Publication Date:
Wed, 2001-01-03 18:00
Article Image:
| Curtis Peltz |
The Problem
The global building industry is highly fragmented and disconnected. The hundreds of monthly transactions between thousands of builders and subcontractors create a blizzard of paper, faxes and phone calls and unfortunately, new technology is not readily embraced.
There are numerous Web portals and business-to-business (B2B) eMarketplaces springing up today that provide e-commerce functionality to building companies. However, these solutions have the potential of taking this fragmented and disconnected industry and replicating it online and they don't address the needs of the subcontractor, the most important piece of any building project.
The building industry needs customer centric e-commerce solutions that don't require a massive shift in the way builders and subcontractors currently conduct business. Project managers run building projects in the real world. For this reason, e-commerce solutions need to empower project managers to become the hubs through which online information and e-commerce flows.
The Analysis
Analyst firm Forrester Research estimates that online business trade within the $3.2 trillion global construction industry will rise from $6.3 billion in 2000 to more than $140 billion in 2004. Forrester also predicts that online market trade for the construction industry will reach $43.7 billion in 2004, and another $97.3 billion will move online via extranets. But the current reality is considerably different.
An eBusiness Research Report
Timberline Software Corp. (Nasdaq: TMBS) is an international supplier of construction accounting, estimating and property management software. In March 2000, Timberline initiated a survey of various members of the housing and construction industries, as well as its customer base, to ascertain what they needed from the Internet and what level of technological sophistication was most common among builders and subcontractors.
In association with Image Analysis, Timberline developed an "eBusiness Research Report" that used a representative sampling of more than 300,000 companies from the commercial/industrial, residential and specialty construction industries. Some of the results were illuminating:
The Current Industry Standard: Paper, Faxes & Phones
B2B eMarketplaces are not going to unilaterally solve real problems in the building and construction industries in the next several months. In fact, a portal itself becomes just another layer of the process. There are five main issues:
1. A large majority of subcontractors don't use portals for the hundreds of transactions they conduct in a typical month.
2. Invoices or job-specific documents often aren't appropriate for portals.
3. Communication between construction and building companies is still mostly based on paper, fax and phone calls.
4. Building owners and large prime contractors usually dictate which portals are used so contractors and other members of a building team might have to use several different portals at the same time.
5. There is no back office integration and contractors are having to double post information and learn multiple user interfaces on different portal sites.
Clearly, any effective e-commerce strategy for the building and construction industries must accommodate these various channels of communication as well as emerging Internet-based outlets.
An Internet strategic view
Following its survey, Timberline Software has developed a "multiple reach" approach using as a base, its accounting and estimating software and partnerships with leading construction portals. This approach provides clients with rich e-commerce connectivity to their subcontractors, suppliers, construction portals and B2B eMarketplaces. (Timberline counts 25,000 customers representing 125,000 individual users with combined purchase power of more than $80 billion from its installed base.)
Our concept views the Internet as a tool to be fitted to the way you do business today. Our strategy is to allow our clients the ability to electronically exchange information from their Timberline systems with whomever they choose, regardless of their business partners' choice of software or online service, or level of technical sophistication. We feel it is more important to accommodate the way people conduct business in the real world, than to force them to change the way they interact with their partners and customers. We hope to provide a practical way for construction companies to begin merging e-commerce with today's business practices.
For more information, contact:
Curtis Peltz
President and CEO
Timberline Software Corp.
15195 NW Greenbrier Pkwy.
Beaverton, OR 97006
Phone: 800-628-6583
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