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June 14, 2010
Business of Building
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Business of Building
Technology Trends for the Next Decade

By Craig Schweikart

Technology trendsInto the next decade the role technology will play in a builder’s operation will become increasingly important. In the past, builders have typically been slow to adopt and use technology. Often they have avoided cutting edge or leading technological advancements. The three leading reasons seem to be:

  1. Cost of adoption;
  2. Understanding and applying new technology; and
  3. The reality that a failed initiative can severely impact a builder’s business.

Cost of adoption will continue to be an obstacle for at least the next couple of years. The constricted financial markets, combined with the economic reality of the housing market, will hamper the ability to find funding for technology initiatives. However, many of the most essential technological advancements for builders have initial costs that are offset by the savings the upgrade produces. In other words, the builder can actually save money by investing in technology. Many technology providers are working hard to reduce the builder’s initial cost or capital requirement, and they offer solutions that require little hardware and less expensive infrastructure. As a result, the cost of adopting better and necessary technology is lower.

Understanding and applying new technology has long been an issue in our industry. For the longest time, the builder has made the argument, “We just don’t do it that way.” Into this next decade this will no longer be an acceptable perspective. The marketplace, both buyers and trades alike, will demand better. There has never been a greater need for builders to change the way they use technology within their organization. Economic realities are forcing everyone to do more with less. Technology advancements represent a way in which a builder can successfully and profitably make changes without adding people to their organization.

Failed initiatives have always plagued builders. I do not know a single builder who has not experienced or heard the horror stories associated with technology gone bad. As we move into the next decade, the good news is that we do not need new technologies as much as we need proven technologies. As proven technologies are applied to our industry, we will see a reduction in the number of horror stories and an increase in the number of success stories.

As software providers and partners continue to help us by lowering initial cost of adoption, applying proven technology tools will result in greater success in responding to the marketplace, and will make the specific technologies easier to adopt.

Demands of the next decade

Many builders have spent their energies and efforts to survive the rigors of this downturn, that few have paid attention to the huge changes taking place in the industry. The changing marketplace is demanding and we, as builders, must change to keep pace. We are constantly faced with:

  • Demands on our websites;
  • Demands for better and streamlined communication;
  • Demands on our sales process;
  • Demands of our business relationships;
  • Demands of advancing technology (such as Facebook and Twitter).

The first thing we must do is recognize these demands as being very real. The builder who responds best to these demands will be in the best position to dominate, as the market recovers. Fundamentally, a builder needs to focus on two broad technology areas – the Web site and the business software (accounting, operations, and accessible information.)

These are the same familiar areas we have always looked to for better technology, but now the specific focus is better defined. The next decade will move the Web site to the forefront of the builder’s technology plan, and will require the most attention. The business software will need to become more nimble and drive information to and from the Web site.

Website

The website of successful builders will be the cornerstone of their sales and marketing efforts, while becoming their operations and communications engine. Currently more than 70% of all new home sales include the builders Web site as part of the buyer’s decision process. One sales and marketing consultant suggests that any person visiting a community or visiting a home for sale, should be considered a return visitor because their initial visit was to the Web site.

As with most technology products, the builder has the choice of building or buying merchandise. When a builder makes the choice to build a solution, they choose to combine internal and external resources to pull all sorts of information together into one cohesive solution. This is no small task. It now becomes the builder’s responsibility to provide the industry knowledge and process expertise. They must then transfer this knowledge to the technology provider. It is no wonder why builders are slow to adopt technology – all of this is very hard to do.

If you choose to build your site, make sure you partner up with a Web developer who will sit down with you to understand your business. Once you have selected your developer you can leverage their expertise. Look for Web developers experienced in working with builders and with adjacent industries, such as the real estate and broker marketplace. Your Web developer should also have extensive knowledge with proven success in website optimization.

Ultimately, what you are looking for is the best, least expensive alternative available. There are Web solution providers who are focused on working with builders and they should be your first source for new Web solutions. Builders need to recognize that realtor and broker websites are ahead of most new home sales sites. A strong Web site must help you attract and nurture prospective buyers. Spend time looking at broker and Agent Web sites, since the leading competition for new home sales continues to be in the sale of existing (used) homes.

From Website to Web-Presence

Your new Web presence for the next decade must:

  • Be a marketing tool with focused and effective Search Engine
  • Optimization (SEO);
  • Attract and cultivate Web visitors (leads);
  • Pass leads to an automated follow-up system;
  • Involve and engage prospective buyers with stimulating content;
  • Contain content that is easy to maintain and modify;
  • Offer real-time information to prospects, buyers, and homeowners;
  • Become the single source of information to all stakeholders;
  • Provide communication portals to trades and buyers;
  • Be driven by industry knowledgeable professionals;
  • Be nimble enough to adapt to the changing marketplace.

In the next decade, you will see great benefit as you change from a traditional Web site to an electronic communication engine. Your prospects and buyers will at least expect, though more likely demand, these changes from you. If you don’t have what they want, they will go elsewhere. As Chuck Shinn is quoted as saying on the Builder Partnerships Web site, “Coming out of this cycle, the baby boomers are moving into the downsizing stage of their lives. However, they will not return to the market in any significant number until the housing prices at least stabilize. The next population group, the Generation X, are now in the prime home buying age of 28 to 44 years old. The industry will experience a complete generational change as the millennial generation enters the housing market and becomes the new driving force for housing.”

You must evolve in order to address the demands of the millennial generation. These next generation buyers choose to transact business and communicate in the electronic world, rather than use traditional methods used by the baby boomers. If you do not participate in their electronic world, they will exclude you, and you lose your opportunity to do business with them.

