Almost 25 years ago to the day — in October of 1982
— I finally graduated from Newbie Remodeler U and began
building my first start-to-finish new house for a paying
customer (even if it was my sister). Reliable job-site
information was hard to come by in those days, so when one of
my fellow workmen pulled out a dog-eared newspaper called New
England Builder, I couldn't subscribe fast enough. It was the
first publication I'd ever seen that had real information for
builders about what did and didn't work, written and
distributed by people who were actually doing it.
What does my subscribing to NEB in 1982 have to do with you
being a "connected contractor" in 2007? Ironically, quite a
lot. In 1982, Mike Reitz, the original publisher of NEB/JLC,
was a contractor in rural Vermont who was having the same kinds
of problems finding information that I was having in rural
Pennsylvania. There was no Internet, of course, but the ideas
of "collaboration" and "community" were definitely incorporated
into those early issues of the magazine, as they are today. And
if there had been an Internet in 1982, I'm pretty sure JLC
would have started as a community portal/social networking Web
site, more on the order of today's www.jlconline.com.
JLC was born (give or take a couple of years) around the time
that the three devices we've long considered to be the "holy
trinity" of home-builder technology started gaining widespread
acceptance: the cellphone, the fax machine, and the personal
computer. But until very recently, if builders wanted to take
advantage of PC technology, they had to build and maintain
their own island of hardware, software, and networking. That
required learning a new trade — IT management — or
hiring third-party help.
That is no longer true, largely because of all the resources
available online. And so for this 25th anniversary
retrospective, I'd like to add a fourth element to the
builder-technology trio: the Internet.
The Pervasive Internet
The PC, the cellphone, and the fax machine certainly changed
how we all did business in the '80s and '90s, but today's
Internet is even more influential — it's changing the
very nature of our business, from how we communicate with
customers, subs, and suppliers to how we research products and
manage our projects.
The small-business servers and local area network (LAN) desktop
applications like SoftPlan, Microsoft Office, and QuickBooks
are far from dead, but now, thanks to the Internet circa 2007,
they're all optional. As more and more kinds of applications
become available online, much of the hassle of using technology
has been pushed up into the Internet cloud, and the issues of
hardware and software maintenance, backups, and file
synchronization have been greatly reduced. Today's newbie
remodelers might never purchase a piece of software, electing
instead to use only Web-based or shareware applications they
find online.
The Dot-Com Boom — and
Bust
It's hard to believe, but what we now call the dot-com boom
began 10 years ago. That's a long time in technology years, yet
builders and remodelers are still worried about the perils and
limitations of working online, as if we were all still stuck
back in 1997. Back then, broadband (fast) Internet access was
almost impossible to find, there were very few standards for
how applications would work online, and security was
questionable at best. And for the record, there were a lot of
really bad online applications for builders that ended up only
wasting our time. It's no wonder that when the bubble finally
burst in 2000 or so, many builders were left skeptical of the
Internet.
But one company had a big — make that gigantic —
dot-com idea that, if it had succeeded, would have
fundamentally changed how builders did business with their
suppliers. BuildNet wanted to eliminate much of the
inefficiency in the materials supply chain by letting builders
use its software coupled with the Internet to peek directly
into a supplier's real-time pricing and inventory, place a
paperless order, and take delivery at the job site with a
bulletproof paperless electronic trail.
But the industry wasn't ready for the idea, the technology
wasn't there to support it, and the company made quite a few
dot-com bloopers that eventually sent it circling the drain.
Still, the underlying concept provided a glimpse into the
future, revealing how the building industry could directly
leverage technology the way other industries had been doing for
years. If somebody tried launching a similar company today, the
outcome would be different.
Back to the Future
I was thinking about BuildNet a few weeks ago when I stopped in
at a locally owned lumberyard to get a price on some deck
hardware. This outfit was one of the first businesses in our
area to put in a computerized invoicing and inventory
management system — cutting edge in the early '80s. As I
rolled up, I was shocked to find the parking lot empty and the
buildings looking run-down. Inside, it was still 1985, with the
same monochrome point-of-sale terminals churning out the same
three-part invoices on the same dot-matrix printers.
