The ERP Takes A Wrecking Ball To Construction Workflow Friction

As the single source of truth within the back office, the enterprise resource planning (ERP) system continues to play a vital role across many functions, particularly those involving finance and payments. In the construction industry, the ERP is especially valuable considering the complex network of collaborators, and subsequent high volume of data, involved in a single project.

But the ERP is not necessarily always ready to manage that data in the way construction firms need it to, according to Computer Guidance Corporation Vice President Victoria Satran. While the sector has been pushing towards back-office modernization for some time, the pandemic has intensified the need for technologies that can more eloquently manage project data in order to, among other functions, get vendors, business partners and employees paid.

Speaking with PYMNTS, Satran discussed the evolving role of the ERP in the construction industry as not only the single source of truth, but as a cornerstone of the back office that can make data more intelligent and actionable.

Gathering The Data

From managing subcontractors to coordinating with insurance firms to paying employees, data sits at the heart of every construction project.

“I don’t think there is one construction project that, from the beginning to the end, is the same as another,” said Satran. “There is data needed from the moment of estimating it out, all the way through to paying everyone and building it out.”

With so many moving parts, there must be a streamlined and centralized mechanism for managing that data. Historically, that’s been the ERP, but in the age of enterprise modernization, expectations for how ERP systems actually manage key information is on the rise.

According to Satran, there are three main roles the ERP plays for construction firms today. The first is to actually house data in a digital format, which is vital considering the high volumes of paper involved in construction projects, especially in workflows like invoice processing and payments, as well as payroll. Centralizing this information creates a source of truth for everyone both within and outside of the enterprise.

“This allows very innovative and comprehensive content management systems to exist, so people in the field, or in the office, or outside of the company like subcontractors, legal organizations and insurance companies, can access it,” explained Satran.

The second, she noted, is to take that digital data and make it intelligent. And the third is to enable that digital, intelligent data to promote automation. The opportunity for ERPs in the construction industry to facilitate streamlined and automated workflows continues to grow thanks to an increasing number of third-party FinTech solutions designed for the industry. With data integration between FinTech platforms and the ERP, the chance for that central source of truth to continually drive connectivity throughout the enterprise grows.

Optimizing Workflows

Facilitating payments is one of the most important functions of the ERP in the construction industry.

“At the end of the day, invoice payments are a huge component of the construction process,” said Satran. “No one does the work until they get paid. Invoices have to be estimated and accounted for. It falls into the entire construction project, from the beginning all the way through paying your vendors, employees and subcontractors — and having this done on time.”

When organizations lack digital, automated solutions — or lack an ERP that can consolidate and optimize data across the enterprise — facilitating invoice payments can be a headache thanks to the high volume of paper and documents involved, as well as the added complexities of processes like auditing and standardization.

While the ERP is commonplace within construction firms, it is not always able to facilitate the kind of data consolidation, integration, digitization and automation required to enable seamless coordination in processes like invoice payments and payroll. According to Satran, in order for the ERP to step up to this level of performance, it must connect the right people to the right data.

“The most important role an ERP can play is to make information available to everybody within the enterprise, and to make that information available in simple clicks,” she said. “Instead of going into multiple apps, opening up several browsers, and going into different mobile devices, it should be totally transparent, a simple way to access data.”

Achieving this is not an easy feat, but the construction industry has recently dug its heels deeper into efforts to optimize ERP functionality as a result of the pandemic. Satran noted that the pandemic has reinforced pre-existing trends within the sector, including the migration of the ERP into the cloud to support a remote workforce as well as the level of data integration and sharing required to optimize workflows.

As a result, the ERP is no longer merely a single source of truth within construction enterprises. Thanks to accelerated digitization efforts, organizations are now turning to their ERPs to operate as the central wheelhouse that automates workflows through more intelligent, accessible data.