing software integrated to the sales module?
- Can the builder run a report with data from all four BOB modules? An example may be where the CEO requires a field from warranty to be included in a required accounting report. As a general rule the BOB supplier would recommend that the builder set up yet another database to consolidate the reporting.
- The vendor portal in most solutions does a good job with purchase orders. However does it integrate to the accounting software to the extent that the trades can see the check number and amount that paid the purchase order?
I could go on and on but true integration that pays back to the builder.
One objection pointed to the ERP vendor is that you have “all your eggs in one basket”. Check out the ERP vendor you are dealing with as it may be that the vendor is on very solid financial ground. In a BOB solution you must do due diligence on say four vendors, any one of whom could bring down the solution which no one really owns. Will any one or all of the vendors continue to be a best of breed vendor? Who decides this?
When problems occur in an ERP solution it is one call to one vendor. In a BOB solution you would be faced with four numbers. Many times they may say the problem is another vendor’s problem.
Don’t get me wrong, I have seen BOB solutions function but usually to the extent that IT resources are hired to run it. The running cost of a BOB solution has to be higher because of the databases involved and the resulting reporting requirements.
I ask the reader one question. If you built a software solution, would you not want to be in complete control of it?