Ask a simple question? I should have known better.

Before reaching any conclusions, we need to explore some of the issues that come with construction industry territory and thus establish what we now really mean by "best of breed" and just as importantly, who is best placed to deliver it?

Firstly, there's the thorny question of construction industry "uniqueness." Just how unique really is the construction industry and does its uniqueness, perceived or otherwise, need to be reflected in the financial systems required to best manage it?

Secondly, what effect has the industry's reputation for slow technology uptake had on financial management? Has it affected best practice system adoption, particularly among small and medium size companies (SMEs) or caused hard to reconcile divides between different systems for different functions?

On the subject of construction's uniqueness, Michael McCormack of Construction Management Software has this to say:

"The construction industry is unique in that there are a core number of requirements from the way that work is tendered through to purchasing, management of the subcontractor function, control of the contract sales function and contract management and costing. These functions are to some extent set apart from the core financial accounting requirements, which tend not to differ greatly from industry to industry."

A.Crawford Watt of Algorithms Software agrees and is prepared to acknowledge some of the industry's shortfalls when it comes to overall financial control:

"The working conditions may be unique but the processes involved are not. Project management techniques and financial management reporting are common to many project environments.á In reality these project management theories and financial controls are not always as well maintained in construction as they could be when difficult project conditions prevail. Updating paperwork is the last thing on anyone's mind when projects are running late and over budget."

The view from Computer Systems for Business Ltd (CSB) is, however, more emphatic regarding industry uniqueness:

"The construction industry needs specialist VAT and CIS functionality and cumulative billing and payment routines for customers and subcontractors respectively....what about the functionally rich contract management system that is the heart of any successful financials package in construction?á One that understands the requirements of contract costing.á One that provides a Work Breakdown Structure (WBS) that allows for the management of costs that reflects how the project is being carried out.á One that is tightly integrated into all other modules that also understand the requirement for contract numbers, cost codes and WBS elements. The construction industry does indeed have unique business processes."

So yes, construction comes with some unique processes but equally, the need to manage core business processes and their financial implications is common to all industries. But how long does a certain uniqueness remain a barrier to wider vendor/system choice and adoption in this technologically advanced day and age?

Well perhaps one thing slowing down system adoption is the high incidence of old technology in construction, coupled with an inability or at least a high level of difficulty and expense involved in linking disparate systems to deliver today's real-time financial management requirements.

On the subject of old technology, Algorithms have this to say:

"As technology and the awareness of requirements have changed over time, many firms are finding that they have a number of systems that individually perform well, but do not combine when transferring important information across the project team. Excel spreadsheets are often used as the glue to hold the information together." 

Rob Steele of Exchequer Software agrees:

"The construction industry is currently experiencing growth of £1 billion per year, employing 1.4 million people and representing a tenth of UK GDP. However, despite the size of the market, it is still predominantly being served by old technology. 
Historically the market has been slow to embrace the advancements in IT software with all but the very large players relying on antiquated hardware and software to cope with basic accounting and job costing functionality. These accounting practices were also equally reliant on manual procedures, particularly with the arrival of the CIS requirements a few years ago. Spreadsheet accounting and reporting is still prevalent amongst a high percentage of SME companies in the Construction industry."

Paul Klein of Peak Systems identifies similar system development issues:

"Large construction companies in the 1980's used mainframe computers to run financial systems that over time were extended to support functions such as order management, customer service, procurement and supply chain management. These were dedicated systems that developed independently and consequently suffered from the major drawback that software programs were often unable to communicate with each other."

Now here's where the original best of breed concept for construction industry software emerges. Historically it was applied to niche products developed to deliver a single dedicated function such as estimating or job costing. They were provided on a stand-alone basis with little incentive to ensure proper integration with core accounting solutions, which themselves were often non-generic products, chosen for their strong accounting functionality (i.e. best of breed accounting) but not necessarily construction-specific applications.