After a painful 20 minutes spent shuffling back and forth
between a computer terminal, a three-ring binder, a telephone,
and the warehouse, the man at the counter still could not find
a price. "Someone from the factory will call us tomorrow," he
told me.
I couldn't help thinking as I thanked him and left empty-handed
that my old supplier, once the pride of the area, was already
out of business — they just didn't realize it yet.
Similar operations in the region — some more than 100
years old — had already been forced to close their doors,
because the builders they served could no longer afford to wait
for "the factory to call back tomorrow."
Back in my truck, I fired up my laptop and mobile broadband
connection, and after a couple of minutes on
www.lowes.com I had my
answer. A few minutes more, and I had the hardware I needed
heading to my door. It's not just the big boxes that are going
online, either: In nearly every part of the country, you'll
find forward-looking local and regional suppliers making it
easy for builders to do business with them on the
Internet.
Ultimately, it didn't take a BuildNet to give builders
centralized purchasing capability — just a decentralized
grass-roots effort.
The Role of Technology in
Business
Historically, technology has played one of two roles for
businesses. Sometimes it's a supporting player — one that
makes getting a product or service out the door a little
easier. Your cellphone, fax machine, and PC are all convenient
helpers, but if you had to, you could probably build just as
good a house without any of them, though it might take longer
or require more manpower.
Other times, technology is a major player, contributing
directly to the so-called value chain of the product or service
in question. Try making a sheet of OSB, an engineered I-joist,
or a slab of quartz-countertop material without the factory's
computer-guided equipment. You couldn't do it, no matter how
much time or how many laborers you had available.
If you look at how builders, remodelers, the trades, and
suppliers have used technology up until now, you're apt to find
a "take it or leave it" attitude like the one I observed during
the visit to my old lumberyard — definitely not very
forward-thinking, but understandable given that until recently,
most technology in our industry has played a supporting
role.
Better, Faster, Cheaper
But when it's used in both roles — directly, to lower the
cost of goods sold; and indirectly, to reduce overhead and save
time — technology can be the final frontier in
profitability for a builder. Here are some working examples of
builder/remodeler technology directly impacting the bottom line
— and they're merely the tip of the iceberg.
Customer relations management (CRM) and vendor relations
management (VRM) databases create a corporate "memory" that
outlives any individual employee. You shouldn't have to start
over from scratch with a client just because an employee leaves
your company, and your warranty technician should be able to
"see" what happened to that customer's account from the first
sales contact through construction. This keeps everyone in the
company on the same page, and ensures that the customer gets
seamless service — which, in turn, results in better
referrals.
Industry stats confirm that builders with CRM and VRM systems
are able to leverage referrals and slash marketing costs by
— on average — 1 percent to 2 percent of annual
volume. For a $1 million annual volume, that could be worth
$10,000 to $20,000.
Job-site Webcams can give your superintendents eyes in the back
of their heads, letting them run more projects that are
geographically farther apart. All other things being equal,
every additional job one super can handle adds that percentage
of his or her salary back to your bottom line.
Computerized accounting, purchasing, and scheduling systems can
enforce best practices for product installation and job-site
safety, plus help control direct costs by limiting price
increases. A good purchasing system can save 5 percent to 10
percent in direct costs on every job, or $5,000 for the typical
$150,000 project.
Mobile communication technology such as camera phones, e-mail,
and instant messaging can solve issues in the field in minutes
instead of days or weeks. Every day saved in cycle time is
worth approximately $250 or more to the average builder, not
counting opportunity costs.
Project collaboration Web sites provide a single, centralized
place where everyone can go to view schedules, specifications,
project documents, and photos. Considering that reworking a
major project can cost thousands of dollars, and that a special
trip to a supplier to swap the wrong product for the right one
can shut a job down for a day, it's easy to see how such a site
would pay for itself.
