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Do I Really Need New Software? The 5 Warning Signs
BY FRED ODE
When is the right time to purchase new business software? Do you use the three-year
rule, figuring that technology must simply be three times better by now? Or do
you take a more conservative approach, hanging on to the familiar, albeit sluggish,
programs because they are as comfortable as well-worn sneakers?
In construction, it’s easy to justify the purchase of new equipment.With a $90,000
front end-loader, for example, a contractor knows exactly what it can do and how
it’s going to make money for the company. Besides, it can be depreciated up to 15
years. Harder to negotiate, however, is the decision-making process involving new
business software purchases. Though new tax laws provide added incentives
(increased deductions and investment limits) for new asset purchases through 2005,
many are still unsure if now is the right time to buy. More importantly, how will the
investment pay off? These five warning signs can indicate a need for change.
1. The present system does not
meet business needs.
If a software
package is not doing
what is necessary, then it is
probably a good candidate for change. In
this case, use the frustration factor. Before
shopping for new technology, sit down
and list the top three challenges or problems
with the current system. For example,
keeping track of over/under billing
may be difficult using the current
accounting package. Maybe the present
bidding software doesn’t offer enough
levels of detail to prepare competitive
bids. Or perhaps the cut and fill package
won’t allow importing of architectural
CAD files.
Define the real problems to reveal the
company’s basic “must-have” requirements
for new software. Identify the vendors
that meet these basic requirements
to start the selection process.
2. The costs of inefficiency are
high.
In every business—and
construction is no exception—
payroll costs represent a huge
percentage of a company’s overhead.When
employees work inefficiently, or when they
are assigned to jobs that are inherently inefficient,
it costs the company. But is there a
way to determine if switching software will
actually save money?
First, quantify the approach by evaluating
areas of inefficiency and assigning
costs to them. For example, three project
managers are collectively spending about
20 hours each month estimating and
preparing bids and another 15 hours each
month reentering information into
Spreadsheets for reporting purposes.
These tasks cost the company approximately
$3,000 each month ($55/hour
wages x 60 hours per month). An integrated
software package promises to cut
that time in half or better. From that,
determine how long it will take to recover
the purchase and start-up costs.
When considering costs, don’t forget
the qualitative factors, such as whether
the new software will improve productivity,
time constraints and overall stress levels
for employees. If all indications say “yes,” then the cost of staying with the
current software is simply too high and
change is needed.
3. The present system is too difficult
to use.
Perhaps the current program
is capable of doing what
is necessary, but it is clearly
way too complex for non-technical or
novice computer users. Perhaps minor
problems snowball because the software
vendor offers inadequate technical help.
Or perhaps the only person capable of
running the program just left the company
for another job.
Even the greatest software package can
become a liability if minor “glitches” can’t
be overcome quickly. If employees spend
more than 10 percent of their day learning
new features, solving software difficulties,
or waiting for help-desk call-backs or tech
support, consider other products and vendors—
and quickly. The key is to balance
technology with functionality to get a
package that will work well into the future.
4. The present system is not specific
to the industry or business.
With sophistication comes
selectivity. Yesterday’s computer
user may have been satisfied with
the generic, one-size-fits-all software program.
The trend today in software development
and technology is a definite shift
to industry-specific “middleware” products
that offer tailor-made solutions for
specialized industries. And construction
trades are no exception.
Take, for example, the wide range of
estimating software packages available. In
addition to general construction, several
products address specific trades such as
electrical and mechanical, transportation,
roofing and more. For companies that
focus in just one area, it makes sense to
consider software designed to improve
specific efficiencies of operation.
Consider the options available to a
heavy/highway construction company
that regularly bids on Department of
Transportation (DOT) projects. A specialized
package allows for the instant
import and setup of DOT items, which
average 300 to 500 line items per job,
while a non-specific program might
require downloading information and
manual entry. While an industry-specific
package might cost more than a generic
package, recovering those costs will happen
more quickly.
5. The present system does not
keep pace with technology.
The fact that a certain software
package was a perfect fit
five years ago means absolutely nothing
today if it can no longer grow alongside
the business. While advances in technology
happen in nanoseconds today, many
software products don’t keep pace. In
addition to regularly scheduled new feature
updates, software companies need to
invest in core product development if
their product is to stand the test of time.
A contractor should ask: Does the software
vendor have a vision for the future
as well as a commitment to continuous
improvement?
Regarding technology, the other
important consideration is how well software
products integrate with others.
Construction firms can benefit from the
integration of their many software programs
and the resulting flow of information
between different applications.
Some vendors promise to do it all, but
many of the leading systems focus on just
one area, such as estimating and bidding,
job cost accounting, project management
and others. The good ones were developed
with integration in mind, from the
design environment to the programming
language.
THE NEXT STEP
After considering these five warning
signs, a construction company can choose
to make peace with its current software,
or make a change. Selecting business software
is a complex process but, hopefully,
you now have a good idea of how to begin
the search.
Ode is CEO/chairman of Foundation Software.
For more information, call (800) 246-0800
or email fred@foundationsoftware.com.
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