Specialty Contractor

IT Strategic Planning

A large Michigan based interior contractor performs tenant finish work involving all aspects of walls, floors, and ceilings. Their work has grown to also encompass CM work for several large clients. From a single office the company has opened two small branch offices north and east of its headquarters. One of the offices employs union labor and the other two use non-union labor.

The Situation

The company felt it had lost control of technology. One of the remote offices had a small network and was using a multiplexer to link a few users over a dedicated phone line to the central computer. The other offices, including the headquarters, had a few PCs but no network. Modules on the central system were not being used. Users had not been well trained on the system and had certain beliefs about its workings that were not necessarily well founded. Additional software had been purchased and was being used to various extents, though none well. Management felt that before it spent any more money upgrading or replacing hardware or software a complete review was needed and a plan put in place so that future expenditures would be moving toward a well-conceived system goal.

The Challenge

BCG had conducted a planning workshop with key management personnel and conducted interviews with employees to determine information system needs. At the end of the interviews it was clear that the company faced a significant decision. Major changes were needed to the hardware infrastructure if the company was to consider any new software. Other short-term software initiatives were also rather urgent. Further, there was a perception by the users that the core accounting software was inadequate. Replacement of all systems was warranted and the potential for improvement was high; however, the total cost of all of the initiatives was more than the company could afford all at once.

Solution

BCG conducted a second planning workshop with key management personnel, presenting them with the facts and assisting them in working through the alternatives and prioritizing the options. As a result, the decision was made to install an entirely new infrastructure and to delay software selection for one to two years. BCG also assisted the client in planning the implementation of other short-term initiatives to produce a healthy return on a small investment. In the course of planning, BCG also discovered some procedural issues and helped improve workflow for purchasing, receiving, and invoice processing.

Result

The client has upgraded to the entire hardware infrastructure with a Citrix Winframe core and a network to accommodate home office and remote users without upgrading the desktops. As a result of specific training and upgrades, there has been a significant increase in the use of the existing system. AP invoice processing has been cut from several weeks to a few days.

Lessons Learned

  • If you can’t afford to do everything on your list, it is important to develop the list and let your user community help prioritize.
  • New procedures can sometimes result in significant improvements of old systems.

An electrical contractor located in the West with seven regional offices producing over $200 million in annual revenue. The company performs both commercial and industrial services for their private and public clients.

The Situation

The company was growing quickly. They were decentralized with remote offices that operated very autonomously and were not tied into the current system. The current accounting system was an older version of a construction accounting software product. It was no longer being supported by the vendor and had not been updated in a number of years. It also lacked Inventory, Human Resources, Equipment Accounting, and Purchasing, all applications important to this company.

The Challenge

Aside from this company being large, complex, and decentralized, most of their procedures were based on older systems. It was also necessary to get a number of functional areas of the company to compromise slightly in order to get them all operating on an integrated system.

Solution

BCG kicked off a standard software selection process with a planning session that included several top managers from throughout the company. A vision of the ideal information system was developed and then specific objectives were set. From there the selection process was started in earnest and included visits to two of the six remote offices. The site visits were to identify unique requirements at the remote offices as well as to begin to develop buy-in to the system from staff at these offices.

Result

The company selected a software product from a smaller software developer (40 users in total) that focused on specialty contractors. The product was also more tailorable, which means it could be adapted as the company grew and changed. The software included a sophisticated Requisition and Purchasing application, which the purchasing department needed. Finally, the product would allow for certain functions to be pulled away from the central server, placed on remote workstations, and run from there with the option to connect and move data back and forth. This was a unique capability that really appealed to this company with their remote offices.

Lessons Learned

  • Involving staff from remote operations in the selection process is important even when the functions will not be any different. It ensures buy-in.
  • For larger organizations, many of the support functions are very sophisticated and must be considered carefully in the evaluation.
  • Implementation planning is critical to establishing the implementation strategy and schedule as well as for establishing agreeable expectations for both the vendor and the contractor.

This fast growing consolidator based in Texas already had 14 utility and electrical transmission companies in place by the time they contacted BCG, and they were adding a company or two each month.

The Situation

Management had significant plans for growth and was becoming increasingly concerned about the variety of systems that existed in all their business units. Further, some of these companies had Year 2000 issues or were on systems that would be out of support by the end of 1999.

The Challenge

The corporate office had not yet developed a large IT staff to deal with these problems. In fact, no one was dealing with them. Consequently, the business units were on their own to resolve these problems. Some were faring well while others were floundering. Management was also very involved in the acquisition process and did not want to dedicate too much time to uncover issues they were not in a position to resolve.