Exchequer Software summarises this point:

"The inherent difficulties associated with linking two totally separate software products have caused endless problems to a large number of companies in this market. The premise of a "best-of-breed" solution sounds ideal in principal, until you realise that systems don't like talking to each other."

So how have things moved on and what now constitutes new best of breed thinking?

Peak Systems identifies the current context and the best of breed challenge for the future:

"Core business technologies are still continuing to evolve rapidly, it's perhaps the one thing that everyone agrees upon. Key functionality as expressed in traditional enterprise resource terminology is still essential, but the list of tasks required by many companies in the construction industry is expanding to encompass new requirements. One notable move is towards web enablement, which makes data available to remote users over the Internet. This is of particular importance in procurement and inventory replenishment and links to supply chain partners will become essential in an increasingly competitive marketplace."

Steve Thomas of Metaphorix focuses on the present challenge:

"Organizations need better financial management to provide instant business decisions and give them that competitive edge and hence we believe this is why a lot of companies are now considering tighter integration between applications across their business, but also in the supply chain."

Mike Flemming of Jobmaster is unequivocal about how that challenge should be met, why construction must put its IT house in order and finally offers a clear-cut approach to system selection that replaces the old best of breed mentality with a new mantra:

"The contracting industry is characterized by low margins, complexity & one offs. Most contracting companies are now run very tightly and there is no time, money or energy to force an IT solution to a successful conclusion.

I would argue for industry specific, one stop shopping of the closely related estimating, post-contract & accounting - not interfaced, not best of breed - just best optimized overall. Contractors need a ready to go solution that works, gives them the benefit of high individual productivity, enhanced team productivity and easier working to deadlines.

Good decisions are made through positive selection and unfortunately most decisions are made by negative elimination. Elimination is the friend of the (old) best-of-breed mentality.

What really matters is a single software author exercising his power within his organization to produce integrated software."

In other words, out with system rejection based on what it can't do for you in a certain area and in with system selection based on what it can do well for the majority of your business processes overall. The cornerstone of which seems to be integrated systems from a single vendor.

Algorithms endorses the concept of an integrated solution and the benefits it brings:

"The introduction of integrated software now makes it possible for project information to flow freely through an organisation.  These systems also allow real time information to be available to each member of the project team.  This not only improves efficiency but facilitates and improves informed decision making at all levels and eliminates the "shock results" which are still all too common in construction.

The core business of any construction company is to win work, complete projects on time and within budget and ultimately to make a profit. Contractors do not have the time to spend on supporting complicated inefficient IT systems.  We can learn from the success that other industries have had from using a holistic approach to their projects and businesses. It is clear that this approach can best be achieved by using the latest fully integrated construction specific software."

Aside from the wisdom of fully integrated financials, two additional important points are emerging here: learning from other industries and the notion of construction specific software. Now here's where it gets territorial from a system vendor point of view. Just who is best placed to deliver a construction specific financial management system, yet one that benefits from other industry best practice?

CSB would argue alongside Jobmaster and Algorithms that their heritage in the construction industry - "over 1,500 man-years of construction industry experience" -  gives them more than a head start over newcomers to the sector "in providing construction best of breed supported by consensus best practice to their construction clients:"

"A true best of breed financial management system is one that combines rich functionality with line of business expertise.  This provides the ideal solution to the construction customer because it has a built in ability to solve that customers problems because that was what it was designed to do from day one.

From time to time vendors of products typically strong in their purist accounting functionality but designed to address all and any vertical  market may focus on what is a new vertical market for them, such as construction.  This is happening more and more as their traditional markets, such as manufacturing, are collapsing and the construction market, at 10% of GDP, is seen as a golden opportunity.

A best of breed or ERP solution typically brings its origins with it when introduced into a new market.  Construction is not a repetitive process where the benefits of manufacturing based systems can be realised.  Consequently the overhead of masses of data entry and rigid processes cannot be justified.  They are simply inappropriate.  By comparison an end-to-end solution designed specifically for the construction industry that caters for the different business processes of the industry can be an unqualified success."

