Jun 2005


By Bill Allen

This is the 15th article in the Tech Talk series.

For some time now, consultants and IT vendors have sung the praises of integrated, automated back-office processes and systems. Not long ago, this meant that estimates could produce purchase orders; purchase orders could update accounts payable functions; and loan draws, customer deposits, and accounts payable systems could update the general ledger.

The benefits are obvious; the payment approval process, in particular, becomes much more efficient. For example:
The superintendent inspects work done in the field and approves it.
This triggers automatic approval of the electronic purchase order, which is set up to be invoiced and paid.
At the same time, the task is recorded as complete in the construction schedule, and all dependent tasks are then scheduled. Exceptional costs are managed through variances, as are schedule changes and customer additions to contracts.

The next natural move is to integrate automated front-office processes and systems. In this scenario, production schedule milestones automatically update the payment approval process, while sales office systems automatically update the sales and closing backlog and the customer care process. Handheld computers replace whiteboards, and a computerized database replaces file cards containing information about prospects and buyers.

Builders have struggled mightily to get to the point above. Integrated systems and software require everyone in the company to adopt a common set of procedures. Tasks must be standardized so that data used by a variety of systems is perpetually updated-not duplicated or corrupted, as is often the case with manual systems.

To a small-volume builder, just the process of synchronizing a Blackberry® to Microsoft Outlook® is a big job, but has obvious benefits. Integrating every process of a home building operation is a daunting responsibility even for a mid-size builder, but consider how many redundant steps the payment approval process described above saves.

Process and systems integration does not stop there. The next dimension is to go outside the office and allow your automated systems to communicate with trade contractors, vendors, and customers. Many builders are now opening up their Web sites to these "outside parties" with password-protected portals. The Web site is no longer an electronic billboard. It has become part or an extension of the virtual private network.

This is not simply Bill Gates dictating what the future will be. The whole point of process integration is accomplishing more in fewer steps, with less paper and redundancy than ever before. It's also about service to the customer. If you don't embrace this evolution, your vendors and customers will demand it.

Here are some pointers on making process and systems integration work for your home building company:

* Examine your current processes. Determine how external users (e.g., trade contractors, suppliers, homeowners, etc.) could benefit from integrated processes. Just because you save time and redundancy doesn't mean youve made life easier for your external customer.
* Determine which action steps in your processes affect which internal users (or employees, in this case). Figure out the point of control (the point at which a human decision or intervention is needed; e.g., approving a purchase order, checking a bid list to make sure it's complete, etc.) in each action step.
* Explain to your staff how automated processes work and the benefits of automating yours. Get your employees' buy-in (and be sure to listen to their concerns) before converting manual processes to automated ones.
* Similarly, explain to your external users how you plan to automate the manual processes they participate in. Ask them if they agree that integrated processes will get the job done better. Give them training and guidance to use automated processes properly and effectively.
* Evaluate whether or not you still need paper. Could your integrated process work just as well-or possibly even better-if you used electronic documents, databases, and records?,br> * If you incorporate a feature into your company Web site (such as allowing trades to submit bids online via password-protected portals), figure out how the information collected will automatically mesh with your integrated back-office system. If you have to re-enter the bids into your estimating system, you've put the cart ahead of the horse.
* There's only so much business you can transact via Web sites, e-mail, and other electronic communications. Identify those aspects of your processes to be automated that require "high touch" (that is, interpersonal) communications to ensure that the end product meets the customer's expectations. Examples include vendor purchasing negotiations and customer selections. Make sure automated processes include prompts as well as a way for users to get in touch with you (or vice versa) for those all-important face-to-face conversations.
* How will you handle an exception to the planned cycle (e.g., an emergency customer service call, a schedule delay, or a purchasing variance?). How will such an exception affect other integrated processes and systems?
* Test your automated, integrated systems in-house before you make them available to your external users. Don't blow the cover until you are ready and able to. This applies to any new system initiative, but especially to something you are asking an external user to interact with.
* Don't be afraid to abort a process that is not delivering expected results. Have a backup plan in place, and know what procedure to return to. My deceased father was a pioneer airline pilot. Another pilot once told him the greatest maneuver in flying was the 180-degree turn.
The exciting part of integrating systems and processes between the field, front- and back-office functions, and end users is that smaller builders can compete with larger builders using the same arsenal of speed and services on a level playing field. So keep up the grass drills, wind sprints, and be agile. It's a new world out there!

Bill Allen is a longtime contributor to NAHB's Business Management & Information Technology Committee and is president of W.A. Allen Consulting ( The Redmond, Wash., company provides information technology consulting services and process management assistance to the home building industry. Contact Bill at 425-885-4489 or via e-mail at

For more information about this item, please contact Natalie Holmes at 800-368-5242 x8461 or via e-mail at

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