Keeping Technology Costs Down

Consider the cost associated with your new Web presence. You are confronted with the “build or buy” decision and the need to do it cheaply. Cost is quantified in many ways, but primarily in time and dollars. The dollar costs to build a technology solution are often high and are frequently underestimated. Lack of industry experience and no real time integration of critical information are often cited as the root causes of high costs.

Unfortunately, far too many builders build and launch their Web site based on simple economics. They build to match their budget, instead of budgeting to match their needs. The purpose of a Web site is to market you, the builder, and your homes. It is clear you must change and evolve, somehow, in these trying economic times. So, how are you planning to pay for your Web site? It is important to note much of the cost for an advanced Web presence is a matter of shifting costs from traditional budgets toward a new, electronic outreach. Billboards become Web pages, mailers become e-mails, brochures and flyers are replaced by interactive plans on the Web site. Printed homeowner manuals are now available online. Plan sets are no longer photocopied – they are shared. The list goes on and on. The money is already in your operating budget. You simply need to embrace the change and make the move.

The second component of cost is time. Time to develop, implement, maintain, and integrate are all costs when planning a Web site development project. You need to be aware of the time it takes to do all of these things in a custom Web site project. There are ways to lower these costs by looking to packaged or template Web sites with comprehensive content management tools.

These products will minimize the time cost compared to a custom project. These solutions are available and should be evaluated as part of your decision process. Look for solutions that provide you with the easy ability to administer and customize your Web site to meet your specific requirements. By doing the work yourself, you save both time and dollars. Imagine the amount of time and the size of the fees a developer would require, to develop a Web site to manage and promote your quick delivery (spec) houses. What would they charge for the complex task of developing a Web page showing real time data on lot status and availability?

Managing the content of a builder’s Web site can be a daunting task. We often hear that it is considered too hard, or it takes too much time, or it is a matter of affordability, or that it costs too much to have someone else do it. Seek a solution with the content management capability - an easy to use and simple to understand module that takes the fear out of managing the Web site content. Simple tasks like browsing images to upload them, or copying and pasting text to update the pages, are simplified with good content management capabilities.

Communication

The focus of your communication will be through your Web site and sharing real-time information. You will generate interest from prospects and shoppers using the power of your Search Engine Optimization (SEO). You will then capture and manage the resulting traffic and eLeads using the information you post to and from the Web site. Communicate with your business partners through the use of portals. Portals are software tools that post and pull real time information.

Much of this information already exists if you have a strong builder specific software system. It’s simply a matter of making the information available to your business partners (realtors, lenders, trades, and suppliers). By understanding the information you wish to communicate, you should select and use a software package that is designed with your needs in mind. Your field operations will use mobile platforms (like smartphones) to capture important information including job progress, photographic data, variances, and production updates. This information will be stored within your software so it can be easily communicated with all interested parties. The role of the field staff as the eyes and ears of the builder will be enhanced by using these mobile tools.

The Web site communicates a wide variety of information. Real time information is the most valuable, yet is often the most difficult to integrate as part of your new Web presence. For this reason, it is very important for the builder to work with a software provider who is willing and able to work with their Web developer to facilitate the sharing of information.

Making a Sale

Once again, builders will put new demands on their Web site. They will need to enhance the interactive experience a prospect or buyer encounters on the site. In many cases the Web site will be where the lead is originated and software will control and manage that prospect from cultivation to close. A well designed and well implemented Web site will have a defined process in which the buyer is immersed. The site will manage expectations, actions, and ultimately, it will manage the entire selling and sale process.

It is also important to adopt some of the great functionality found on broker Web sites. Things like a texting or talking house will become commonplace. The builder will rely on automatic follow-up plans and communicate directly with the prospect. If prescribed follow-up goals and achievements are not being met, systems and reporting will communicate the deficiencies to the appropriate staff.

Building and Buying

Much of the purchasing and production processes will be driven through electronic means. Vendor and supplier portals will replace other updating methods. Partners will be directed to the builder’s Web site for vital information on a specific home. Construction managers will have access to the same set of information through mobile applications and portals. They will use their mobile platforms to update critical information contained in the back office and in the accounting software. Purchase orders, schedules and variances will be captured and documented when they are observed. This real time information will be made available to everyone.

There will be a single set of information all parties can access. This should virtually eliminate costly mistakes caused by not having one set of data, or conflicting data. People will create or expand networking groups to take advantage of manufacturer rebates, preferred pricing, online specification, and installation data.

The Facebook Factor

Technologies applications such as Facebook are having a profound impact on the way we do business. Builders must learn about building their own community using social networking tools. They will learn the value of leveraging friends and fans, and use networking sites to broadcast their message to their audience. The Facebook generation expects to see everything online, including updates in real time. This notion is foreign to almost all builders, but those who master it early in the decade can expect significant results. Their message will guide the conversation and they will be masters of their ever growing sphere of influence.

In conclusion, technology is more important today than at any other time in recent history. Are you ready for the next decade? Here are seven simple steps you can follow to propel you out of the downturn and into the future:

The 7 Simple Steps to Follow

  1. Build YOUR Technology Strategy;
  2. Standardize Processes Around your ERP Solution;
  3. Prioritize your Communication Needs;
  4. Evaluate your ROI;
  5. Invest for your Best Return;
  6. Start NOW;
  7. Don’t settle for a DIY project.

Craig Schweikart is a Vice President at Constellation Homebuilder Systems www.constellationhb.com where he focuses on solutions designed for Small Builders and regularly presents this subject to builder groups and local associations. For more information contact him at cschweikart@constellationhb.com or 206-450-9983.

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