Solution

BCG performed two surveys of the business units to determine the systems in place at each business unit, how satisfied they were with it, to what extent they were prepared for the Year 2000 and other related IT questions. A committee was formed from representatives of the business units as well as two members of the corporate management team. The results were presented to the committee and an action plan prepared. The primary strategy recommended moving to some form of standardization but gradually so as not to take anything away from the business units. BCG was to address the high priority business units first and then gradually move the other business units toward the standard.

Result

Management was made aware of the IT situation and issues that existed in their new business units. The committee was empowered to direct our efforts until a CIO could be identified and put in place. The organizations that had Year 2000 compliance issues have been substantially addressed. A committee and a manager are now in place to direct the overall corporate IT direction.

Lessons Learned

  • Standardization is beneficial in many ways but the individual needs of separate business units should be considered and addressed.
  • Survey methodology is a good way to collect and assimilate a large amount of information in a short time at a low cost. The surveys should be supported with a few confirming interviews in person.

Software Selection

This is a $15 million contractor in upstate New York that was starting up a service business with clients in a seven-state area. Having no service experience, the company was moving into a discipline related to its core environmental engineering and construction work.

The Situation

The service contractor was part of an engineering firm that was using a good system that was not well suited to the needs of a service contractor. There were no facilities in the software for handling service calls, tracking and scheduling work, or handling inventory. Nonetheless, there was significant pressure to continue using the core system.

The Challenge

The company was relatively new to the service business and had little understanding of the capabilities of service management software. Also, procedures were not well established, so it was necessary to develop procedures and define software requirements simultaneously.

Solution

BCG began the project as a system selection. The client anticipated building procedures around the new software. However, as BCG and the client got underway, it became apparent that the workflow needed to be evaluated and revised separately before software could be chosen. BCG used Visio charting software to document existing and desired processes as well as to document system requirements. Once this brief exercise was complete, the organization moved ahead with the selection more confidently. The software they selected worked with the processes as designed with only minor adjustments. Given BCG’s experience with the available software, the process designed did not force them to develop custom applications to manage their business.

Result

The client acquired a client/server solution from a recognized provider of service management software that also included job cost accounting, inventory and other systems they needed. Implementation included refinement of processes to fully utilize the new systems. The client implemented the software with their new procedures.

Lessons Learned

  • Selecting a system is more difficult if your procedures are not well defined.
  • Developing procedures around a system is effective if you have selected the correct system.
  • Sometimes a related business may need unique software if they have unique needs.
  • It is possible to run the software from different vendors on a single platform.

A mechanical engineering and contracting firm located in a suburb of a large Midwestern city. The company did approximately $15 million per year in engineering services, contracting, and service primarily for their commercial and institutional customers.

The Situation

The company had a stand-alone service system as well as a relatively new version of a construction accounting system. The two, however, were not integrated and the accounting system was not implemented at all. After a modest amount of training, someone within the company decided it was too much work to implement and more or less gave up. The staff in that department was preparing job cost reports and billings manually. They also lacked any kind of integrated subcontract management or change order management.

The Challenge

With all of these stand-alone systems, financial statement preparation was difficult and inefficient. Nearly all information was in printed form and only produced on a monthly basis. Adding to the challenges, the president was not aware of the situation he had and, for that reason, did not know it was a significant issue that needed to be addressed. When a new VP arrived, he recognized the situation and called in BCG.

Solution

After a series of interviews with the staff, BCG quickly realized that the existing system, while functioning moderately well for one of the divisions, was wholly inadequate for the other divisions and was not integrated with service. BCG also suspected that the package that had been purchased, which had an integrated service module, was in fact a good fit and simply needed to be implemented. BCG asked the vendor to return to the client office and demonstrate the software to a group of people from service, accounting, and operations. It was quickly determined that the new version of this software would serve the organization very well.

Result

Just prior to implementation of the new version of the system, the company was purchased by a large supplier and that company’s systems were put in place. In spite of that, the organization went into the merger with a much better understanding of how their systems should be working.

Lessons Learned

  • Sometimes the software purchased is satisfactory and it simply needs to be implemented better.
  • Integrated systems are important for information access and efficiency.
  • Senior management must become more aware of information systems and their role in the organization even if the individuals are not technically oriented.
  • Software vendors should be much more attentive to their customers so they are aware of who is struggling with their product and how they can help.

This large underground utility contractor based in Northern California provides utility construction services for their public and private customers in the California and Nevada marketplace. They had recently become part of a larger organization when purchased by a consolidator.

The Situation

The company’s system was based on an older version of a popular construction software program that was not yet ready for Year 2000. One of the company’s sister companies had made the upgrade to this newer Y2K version and had a horrible experience, including a crashed disk drive and lost data. They were reluctant to go through the same experience and asked BCG to assist them in evaluating alternative products in the market.

