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Using Business Technology + Data to Drive Efficiency + Profit | Q+A with Joe Stoddard
This is one of a series of Q&As with architects, builders, consultants and software providers that explore what builders need to do to take advantage of BIM or other advanced software programs, as well as how to choose the right one for their needs.
This Q&A is with Joe Stoddard Principal of Mountain Consulting in Corning, N.Y. Stoddard works with production builders nationwide on strategic planning, lean business processes, software implementation and other business issues. He has helped several of them implement fully integrated software systems into their business.
Alliance: What is a common problem that builders you work with want software to solve for them?
JS: A big one is how to ensure that they're building what was sold. Say the customer buys a Barrington Two model with a left hand elevation, a two-car garage, the executive master bedroom upgrade, a gourmet kitchen and arched openings. Then the house gets built and doesn't have the gourmet kitchen or arched openings.
Alliance: What do they need to address this?
JS: They want a good sales system where everything is pre-priced, and where the data feeds the P.O.s and the design software. The problem is that software by itself won't do that.
Alliance: Do most builders understand that?
JS: Some do but others don't. I've seen a lot of them talk with a vendor at IBS who seems to have a software package that could help. Then they buy it before working out their internal issues, so it ends up as a solution looking for the problem. I call that trying to defy gravity.
Alliance: What do you mean buy working out internal issues?
JS: They need to clean up their operational side first. Technology by itself won't fix anything. There's no technology that that will go into a dysfunctional organization and fix bloated and bad processes.
Alliance: How does a builder start fixing those processes?
JS: You need to ask some hard questions. Here are a few examples.
What are you selling? In my experience, sales really do follow the 80/20 rule, with a few plans representing the vast majority of sales. My advice is to pick 10 or 12 plans, then work on getting them perfected in the system before doing anything else. Once the best sellers are up and running, you can start adding new plans under development. Oh, and if something hasn't sold in two years, chances are it's not going to sell ever again.
Do you have common naming conventions? If not, this is a good place to start. Say you have similar versions of the same plan in different communities, and that they use different names for essentially the same options. One might have a foyer and another an entry. Ironing these out can be a big job for a builder with 10 or 20 geographical locations, but with a big operation like that the work is even more important. Otherwise you will exponentially blow up the size of the database.
What, do you need the software to accomplish? Outline exactly what you want the software to do and how you want it to be done. These requirements are usually written as objective statements, things like "the software shall allow multiple selections of color." You need to do this work department by department. It's very time consuming but is crucial to making sure you get the right software.
What are your terminating factors? That is, what functions are non-negotiable? If one software only tracks homes by phase and lot number but you use physical addressees, can you work around that? What if it has a minimum schedule duration of a day but you typically have the same backhoe on three different jobs on the same day? There are a hundred possible examples but you need to think through them.
Who will use the software for what? I suggest talking with everyone in your organization about this, as some uses may not be obvious. For instance one company I know of put software in place that had a centralized scheduling system, which eliminated the old system of Excel spreadsheets. Although no one thought to tell the receptionist, she was the one who had been putting welcome packages together for new buyers, which probably totaled 10 per week. Then all of a sudden homeowners stopped getting their packages.
What is your budget? Technology costs money. Our absolute bottom-line IT budget for a small production builder is 0.5% of revenue. If that seems like a lot, consider that a lot of other industries budget 1% or more.
Can you invest the needed time and effort for this work? I usually start with several days of on-site meeting with various people in the organization, then several weeks of follow-up conversations. That's before ever looking at software packages.
Alliance: How long with a full implementation take?
JS: If you've done the prep work I just described, you will need at least six months, and maybe a year, to get up and running with a fully integrated software package. I know a 200-unit builder that spent a year getting their house in order before ever talking to software vendors. Then they took another year to do the implementation. But the software is working great for their business.
Alliance: Is there a minimum volume to make this cost effective?
JS: If you're building less than 50 homes per year, an integrated system won't make sense. You're probably better cobbling together smaller products, each of which manages a piece of the operation. But to get the most out of them, you still need do the prep work I described. The worst that can happen is that you will have a better-run business.
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