Despite the steady increase in starts and new home sales since 2011 and the burgeoning millennial market for new residential construction, it’s too early to predict the health of the market in 2019. But, the affordability and availability of more powerful and better integrated residential construction enterprise-resource management software solutions level the playing field for smaller builders to compete against larger players.
Integration, Alignment, and Access
M&A (merger and acquisition) activity in homebuilding software has also contributed to an acceleration of technological advancement in ERP (enterprise-resource planning) software systems. Smaller builders now have access to solutions that integrate all business functions, processes, and people across a single database. Accounting, estimating, reporting, land development, purchasing, sales office, design center, scheduling, and customer service are now all aligned. Information can be entered just once and it flows through these systems.
The combination of application integration with cloud-based access is particularly potent. This enables sales personnel, purchasing agents, field personnel, superintendents, and accounting professionals to work with the same data, in realtime. Even more important, all personnel and business partners can access authorized systems and data wherever they are, from any internet-connected device. No one is chained to their desks, or even hostage to an office.
Partnerships, Cohesion, and Competitive Advantage
This really gets to the root of the smaller, local builder success story. In today’s hyper-competitive industry landscape, builders need to work closely with their trade partners without doing more work. Advanced ERP systems keep everyone on the same page, working in unison. This makes the trade partners more efficient, strengthening these key relationships and making retention a much easier proposition. Looking back just ten years ago, the technology disparity between larger and smaller builders made trade relationships a huge competitive advantage for the big players. With today’s affordable ERP solutions, that advantage has been nullified.
Stronger Customer Pipelines, Better Customer Experience
ERP solutions have steadily improved internal builder business processes for years. Now, CRM (customer-relationship management) solutions that fully integrate with other business applications in ERP systems are enabling builders to take the next proactive marketing step. Today, builders can easily capture, nurture, and convert prospects to buyers. ECi Software Solutions’ latest acquisition of Lasso, the industry-leading CRM solution is a perfect example.
In conjunction with CRM, digital marketing solutions have enabled homebuilders to reach and inspire new prospects with visually enticing representations of their new home options. For example, an “equity refugee” in New Jersey can experience 3D virtual tours of a Dallas builder’s models online, and can even virtually build a home out with an online design center. The combination of CRM and digital marketing tools improves top-of-the-funnel marketing efficiency for builders and the experience for customers. A better experience, more cost-effectively delivered, means SMBs (small-to-medium-sized businesses) can convert more prospects into buyers and more buyers into happy homeowners.
Technology Positions Smaller Builders for Sustained Success
The more efficient and profitable a builder becomes through investments in technology, the better they will be able to withstand labor and material shortages, as well as housing market downturns. Economists have generally been predicting slow, but steady growth in the industry for at least the next two years, but larger economic factors could cause some volatility. Even as we have seen some hints of turbulence lately, smaller regional and local builders continue to gain marketshare in many markets as larger public builders recede slightly. It’s hard to overestimate the impact that powerful, integrated ERP solutions have had in this shift. Our industry has a more level playing field than just about any other—and that’s a healthy development.
Because smaller builders have local leadership, they already understand their markets more intimately than their bigger rivals. Add to that technology that provides business actionable business intelligence and software partners that provide valuable consultative experience from their own prior careers in homebuilding, and the picture becomes crystal clear. ERP technology is driving the industry, and it’s driving balance within the industry, which benefits customers.
Scott Duman is the president of the Residential Home Construction Group, Building and Construction Division at ECi Software Solutions.