Also, builders can participate in product-rebate programs and
track them online. If the CRM/sales system can support those
products directly, there's no administrative overhead to offset
the additional profit, which can add up to several hundred
dollars per project.
In 2032, for JLC's 50th anniversary retrospective, we'll look
back at this period as the time when technology moved from
being a supporting character to becoming an essential part of
producing and maintaining American housing. In its expanded
role, technology will affect how buyers expect to do business
with their builders, suppliers, and trades — and it will
help construction pros manage the mountain of data they'll be
expected to maintain about the projects they build.
Building-industry stakeholders who are unwilling to embrace
technology the way other American industries have simply won't
be able to compete.
Watch Commercial Construction
Many of the technology trends we home builders see today got
their start years ago on the commercial side of the business,
where the project time lines are substantially longer and the
dollars and risks are substantially higher. Big projects like
airport expansions and road construction have been managed
start-to-finish with computer technology — though not
necessarily PCs — for decades, and with Web-based
applications almost from the day they were available.
I remember attending an A/E/C Systems trade show in 1998 and
seeing literally dozens of Web-based collaboration systems,
many of which already had substantial user bases and major
projects running through their veins. But it wasn't the
architects or GCs driving the trend online — it was the
project owners. Those municipalities, companies, and
individuals understand all too well that the design and
construction of a project represents only a small fraction of
its life-span cost (5 percent to 7 percent), but the
information generated during that early phase affects the
owners' ability to manage and maintain the project
forever.
Housing is no different. Until now, most builders have just
been ignoring the other 95 percent of the house's life cycle.
It might take a year or two to design and build a house, but
someone will have to deal with its maintenance and upkeep for
decades after the builder is out of the picture. And every time
the property changes hands, certain issues will resurface. Just
like today's commercial-project owners, tomorrow's homeowners
will demand that their contractors deliver not only the project
they bargained for, but also information about everything in
the house — which they'll want maintained online, so they
can always access it from their "my house" Web site.
Smart builders will see the wisdom in managing such information
long after the job is complete, because down the road it will
help them weed out poorly performing subs and products and
increase dependable referral business — thereby lowering
marketing costs. Tracking project performance from before the
cradle to after the grave also keeps the door open for
additional revenue streams from those same buyers:
Handyman/maintenance services come to mind right now, but as it
becomes easier and easier to use the Internet to maintain
relationships with buyers, dozens of other opportunities will
crop up, too.
Meet the New Boss
Builders and remodelers who have spent their careers working
for the nontechnical baby-boom generation or even for Gen Xers
are in for a rude awakening. There are 75 to 100 million young
people — depending on when you start and stop counting
— who are going to enter the housing marketplace over the
next decade, making them the largest slice of the U.S.
population since the boomers. They're tech-savvy, and they're
going to expect their builders to be right there with them,
online.
Today's college seniors are on the leading edge of what has
been termed Generation Y — or more accurately, Generation
Why: Why can't they buy their house online? Why can't they log
on to their furnace from their phone to see when the filter was
changed? Why can't they see the new sunroom you designed for
them, superimposed on their property map in Google Earth?
Gen Yers have never known life without the Internet and
e-commerce, and they spend large blocks of time online every
day. Their impact on home builders will be substantial: They
don't watch television, listen to the radio, or read newspapers
nearly as much as their parents or older siblings, so the
standard types of marketing and advertising that builders have
used for decades will not be effective with them.
At the same time, word-of-mouth and referral business will
become more important than ever. Gen Yers rely largely on
online social networks and peer review to gain information
about the products and services they purchase, and they're not
afraid to publicly praise companies they like to do business
with and publicly expose companies they feel have treated them
unfairly or that have provided misinformation during the sales
process.
They use cellphone cameras and instant/text-messaging systems
to communicate with large groups in near-real time. They
communicate continuously, a little at a time (think text
messages or blog entries) instead of through weekly phone calls
or magazine articles. They will probably have fewer children
than their parents; and because they'll travel more, they'll
expect to be able to monitor the mechanical systems in their
homes online and initiate warranty-service requests from their
"my home" consumer Web sites.
