From static reports to real time views - Acumatica's Joel Hoffman on why the construction industry is modernizing its ERP approach

Jon Reed Profile picture for user jreed December 12, 2023
Summary:
The construction industry is no longer a technology laggard. As Acumatica's Joel Hoffman explained, there's no longer a choice - if you want to bring in younger talent, you need to run on modern software. But what about functionality requirements? Is there a change in buyer mindsets?

Joel Hoffman of Acumatica
(Joel Hoffman of Acumatica)

I've been documenting Acumatica's Construction Edition since its early days - I published my first early adopter use case in 2019.

Why? Because I believe the future of cloud ERP is vertical.  Green-screen, industry-data-silos running alongside ERP aren't competitive anymore. Oh, and have fun running AI on top of that.

Companies can cling to green screens for good reasons. Sometimes, modern industry clouds simply don't have the depth of functionality a particular company might require. But that's changing - and the reasons for moving off legacy industry software increase by the day.

Add talent to that list. If you need to attract a new generation of workers, don't plop them in front of a desk, staring at a Windows 7 type GUI.

Attracting young talent, and the problem of old school construction software

But how is this playing out for Acumatica's customers? In the run up to Acumatica Summit 2024 in January, I posed that question to Acumatica's Joel Hoffman, Director of Product Management (Construction, Field Service and Property Management). He said:

I've been with Acumatica a little over four and a half years now... Coming to Acumatica really was a refresher for me in the construction space overall. Because if you think of the legacy products and what we had [in construction], a lot of things were closed off. Looking at different things that you've talked about with AI and in general, how you can get into different applications - that really was not the world of construction software.

If you care about recruiting construction industry talent, this matters. Hoffman:

What I get excited about is seeing how construction is evolving into the use of technology. Even when you think back a decade ago, construction was considered a laggard in technology adoption. But now companies are coming in. You get turnover from inside the business; younger folks are coming in, and now they anticipate: 'What do you mean I can't use my phone or my iPad for something,' right?

But it's not just modernizing the software - it's the impact of a data platform. Hoffman explains:

That's where I see my team playing a role: how can we take that information that companies are using, because it's one thing to still be the repository. But now, it's: how do we take that and leverage the data? How can people get notified when things are going wrong? What can we do to predict where items might be going off target?

For modern ERP to be relevant to construction companies, you must address their pain points. Higher interest rates and slowdowns in commercial real estate have not made it easy on this industry. What is Hoffman seeing now?

Part of the challenge, looking at some economic surveys that have come out, whether it's a supply chain and material issue and being able to manage that aspect. I think that's come back - it's not easy, but it's gone down.

The worker shortage is still something overall for construction. Skilled labor is something everybody tells me about. They ask, "How do we deal with that?' If they can introduce technology into their organization, it might help with that shortage - but also maintain and keep their employees.

The challenge a lot of companies have is they train the employees; they get them to a certain level. And then someone down the street might offer a couple more dollars. So now, how do you maintain it? It's expensive to train that person for a while. Acumatica can can help from the technology side, just showing workers that 'Yeah, we are a forward thinking company, from a technology standpoint.'

When it comes to construction software, solving problems on tight margins is another customer priority. Managing change orders is a top issue:

As you mentioned, construction is historically slim or smaller profit margins than what you see. So how can Acumatica help - whether it's making sure that bills are going out on time, or payments are made, or from a construction view, the change order process is a big monetary issue. Change orders tend to be a little more profitable than original.

That's where you see our project management identify an issue out in the field, take a picture of it, send it back to the office, get some kind of a change order impact with that, and now be able to keep that workflow - because from a construction side, it's always that slim margin. That's a slippery slope. How can we manage margin and cash flow? I've got to make sure I've got the cash coming in, and when it's going out - so we need to help manage those areas.

My take - are buyers' views on industry ERP changing?

Every bi-annual Acumatica release contains a slew of new functionality for Acumatica's vertical editions. Acumatica's R2 release from October 2023 was no exception, with Acumatica's Construction Edition getting new features such as change order enhancements, and "side panels added to project and construction forms that provide additional detail and drill-down capabilities."

Compared to vendors announcing gen AI chatbots all over the place, these might not seem like sexy enhancements. But as I've discussed with Acumatica's Ali Jani, a big part of customer-centric ERP is delivering on the nitty gritty of industry requirements.

B2B software buyers are changing. Functionality comparison grids used to be the stone tablets. But I talk to more customers who focus on the relationship with the vendor, and the cadence of their upcoming releases. Even if cloud vendor B doesn't have the depth of functionality as on-prem vendor A, if cloud vendor B has a track record of adding new functionality based on customer input, isn't that a crucial consideration? Especially with so many industries in flux, or pushing into new subscription models, etc.?

Obviously, with each release, Acumatica has gradually closed the gap with old school, on-prem construction vendors. But isn't there a bigger change in play? Hoffman says it's about a mindset change. It's about moving away from static reports, into a real-time view of your organization:

How do we get people to shift their idea of 'I need to push a button to generate a report,' to say, 'Well, I'll take that, but I have a dashboard with that information in real time.' It's much easier, strategically planning, to take information that's current - as opposed to waiting for a report, which might be outdated as soon as somebody looks  at it?

Part of our story, or our solution, is to think outside or think above what you did before. You're not just making a move from one ERP to another. How do you take advantage of that? It's not just running your old application in the cloud - and I like that story as well.

Then there is Acumatica's differentiated pricing, which I always say they should make more noise about. Not being tied to seat licenses is especially potent in high turnover industries, or industries with seasonal workforces. Hoffman:

Once they understand it, they're like, 'Oh, this is much better than 'I have so many named users,' or 'I have to buy a payable user or a general ledger user' or whatever.

Since Acumatica launched its cloud ERP Construction Edition, other modern construction ERP solutions have entered the market. That's a good sign - this improves customer choice while validating the construction market. Verticals have micro-vertical needs across regions; there is room for several strong players with distinct offerings.

Hoffman says one sign of maturity is that more Acumatica customers are combining construction with other Acumatica industry components, such as manufacturing or distribution. He expects these hybrid deployments to gain momentum, as companies bring new business requirements onto the Acumatica platform.

I personally found it refreshing not to dwell on AI in this discussion. Yes, customers expect Acumatica to deliver AI - but in the context of (increasingly) automated workflows. I'm sure we'll hear much more about that shortly, when the Acumatica Summit kicks off in January.

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