Construction contractors have a growing number of software options--with new and established products addressing broad swaths of the business. A single application may handle all of quote-to-cash, project management, preconstruction, site logistics or enterprise asset management.
Rathmann Insights sees several dynamics taking place in the market simultaneously, and construction software buyers or influencers should pay attention to each one.
1. Modern versus legacy.
Many construction software products have been in the market for decades, evolving deep industry-specific functionality suggested by customers. In some cases functionality inside of a product may consist of multiple acquired products behind a common interface or brand name. These products are functionally rich, but because they have evolved over a period of time from both functional and software architecture perspectives, they are complex. One module may not work or look and feel like the next. Integrating with them is similarly difficult because of separate data structures and often, a lack of an API-first architecture.
More modern software-as-a-service (SOA) software will solve many of these challenges because the functionality was designed for a cloud architecture with a consistent, modern look and feel. Many of these modern products are built on an API-first architecture, which means application programming interfaces (APIs) are used to route data from one part of the software to another, and these same APIs support integration with external software packages.
In many cases this newer software will not have all of the deep functionality of more mature legacy products. Legacy software vendors are following a number of playbooks to close the gap and reach functional parity. Sage, for instance acquired Intacct as its dedicated, modern cloud ERP, and is acquiring and developing more and more robust construction functionality to the dedicated construction edition. But in the meantime, contractors who require a more robust financials package with more flexible charts of accounts will want to examine their options. They may be well served to opt for a more mature product, extending it with modern cloud software for operational functions.
2. Mergers and consolidation.
Intacct was purchased by Sage, and Sage has acquired a bevvy of other cloud construction software products to extend its flagship offering to more business disciplines. Autodesk similarly has followed a disciplined approach of acquiring modern cloud-based solutions that can quickly be rearchitected into a product with a common architecture and user experience. Other products both modern and legacy are purchased and meet different fates.
One type of acquisition we see is the product roll-up approach, where a holding company will purchase construction software products at volume, adding them to a broad portfolio of products that may even compete with each other. Contractors evaluating these products will have to look beyond functionality and price and consider the future of the product. What indications is the vendor sending the market that they are investing in the product itself or marketing it so it grows in footprint and in the number of research and development dollars it can command.
3. Suite versus best-of-breed
This is a debate that has raged as long as there has been enterprise software that deals with multiple business functions and teams, ostensibly uniting them on a single version of the truth.
Many of us love that purpose-built, dedicated software product--that customer relationship management (CRM) application, project management tool, that equipment tracking app. They are simple to buy, set up and use. Often, a single person or a single team relies on them to perform their assigned duties.
Do they share data with others up or downstream from that defined set of tasks covered by best-of-breed software? Usually not.
That is the argument of the suite vendor, who sells top management the idea of real-time visibility and control. While data from multiple departments and functions may be addressed in the same software, buyers should press for details on how they can support their specific requirements to view or hand off data across modules. Sometimes the functionality to enable them to intelligently use data from different parts of the suite will have been built--sometimes it won't.
With APIs becoming more central to product design, the best-of-breed vendors have a better story to tell. Integration should be easy--at least for companies with internal resources or a systems integrator on board. Standard integrations will be important for middle-market or small companies--with an attractive option being construction-specific integration platform-as-a-service (iPaaS) options like Agave.
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