President of JBKnowledge, James Benham, presented his “Tech Forecast” at the Construction Financial Management Association (CFMA) Annual Conference in Las Vegas. The presentation promised to demonstrate “What’s here and what’s coming in construction tech.”
Mr. Benham put together a very interesting presentation that should challenge construction financial managers to think about their organization’s technology strategy and aptitude. Technology is important not because failing to adopt will leave an organization behind another in the technology tools used, but because of the consequence to this fact: irrelevance and an inability to compete.
This article will explore some takeaways from Mr. Benham’s presentation that can help guide construction industry executives in their next technology investment.
Things Have Changed A Lot In The Past 12 Months
The “Tech Forecast” presentation curated a lot of survey data about the state of technology in the construction industry, but it was a bit surprising just how much has changed in just the past 12 months.
Here are some examples of changes from JB Knowledge’s 2013 Construction Technology Integration Survey, as it relates to zlien type technologies:
- Percentage of companies with cloud-based accounting software. 2012 – 6.5%. 2013 – 29%.
- How many software applications integrate with one another? 2012 – Largest percentage was None. 2013 – Largest percentage was Two.
- Still, however, construction companies spend 1/4th of other industries on technology
Over and over again, something became very clear from the statistics. More applications were moving off servers and into the cloud, were integrating with one another, and were enabling collaboration through multiple devices. As seen from the two selected statistics above, the changes are happening fast.
Excel Is Still Plaguing The Construction Industry, Accounting Departments, and the Finance Function
Despite more and more computing moving to the cloud and integrating between one another, it was very clear from the survey results that Excel remains a core technology for finance and accounting departments.
[lts_blockquote align=”left”]78.8% of respondents said they are not using a client relationship management (CRM) technology, and among those that are, 46% are using email, 34% are using Excel, and 28% are using a “manual process.” [/lts_blockquote]In the JB Knowledge survey, when asked if companies used “accounting technology,” 35% replied that they used Sage 300 and the next most popular technology was Excel, with 33.1% of the vote. Think about this. Excel is the 2nd most popular accounting platform?!
It’s every scarier than this. 78.8% of respondents said they are not using a client relationship management (CRM) technology, and among those that are, 46% are using email, 34% are using Excel, and 28% are using a “manual process.”
When asked how their company transfers data between software that doesn’t integrate (which is the majority of software for construction participants), the answer was…Excel, with 52% of the response.
It’s no surprise that in Mr. Benham’s presentation, he made the conclusion and recommendation that “we have to significantly reduce the use of Excel.” I couldn’t agree more.
How Excel Is Hurting Construction Industry Credit, Accounting, And Finance Departments
The three significant drawbacks to Excel are as follows: (1) It is an extremely general program that does not move the needle for companies in any one specific area; (2) It is not a collaborative platform; and (3) It results in disorganized sheets saved in multiple areas without an ability to tie all the data together.
Excel is a very powerful and flexible program, and serves an important function. Nevertheless, it is difficult to understate the drawbacks of the program when it is being utilized to transfer data from one application to another, or when it is being used pursue specific important business functions.
Here are a few actual examples of how companies – large and small – are using Excel, which is a problem:
- Staff Members Track Open Accounts on Excel: Many companies export their aging reports each week into an Excel document, and then the staff will follow up on all of these accounts and track their progress in Excel. They will make decisions about who to call and who to collect from, based on an Excel listing. They will track their success based on the Excel list.
- Track lien deadlines with Excel: Every time I speak to a company about lien deadlines, they always ask for a “cheat sheet” showing all of the lien deadlines. I sometimes remind them that we spent 5+ years building a database with tens of thousands of cross-referencing entries when mapping out the lien laws, and that therefore, there is no such thing as a “cheat sheet.” Nevertheless, many credit, collection, and financial professionals “track” their lien deadlines and lien requirements using some Excel form.
- Export and Send Data through Excel: When we ask customers to send us their data, they have the option of integrating their system to ours through an API. Nevertheless, many companies opt to “export” their data to Excel and send that spreadsheet along. Sometimes, unfortunately, they even prepare their Excel sheets manually and send those along. There are many problems and inefficiencies with this, and the investment from IT to connect to an API is quite low.
Understanding The Cloud Is Required
The “cloud” has unfortunately become a buzzword in industries across the world. When I review Mr. Benham’s “Tech Forecast” as a whole, it is evident that “cloud based” technologies and all of their benefits are rapidly starting to saturate the construction industry. Despite this, however, the reliance on Excel is still really high, and there still seems to be a lot of confusion about what the cloud is. Even when cloud based technologies are adopted, in other words, some of the core benefits of the cloud technologies are ignored. Why is this?
I think the reason is because the term “cloud” has become a bit meaningless. No one appears to really understand it.
[lts_blockquote align=”right”]Companies must strive to avail themselves of the benefits when they do ultimately adopt a cloud platform. [/lts_blockquote]Searching for the term cloud in a web browser will return detailed technical information about how cloud-based software works. However, companies must understand what benefits come attached to cloud-based technology. Then, in understanding these benefits, companies must strive to avail themselves of the benefits when they do ultimately adopt a cloud platform.
Here are the high level benefits:
- Fire your traditional IT workers. If they are still talking about Microsoft certification, server rooms, etc. – it’s time. You don’t need them anymore. Software companies are your new IT workers. They manage the servers, the software updates, and usually, technical support. All you need to do is start your company and go to their website. This is a very large benefit.
- Connect Your Products Through APIs, Web Services, and More: Don’t ever do double data entry again. Also, don’t export data from one system and import it into another. Forget how to use the extensions .csv and .xls. Your systems can very easily talk to one another when you use cloud based technologies. Data will flow between applications without much technical effort at all. Invest in that technical effort.
- Log in from any device, anywhere: You don’t need VPNs, server access, certain operating systems, or anything like that. All you need is the internet. If you have the internet and that’s all, and you can’t access your systems, something is wrong.
- Pretty Things: Stop using ugly software. It’s hurting your ability to do things correctly. Web based technologies are pretty
Cloud Platform To Get Control Over Security and Lien Rights
While lien may be a four-letter word in the construction industry, it’s something that is not going away. It’s been a core component of our nation’s construction landscape for over 200 years. From the perspective of subcontractors, specialty contractors, and suppliers, maintaining control over these lien and security rights can be extraordinarily important, and difficult.
The laws governing mechanics lien and bond claim rights are complex, and change frequently. Those who furnish materials or labor across multiple states and multiple project types will face significantly different requirements on each job. Traditionally, these variables have been managed by working with service providers to handle each variance on a project-by-project basis. And insofar as lien rights are concerned, companies would either pay a vendor to track their rights manually, or would keep track of their lien rights using an Excel document.
This is an area where cloud-based technology can help.
zlien is a cloud-based platform that can completely automate the security and lien compliance process. Using JBKnowledge’s presentation about cloud technology to frame this discussion, here is how zlien works:
- Cloud Based: The technology is cloud-based, meaning that companies don’t need to install anything to use the platform, and never need to update it. Anyone can log in at any point from any place, and will always be able to use the up-to-date platform. When a system made is changed everyone will have access to it immediately. When a legal change is made, again, everyone has access to it immediately.
- Integrate With Your Data: Since zlien is cloud-based, it can integrate with your company’s existing data through web services or an API.
- Track Lien Deadlines and Requirements Automatically: Finally, ditch excel. Your lien and security requirements will be figured out automatically, live with your data.