The Challenge

Operations was reluctant to give up several Job Cost and Subcontract reports designed and programmed especially for them. It was also necessary for operations and accounting to agree on certain key aspects of the new system, like whether or not they needed a Purchasing application. The team assembled to assist with the software selection was somewhat convinced they needed a tailorable software product rather than one which was more structured.

A sister company located in the same area and doing somewhat similar work was also experiencing system problems and was growing increasingly frustrated with the unstable nature of their software. They viewed the same systems that this company was considering but, while they liked the system that was chosen, may not have been able to afford or operate it on their own.

Solution

After getting demonstrations of a structured program and a more tailorable program, the company quickly realized that a tailorable program was far more maintenance than they wanted. The structured program was quite functional and provided them with a sound and efficient platform on which to build their information system.

The company also elected to purchase a larger server with additional licenses and become a service bureau for the smaller neighboring company. This made the licensing of the system for the smaller company more economical and actually saved the larger company some money as well.

Result

The company selected that product and is in the process of implementing it as of this writing. It is one of the products being considered as a standard by corporate headquarters for all business units.

Lessons Learned

  • Sometimes what you think you want isn’t really what you need.
  • Negotiate hard and be willing to meet somewhere in the middle.
  • Software license agreements are not cast in stone.
  • The service bureau approach remains viable.
  • Include a cancellation policy in the contract for software that has not been on the market for a considerable period and thoroughly tested.

A small and growing concrete and grading contractor with three divisions throughout North Carolina. The recent addition of a grading division and some very specialized grading and concrete equipment dictated that the management information systems in place needed to be upgraded to keep up with the needs of the organization.

The Situation

The company had an old accounting system that was missing certain key modules such as equipment and billing that were needed to help them grow and maintain control. Manual processes were not keeping up. A PC based equipment management system was not integrated with accounting and was only marginally adequate.

The Challenge

The company was developing its key employees into new positions of responsibility. They were still developing new procedures and finding out what was really needed to do their jobs better as the system selection was taking place. The president of the company was looking for more management information to help him control the organization as it was growing into new business areas. Some younger project managers were focusing on technology while not fully comprehending the complexity that client/server systems would bring.

Solution

BCG conducted a system selection process, assisting the client in establishing reasonable requirements to meet their growing business needs, while not overwhelming new managers with a complex implementation that would be beyond their capabilities. A host based system was selected with a path toward a conversion to client/server in the future.

Result

The client selected a flexible system with enough structure to ensure that the implementation would not be unreasonably long or arduous. After a reasonably short implementation of four months, the company has brought the system on line and is gradually eliminating the side systems, becoming more efficient and gaining control of the information.

Lessons Learned

  • Sometimes a conservative approach is better than going after the latest technology.
  • Client/server software is not right for everybody.

A small New England utility contractor has a large number of small projects and several large maintenance contracts. They own a quarry and sell materials both to themselves and outside parties. They also have a very large fleet of equipment with a maintenance department and large shop. The owners are descendents of the original founder and have been working to build the company and improve the management controls.

The Situation

The existing software, while adequate in some respects, did not meet the needs of the company as a whole. It was geared more toward a general contractor or small subcontractor and did not really fit the needs of a utility contractor, particularly one with plant sales. Much of the accounting process was conducted manually and off line, as the system did not meet all their functional needs. A separate software package was used for equipment maintenance, not integrated with accounting. Billing was manual. Scale tickets were processed manually. A stand-alone Human Resources database had been developed and implemented.

The Challenge

There were certain aspects of the core accounting system that were meeting the company’s needs. Those employees whose needs were met were loyal to the product and did not want to see changes. There was also a comprehensive, though non-integrated, equipment system in place. Each of these requirements needed to be managed to ensure a successful system selection. In addition, the quarry had been managed manually, so there was little consistency in billing procedures and the belief existed that no system could meet these needs.

Solution

BCG guided the client through a system selection that included a series of detailed interviews with personnel from each department. A system, especially developed for the highway and utility industries, was selected that would meet the needs of each of the divisions. Each group was allowed to participate in the selection presentations so that they had a part in the final selection and could approach the implementation with confidence. Though everyone compromised a little, there were improvements in the overall efficiency of the system that everyone saw.

Result

The contractor has a new system with modules that were not available in their former software system, giving them greater functionality, more automation, information on a more timely basis, and less manual effort from individuals.

Lessons Learned

  • If your business is very specialized, you may have a limited selection of vendors to choose from.
  • With an adequate selection process, you can find good software even if your needs are somewhat unique.

A large and growing ground modification contractor with 11 offices and seven companies had foreign as well as domestic business units in North and Central America. A foreign parent corporation requires specific reporting on a monthly and quarterly basis.

