The Fight of the Millennium

By now you’ve hopefully come to grips that we’re in this so-called e-construction era. Good. Whether it’s Alcoholics Anonymous or business, realization is the first step to action. So what do we do now?

First, we outline the playing field in our new world. The most crucial area of the e-construction era is the hub. The hub is the central location where all the players meet to transact business. The players are the builders, remodelers, subcontractors, manufacturers, homeowners, and the e-commerce platform provider. The hub connects the players from the back-end to the front-end of business. Pretty cut and dry, but don’t rest so easy, this is going to get a little tricky.

There is a fierce competition among a lot of players to control the hub, and nobody seems capable of really handling this task at the moment. To control the hub means that all parties must come through the gatekeeper to conduct real time business with everybody else. Conventional logic dictates that e-commerce companies like USBuild.com, Equalfooting.com, or Buzzsaw.com would be in the best position to control the hub. There is a huge technological gap that must be bridged to merge back-end business software applications such as accounting and order processing with front-end programs that handle communications between the builder, the job site, and the homeowner.

Right now, no e-commerce companies close this loop. There are some heavy hitting companies like BuildNet, who is essentially bidding to become the back-end hub. It is buying up the majority of builder software companies and uniting them under one corporate umbrella. Furthermore, they are partnering up with some big name manufacturers like GE and Andersen Windows to try and streamline purchasing and inventory, but they have absolutely no way to get to the front end right now. If BuildNet is unable to develop a network that connects its purchasing, costing and scheduling applications to the job sites, and they have no public direction to do so after 5 years of promising just this type of solution, it becomes nothing more than tool for the hub’s gatekeeper.

There are also some front-end e-commerce providers with great ideas and a foot in the hub’s door as well. HotBuilder.com is a new player in this field and offers some great front-end business solutions, but it has no public intentions to delve into the back-end of residential construction, so it too, becomes a tool as opposed to a gatekeeper.

That leaves us with the new home builder, the manufacturer and the homebuyer/owner. Manufacturers have long starved to be able to remove the costs associated with storing massive inventories of products, ever waiting and abiding by the pace of a building industry that is always at an arms length away. But the fact that they are always an arms length away form the rest of the industry means that they will always be dependent upon the e-commerce companies and the builders. As for homeowners, their concern is with buying homes and products, not making products or streamlining businesses.

That leaves us with you, the builder. The builder is the only player with access to all the other players. Oddly enough, one of the reasons that there is no company that can connect your back-end applications with your front-end applications is that most of you don’t have back-end or front-end applications to begin with. Most builders are still wasting time and money on obsolete accounting methods, fax machines, and hoards and hoards of cell phones, walkie-talkies, and overnight packages. Software companies see the biggest and immediate opportunities in creating new products for builders, but until the products become mainstream, nobody will be able to connect them. You’ve caused the problem, and as a result, are holding a potential industry hostage - and that’s the best thing you’ve got going for you right now.

While the e-commerce companies struggle to develop and purchase products for you to use, they will spend millions in marketing it to you and the manufacturers. By now, most manufacturers realize that what they do best is create and sell products, so they will fall into line with other companies to stay in the electronic loop. That’s why you are seeing the strings of investments into other companies by giants like GE and Owens Corning. They’ve sent perhaps the biggest message to the industry. GE gets millions of hits a month at their web site, but they still need the builder to get into the consumers’ hands. Since builders aren’t successfully managing the entrance to the consumer worlds that they create, many manufacturers have had to make a go of e-commerce on their own, and have turned to third party platform providers.

Those third party platform providers can get the manufacturers onto the builders desktops, buy they still can’t reach the consumers. Thus, the builders are in the prime position to leverage themselves at the hub of the e-construction world. How are you going to do it? I’ll tell you this much for now, think of the airline industry: many carriers, many hubs, and many routes along the way for anybody to reach a desired destination.

Todd Shraiberg is the Project & Development Manager for HousingZone.com. Please email him with any comments or questions regarding his column.

Also see:

Welcome to the E-Construction Era