Why ‘using what we already have’ may be costing more than you think

ERP systems are at the heart of the construction sector’s digital revolution and have delivered real benefits to businesses of all shapes and sizes. However, many construction firms embed ERP software into their operations and then forget about it, allowing the system to become outdated and unfit for purpose.

This mindset of ‘using what we already have’ rather than committing to ongoing investment in your ERP system has tangible costs at a time when margins are tighter than ever. Read on to learn more about how these invisible costs can accumulate so you can recognise the signs in your own business before it’s too late.

Workarounds, duplication and manual fixes are becoming permanent

One of the most important advantages of using a construction ERP system is that it is a single source of truth. Everyone works off the same data and the most up-to-date plans, using the same methodology and reporting mechanisms. Doing so can:

• Save time and cut your construction programme.
• Simplify regulatory compliance.
• Minimise rework and other unnecessary costs.

However, if you install your ERP and forget about it, your team are likely to start making changes and altering how it works in practice. Internal fixes, workarounds, and task duplication may each make sense on an individual level, but eventually your ERP system will begin operating differently for different people.

If you let this situation develop, these changes will become permanent, and the ERP system’s power will be diminished. Before you know it, the invisible costs will start stacking up and threaten your business as a whole.

Sunk cost thinking, which disguises inefficiency

When you’ve gone through the process of investing in an ERP system and then taking the time to embed it into your daily operations, it is extremely easy to see it as a sunk cost. After all, you’ve now got a system which is tailored to your unique business needs, so it makes sense to continue using it if:

• Your team are familiar with the system and has received training to use it.
• The system is embedded in your workflows.
• You have customised the system to suit your unique business needs in the past.

Nobody wants to discard that level of investment without good reason. However, most of the time, this is a trap that can cost you more than you think if you let it stop you from developing and innovating your processes in the future.

Effort shifts from improving performance to compensating for system gaps

Sticking with what you already have rather than updating the system as a whole can shift your team’s daily priorities. Instead of using the system to improve performance, an outdated ERP can see your team spending the majority of their time compensating for gaps in the system, which are slowing them down, for example:

• When the system lacks a key daily feature, your team has to invent their own process.
• ERP support is unsatisfactory, so your team find their own workarounds or stops using features entirely.
• The technology you use has outgrown the system, making the ERP a feature which actually slows your team down when they have to compensate for aged processes.

In all cases, dealing with the ERP system is using up time and energy that your team could be directing towards the important work. That has direct implications for your bottom line, staff satisfaction and the quality of the product you are building.

Avoiding spending is not the same thing as protecting value

These are challenging times for many construction businesses. Margin pressure is real, and it’s all too easy to try to protect your cash flow by pausing new investments. Avoiding spending in this way has a clear impact on the budget line at a time when that is needed, making it a sensible move in isolation, but cost and value are not the same.

Choosing not to invest in your ERP system can lead to:

• Inefficient work on site as communication worsens and confusion sets in.
• Increased safety risks and more complicated regulatory compliance.
• Construction programmes are slipping, and budget discipline is failing.

These are the invisible costs that a proactive, considered ERP strategy protects you from. If you fail to invest, you might save on immediate costs, but the overall value to your business will be negative.

Reviewing your ERP system and ensuring it’s not costing you

The solution is to review your ERP system and determine whether you are still getting the maximum value from it. This doesn’t mean you need to commit to immediate change, but it does restore control and give you greater influence over your business’s success.

Want to learn more about how to review your current system? Contact our team of experts today to get started!