The Situation

The company had an older software product with inadequate support. It was one of four installations of a software product that was on a different relational database than the main system. As a result, the support had waned, as had the interest of the vendor in supporting it. A potential Y2K problem existed. There was also a significant effort needed to produce reports on a side system that required manually entering data each week, most of which already existed in the core accounting system. The Challenge A special report, relatively unique cost and revenue recognition requirements, along with a Canadian payroll meant that the vendor/product short list would be limited. Also, the fact that many of the users needed to have access to the system over a wide area network or via telephone line meant that the user interface and software architecture needed to be considered in the analysis.

Solution

BCG assisted with a system selection that included a Request for Proposal (RFP) sent to a select group of pre-qualified vendors. A host-oriented system with graphical user interface was selected and a custom report was negotiated as part of the agreement to meet the weekly reporting requirements. BCG assisted in developing the custom report specifications, negotiating the contract, and facilitating the implementation planning workshop with the vendor to ensure a successful project.

Result

The client has begun implementation of the new system. Custom report design was completed and a prototype testing approach included in the agreement revealed a flawed assumption. As a result of the approach taken, the software will be corrected prior to going live on the system.

Lessons Learned

  • Custom software is often risky. It should be avoided it if at all possible.
  • Selections run smoothly with executive participation throughout the process.
  • Effective contracts will provide a working mechanism for resolving issues before live processing.

Systems Evaluation

A specialty contractor (retaining walls and foundations) located in a small town 200 miles from a metropolitan area. The company is highly centralized, doing work throughout central and eastern Pennsylvania and Delaware.

The Situation

The company’s entire information system had been piecemealed together over the years until it reached a point when no one was satisfied with what they were getting. Several of the systems were going to run out of support from the vendor or were not prepared for the Year 2000.

The Challenge

As a smaller company they could not afford a large consulting engagement. BCG would have normally done a system selection and identified alternative vendors and resources for the company. The contractor was willing to do some of that work in order to reduce the professional fees, but the staff was not trained in information technology or traditional selection methodology.

Solution

BCG conducted a brief overview of the existing systems and then facilitated a planning session with team leaders from each of the functional areas. The teams were provided with detailed action plans with very explicit instructions about what needed to be done and what to look for. BCG remained available via phone to address specific technical or vendor-related questions throughout the process. Result The company now has a clear vision of where they need to be heading with their information systems. While they cannot afford to implement the entire vision at once, they are making progress and they are doing so in a manner consistent with their long-term objectives. In the end, all of their systems will be compatible with each other, highly functional and, to the necessary degree, interfaced with each other.

Lessons Learned

  • Even when you think you can’t afford outside help, seek a little. A small amount of direction can be of enormous value.
  • The pace of change each organization can absorb varies by company.

This $30 million-a-year commercial and industrial contractor is based in a large Midwestern city. They provide piping, boilermaker, and HVAC services to their commercial, institutional, and industrial clients.

The Situation

The company had purchased an integrated accounting, job cost, and service management software program. They received training on the application but no additional consulting for implementation. By the time BCG was called in, the client and software dealer relationship was strained. The contractor was dissatisfied with all the money they had spent relative to the value they were getting from the system.

The Challenge

The company had grown considerably in the last several years and in some respects had outgrown their accounting department. The staff they had was not able to maintain the books for what had become a more sophisticated operation. They were also not accustomed to maintaining such a broad-reaching and well-integrated system.

Unfortunately, the company did not realize that many of their procedures were going to have to change. They also did not realize that users of the system were going to have to be more disciplined in their use of the system. Finally, top management would need to hold managers accountable for results. Without that accountability, no one really needed to look at the information.

Solution

BCG created small teams or identified individuals for each of the functional areas (e.g. Job Cost, Service, Equipment, and Payroll) and assigned them the responsibility for getting their respective applications operable. BCG then documented the desired procedures and workflows and identified the perceived software gaps. Once the situation was diagnosed, BCG contacted the software developer directly and described the situation. Rather than strain relations further with the dealer, BCG thought it best to go directly to the developer and get a fresh perspective. A senior consultant was identified and brought in to work directly with the staff on software issues. An action plan format was developed for each area and was maintained throughout the project.

Result

Through additional training and some software reengineering, the staff became much more aware of what it was they had. Each team worked with the software more directly and with the consultant to set up the system properly to meet their requirements. At this point, the company is getting good job cost information and has cleaned up the out-of-balance condition. Some functions continue to struggle because of an unwillingness to change certain procedures or enforce compliance to the established procedures.

Lessons Learned

  • Companies need more than training to implement complex integrated systems.
  • Management must enforce procedures if a system is to work properly.
  • A company’s staff must grow as the company grows if they are to be effective.
  • Broader participation in the implementation of a system is better than just a few people.