In case you missed it (!) that was CSB's dig at the newer boys on the block now entering the UK construction sector, vendors such as Peak Systems who sell J.D. Edwards ERP for Construction.  In reply, Peak Systems have this to say about what expertise they can bring to the construction party:

"Traditionally smaller niche software suppliers have dominated the construction sector in the UK. These 'heritage' companies have typically supplied the industry with a core system and post-contract software when available or requested. However the functionality has been limited for the wider enterprise requirement, particularly when the client organisation runs a mixed enterprise and requires software to control the construction, property management and FM business processes.

Financial applications such as general ledger, asset management and cash/credit management are important when extending the reach of the total system. Therefore, what makes a "best of breed" financial management system depends on track record, particularly where integration and proven software are key factors.

Unfortunately, a common misconception still exists in the construction industry that all enterprise systems from Tier 1 providers (vendors such as Baan, J.D.Edwards, PeopleSoft, Oracle and SAP) is focused on Manufacturing Resource Planning (MRP), a fact far removed from the truth.

The challenge of supplying fully integrated, adaptable systems, offering advanced technologies for collaboration has had to be picked up by the larger software vendors where size of business can support the high levels of continuing investment.

Although some companies remain committed to a basic construction management suite, software vendors now recognise that their products must integrate with other enterprise resource packages. As a result there is a movement towards a component-based architecture allowing for specific functionality to be customer selected.

For example, the J.D.Edwards enterprise solutions cover a wide range of business areas. Recognising that one system does not fit all, J.D.Edwards have now created specific bundles for each market. The standard 'Construction Bundle' does not include warehousing, distribution or property management. If a client requires any of these functions, they can be seamlessly added at the time of contract or at any time in the future." 

Exchequer Software is also making inroads into the construction sector with increased functionality in their accounting and business management software appealing to both contract managers and accounts managers instead of just one or the other.

"A "best-of-breed" solution may comprise of various systems from different suppliers being integrated together.  Whilst in some areas this can work extremely effectively, there are times when one integrated solution is far preferable.  Exchequer Software believes that the financial management and project costing should be totally integrated, whilst functions such as estimating could effectively be integrated from a number of specialist estimating systems. In the past, construction software had a strong heritage in terms of costing and estimating, but were generally weak in terms of financials.  Exchequer have a proven pedigree in terms of financials and costing and has all the modern integration tools (COM and XML) for integrating seamlessly with specialist and bespoke systems."

Metaphorix, another relative newcomer to the sector advocates the best of both worlds:

"We are finding that more and more organizations are striving for totally integrated solutions, for instance our own solution gives you the best of both worlds, a highly integrated financial accounting, CRM and ERP solution coupled with the specific requirements of the construction industry."

Steve Tees of ATW Computer Services Ltd. has advice to give system buyers about new players entering the construction sector without ignoring established players and throwing the old best of breed baby out with the new best of breed bathwater:

"The question of whether new players can enter the market depends on not only the stability of their company, but their meeting of the "package" needs of your business.
For "best of breed," think what are the best applications for you and do they integrate?  For example, an accounting package such as Sage is arguably one of the best of breed, not just for tried and tested functionality, but for the ability to choose which package is right for you, the ability to upgrade at any time, and the very basic requirement that new / replacement staff can be recruited already with Sage experience (hence cutting down on training / retraining costs).  Sage themselves appreciate the "best of breed" philosophy in that they produce excellent accounting packages and do not try to cover every aspect of every industry.  They aim to be the master of the accountancy world, not the jack-of-all-trades.  Therefore, they have specialized accredited developers to provide integrated applications for individual industries, including the construction industry.

If you purchase software without considering the whole package you might as well pay the supplier then stick the CD on the shelf, for you will certainly pay in the long run."