The inability to complete projects on budget, the need to comply with changing government regulations, and other challenges prompt construction enterprises to adopt digital technology. According to Technavio’s 2022 Construction Software Market report, the global construction management software market is expected to grow at a CAGR of 10.14% between 2022 and 2027.
In particular, increasingly more organizations are considering implementing ERP tools for construction purposes. This type of software allows organizations to unify and automate disparate construction workflows, thus reducing manual labor, enhancing transparency, and gaining additional business benefits.
However, choosing the right ERP for a construction enterprise is not an easy task. To begin with, an organization needs to decide whether it should implement a generic ERP or if an industry-specific construction ERP would be the better option.
The article covers the main differences between generic and construction ERPs and provides some considerations on choosing between these software types. But first, it is worth discussing the definitions.
What are generic and construction ERPs?
Generic ERPs are mass-market solutions, which are purposed to serve organizations from a wide variety of industries, be it ecommerce, healthcare, or manufacturing. Most often, such software solutions are distributed by large and well-known technology vendors – Microsoft, SAP, and Acumatica, just to name a few.
In turn, construction ERPs are niche solutions built to cater to the specific needs of construction organizations. Generally, construction ERPs are created by industry experts who deeply understand the challenges and pain points typical for construction organizations.
What are the differences between generic and construction ERPs?
Although both software types allow construction organizations to automate and optimize enterprise resource planning, they have several differences that should be considered when making a particular choice. Here are some of them.
Functionality
Most often, generic ERP solutions provide all the functionality required for establishing and managing the basic enterprise resource planning cycle. For example, a typical ERP might include features like inventory management, warehouse management, accounting, CRM, and sales automation.
Therefore, speaking about functionality, is there any sense in choosing a construction industry-specific ERP over a generic one? The short answer is yes, and here is one of the reasons.
The thing is that construction ERPs are also capable of the aforementioned enterprise resource planning tasks. Moreover, they provide additional features designed specifically for the construction industry, which may make a construction ERP more valuable in practice.
Here are some examples of such construction-specific functionality that is unlikely to be found in a generic ERP:
- Field reporting
When employees keep records and generate reports in the field, they often have to do it on paper, which is both inconvenient and time-consuming. With field reporting capabilities built into an ERP, this might no longer be a problem.
With this feature, employees in the field may quickly create electronic reports using an ERP interface via their tablets, laptops, or mobile phones. Considering that an ERP provides a centralized database, these reports immediately become available to all organization’s departments, including back-office staff.
- Incident tracking
Typically, ERP solutions equipped with this feature provide users with templates allowing them to document any type of incident quickly, be it an injury, equipment failure, or else. Later, construction managers may analyze this information using built-in ERP dashboards to identify risks and adapt safety measures, thus reducing the number of incidents.
- Multi-location construction management
Projects that are related to multiple construction sites require an advanced level of communication and coordination within an organization. And here, construction ERPs with multi-location construction management may come in handy.
For example, a construction ERP may enable users to create comprehensive Gantt charts. These charts may display each project’s start and end dates, the duration of specific work activities, and other data, thus helping managers monitor the progress of multiple parallel projects via one software system.
Cost
Apparently, the cost of this or that tool, be it generic or construction-specific ERP, may vary depending on the vendor, features, subscription type, and other factors. Therefore, it is difficult to confidently say which software type would be more expensive in terms of implementation.
However, generic ERPs may sometimes be more expensive in the long run. As we have already noted, these software solutions provide basic functionality and workflows, which may not be enough to cover all critical aspects of a construction business.
So, in addition to license or subscription fees, an organization may also have to allocate resources for ERP customization and maintenance. In turn, construction ERPs may require less customization since they were initially created for the needs of construction companies.
User adoption
Of course, this parameter may also vary depending on various factors – solution design, UI, and many others. Therefore, we cannot say which type of ERP software would be certainly better than another in terms of user adoption. However, there are some considerations why a construction ERP may still be a winner here.
One is that such solutions may provide industry-specific training materials and courses created by construction experts. These materials also contain terminology that is used in the industry. This way, a construction ERP may be more accessible regarding employee education, resulting in accelerated user onboarding and adoption.
How to choose between a generic and a construction ERP?
Both generic and construction ERPs may benefit businesses since they allow organizations to automate many aspects of enterprise resource planning. However, in most cases, we would recommend considering an industry-specific ERP, as this software is tailored to the needs of a construction business.
However, it is essential to note that adopting an industry-specific ERP still can not be considered a one-fits-it-all solution. After all, a turnkey construction ERP provides standardized functionality for all organizations in the niche, meaning it may fail to solve all the pain points of a particular construction business.
In this context, there may be a more promising approach to ERP adoption – developing a custom construction ERP. Such software is built from scratch based on a particular company’s needs, requirements, and workflows. However, custom software should not be considered a silver bullet either, as the development process itself is complex and challenging.
Ideally, we would recommend construction organizations consider consulting with ERP experts before making the final decision. The experts may analyze a specific business case and help an organization define the solution that would best suit its needs.
Final thoughts
An ERP system has become an essential tool in the tech stack of any growing construction enterprise. After all, ERP software helps automate and manage various aspects of the construction business, resulting in enhanced operational effectiveness and, consequently, competitiveness.
However, considering ERP adoption, an organization may face a difficult choice – implementing a generic and multipurpose ERP or choosing an industry-specific construction solution. At Itransition, we believe the second option may be better in many cases.
However, enterprises may gain more business advantages if they consider developing a construction ERP from scratch. But this option is also the most difficult one, so we would recommend consulting with ERP experts before making the final decision.