Gen Y buyers will also be looking for greener, more sustainable
construction; higher-end finishes; and built-in home technology
— plus the ability to track items in the house for LEED
(Leadership in Energy and Environmental Design) certification
and energy usage.
And remember, Gen Yers are not just your future customers;
they're also your future employees, and the employees of all
your subs and suppliers. Learning to operate in their
technology realm will not be optional for builders (or any
other business), and those who can't will eventually be pushed
out by those who can.
Update your sales savvy. I don't see builders firing
all of their salespeople or real estate agents tomorrow
morning, but I do see those salespeople (and that means you if
you do your own selling) needing to be much more knowledgeable
— true product experts rather than just greeters or order
takers. Gen Yers will start their new home or remodeling search
online, spend weeks or months researching every conceivable
aspect of the project, and then show up at the builder's office
or sales center armed and dangerous, expecting to continue the
process online.
The Roaring 2010s: Just Do It
If the '80's and '90s were the age of desktop computing for
builders, and the 2000s are when the Internet takes center
stage, what will it take for today's JLC reader to gear up for
the next decade? Honestly, not much. Just do it. Technology is
getting easier, more mobile, and less expensive every day.
Unless you're a hardcore computer gamer, it's actually tough to
find a new computer for sale today that won't run the
applications most JLC readers need.
In the '80s, I had the financial equivalent of a nicely
equipped F150 SuperCab 4x4 tied up in computer gear and
software that basically amounted to a glorified typewriter and
desktop calculator. Today, my entire office consists of my
cellphone, a multifunction printer/scanner/fax, and a $600
reconditioned laptop (purchased on eBay).
Here are a few more guidelines for the connected contractor of
2007 and beyond:
Hardware. If you rely on Web-based applications, it
stands to reason that you need to get online reliably. Desktop
computers are still tethered to your office, but this is a
mobile business and I recommend that all builders get
themselves a good laptop (or convertible tablet PC) with a
reflective screen that's readable outdoors. This gear doesn't
have to be expensive — back-to-school ads abound with
deals on capable laptop computers hovering in the $500 range.
For that price, you may have to add another stick of memory, or
RAM, ($100) and you'll probably get a home — not business
— version of the operating system.
Whether you opt for a thin-and-light laptop or a larger
desktop-replacement machine depends on personal preference, but
I find the convenience of a small, light computer with
excellent battery life to be well worth the tradeoff of smaller
screen size. You can always plug into an external monitor if
you need a larger display. New LCD screen technology will soon
push battery life beyond eight hours on some machines (but
always buy a spare battery and a spare charger anyway).
Mobile broadband. If you rely on Web-based applications,
you have to be able to get online no matter where you are. For
that kind of access, nothing's more convenient than a cellular
mobile broadband — also called a wide area network (WAN)
card — though it's expensive ($600 per year on average
for service). Some laptops are showing up with WAN cards built
in, but beware: They'll support only the carrier or service
they're affiliated with. A built-in Sprint card, for instance,
can't dial up to the Verizon network.
It's still the network. Back at the office, you may no
longer need the hassle of a true Windows server if you're using
Web-based applications — but you'll still need the same
reliable network to share a broadband Internet connection.
Cabling that adheres to the Category 5, 5E, or 6 standard, a
secure WiFi access point, and a reliable hardware fire wall are
must-haves.
A $50 WiFi router from the local big-box store will get you
(and all of your neighbors, if you're not careful) online, but
consumer gear can't recover from dropped connections and is
more likely to create a performance bottleneck or security
hole. Invest instead in a true small-business
router/firewall/access point, such as the SonicWall TZ series
($600 to $800 street price;
www.sonicwall.com),
which keeps wired and wireless networks safe.
Joe Stoddardis a technology consultant
to the building industry. He moderates the
JLC Online computer-solutions forum.