The trouble is, this promise is not always fulfilled. Consultant Atkins was brought to its knees implementing an ERP solution. Amey, the storm-tossed support services provider, has reportedly had problems implementing an ERP package. The difficulties that housebuilder Wilson Connolly had with its ERP system are well documented, and it remains the only UK housebuilder that uses one.
Many of the complaints about ERP centre on the difficulty of implementing it. Critics say this is because it was developed for a different industry – manufacturing. Rob Holden, group IT director of Persimmon Homes says: "The ERP providers are now having to move away from their traditional manufacturing and distribution markets. However, to meet the needs of the construction sector, they are having to modify and bend their systems. For the user, this can be costly, time-consuming and painful."
Manufacturing involves a repetitive process that takes place in a controlled, static environment. Most construction projects, by contrast, are carried out by teams that come together for just one project, and go away again at the end. Richard McWilliams, who heads the Symonds Group's IT consultancy, elaborates: "If you've got people who are doing incredibly different projects with incredibly different people then there isn't a hope of implementing ERP successfully – but if you are churning out identical warehouses or McDonald's restaurants then it might work."
The result is that construction companies have to mould their processes to fit the needs of the software. John Callcutt, chief executive of housebuilder Crest Nicholson, warns: "Inherently, these systems were not designed for the industry, so our organisation would have to substantially change to fit their business template if we wanted to acquire an ERP system."
Callcutt is in a good position to judge, as Crest Nicholson did consider acquiring an ERP system. The company looked at systems provided by two ERP software providers, JD Edwards and SAP.
Crest Nicholson's experience was not a happy one. It reached the point where a changeover programme was drafted, but the plug was pulled before the software was installed across the business. Callcutt says of the experience: "They promise the earth, hordes of business consultants appear, huge numbers of staff have to be set aside and you have to change the way you run your business. There is no way I would commit my business to an ERP system." The company has decided to go for stand-alone software as old systems become obsolete.
JD Edwards admits that the implementation process does need careful management. "It's not something you can manage on your own – you need JD Edwards' help," says Peter Winspur, solutions consultant at the company.
"Change management is part of our offering; we will help manage change of processes." Atkins' problems centred on changing over to JD Edwards' software – however, Winspur says Atkins implemented the package using consultants that were not approved by JD Edwards, and that it had engaged his company to help sort out the mess afterwards.
Paul Eggleton, the business development manager for SAP, reckons that the ERP systems are blamed for the fact that reorganising a business is inherently difficult and disruptive. "Many construction companies are changing their business model and the fundamental way they operate – we've seen this with a couple of our construction clients. Change goes hand-in-hand with the implementation of ERP; ERP is a trigger for change, and change is painful. We see ERP as the enabler of change."
Consultant Arup has successfully implemented several ERP systems recently, including JD Edwards software. Nevertheless, David Taffs, the firm's IT director, is lukewarm about them. "It's surprising the crudeness of the software underneath," he says. "We were using Oracle and wanted to transfer personnel information into the bookkeeping part of it, but we still had to craft an interface. We now use Oracle for personnel and JD Edwards for bookkeeping, with an interface between the two."
Arup also had to change its business procedures to fit the software. Taffs cites an example: "With JD Edwards, our system of job numbers didn't fit into the package as it was," he explains, "We had to adapt our processes to suit the numeric process the system used. We could have asked the provider to produce a program to suit us. But every time there was a new release of the software, we would need a new program – which means more expense."
Many construction companies have come to the conclusion that they have more to gain by focusing on other areas of business improvement first. Neil Wells, IT director at Wates, says that his firm looked closely at moving to an ERP system over the past 18 months, but decided that it was not a priority compared with collaboration between teams and improving the business process. "We believe that delivers the most benefits for the customer," he says. "I don't think technology will lead that process."
McWilliams thinks most construction companies have a long way to go before ERP will start to bring benefits. "Only companies that fully understand their business processes can hope to make a success of implementing ERP and there are very few companies in construction who can say that." He thinks construction processes need to become more standardised if they are to justify adopting an ERP system. He cites as an example Laing O'Rourke's customised office solution, whereby bespoke offices are built from a selection of modular components.
So what should a construction company do if it needs new software but does not want to reinvent itself and its product? "For most people, the small, simple, understandable package is a better solution than a big system," says Taffs. "I think most of the market should decide incrementally what they want to do, such as invoicing or estimating, then look around for a package that just does that." This approach has been adopted by Wimpey, who did consider an SAP solution but rejected it. Colin Jelley, who is responsible for new IT projects at Wimpey, says: "We have gone for best-of-breed solutions and knitted these together with an integration solution."
Another alternative to ERP is the construction-specific COINS, which has been enthusiastically embraced by housebuilders and contractors (see the box below). The ERP providers could learn lessons from the success of COINS as it, too, was problematic in its early days. Ajey Sharma, Balfour Beatty's IT director, has experience of both ERP and COINS. As an early adopter of COINS, Balfour Beatty had to invest time and money to adapt a product that was developed for the US construction industry. This work has fed into subsequent releases of the software. He thinks the ERP providers need to do the same if their systems are to appeal to housebuilders and contractors. "If the ERP providers are going to be successful they will have to address core functionality issues, things that are important to construction," he says.
JD Edwards is one company that has realised this. It now has a dedicated construction division and has just developed and launched an ERP module called Homebuilder. SAP has also produced construction-specific software. However, regardless of how good these may be, JD Edwards and the other ERP providers have got an uphill struggle on their hands to convince the sceptics.