Information Systems Tune Up or Major Overhaul?

Transcription

1 2015 CliftonLarsonAllen LLP Information Systems Tune Up or Major Overhaul? R.J. (Bob) Sniegowski, PE CLAconnect.com

2 Disclaimers The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, or tax advice or opinion provided by CliftonLarsonAllen LLP to the user. The user also is cautioned that this material may not be applicable to, or suitable for, the user s specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The user should contact his or her CliftonLarsonAllen LLP or other tax professional prior to taking any action based upon this information. CliftonLarsonAllen LLP assumes no obligation to inform the user of any changes in tax laws or other factors that could affect the information contained herein. 2

3 Housekeeping If you are experiencing technical difficulties, please dial: Q&A session will be held at the end of the presentation Your questions can be submitted via the Questions Function at any time during the presentation The PowerPoint presentation, as well as the webinar recording, will be sent to you within the next 10 business days Please complete our online survey 3

4 About CliftonLarsonAllen A professional services firm with three distinct business lines Wealth Advisory Outsourcing Audit, Tax, and Consulting 3,600 employees Offices coast to coast Serve 3,000+ construction companies Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC. 4

5 Speaker Introduction Robert (Bob) Sniegowski, P.E. Bob is a principal and consultant for CLA s construction and real estate group. He joined the firm in 1998 after working within the construction industry for 24 years and is the principal in charge of CLA s construction consulting practice. Bob specializes in operations consulting and implementation of technology to construction companies, as well as dispute resolution support services to attorneys. 5

6 Learning Objectives Evaluate whether your current software presents a risk to efficiency, reliability, scalability, or sustainability Recognize that IT software selection and implementation may demand more time and energy than anticipated Understand how to position for success when undertaking IT system implementation initiatives 6

7 Challenges of the Construction Industry Mountains of data little information The only constant is change! Geographically dispersed operations Workforce availability and capability There is no perfect IT solution! Only best fit 7

8 IT Paradoxes Fully adopting the current software is less costly but also less appealing than buying something new Integration is necessary for efficiency but requires more effort at data entry Consistent processes are essential for successful integration but my way is best is often tolerated Efficiency is necessary and highly sought, but not demanded for fear of a staff mutiny 8

9 IT Strategic Planning Is Good Business IT spend by construction contractors averages less than 1% of annual revenue-last among 19 industries 1 IT systems provide reliable segregation of duties and internal control if used properly Use of technology (or lack thereof) may determine whether a contractor gains preferred status Users of construction services expect quicker response and more accurate information Those entering the workforce expect to have technology available to reduce their time at work 1 Gartner s 2014 IT Metrics Data 9

10 Information Technology is a System of PEOPLE personnel, business partners, vendors, customers RULES policies, processes, procedures, reporting TOOLS hardware, software, applications, devices 10

11 Symptoms of Systemic Weakness Silos of data with no integration or interface Duplicate data entry Over-reliance on spreadsheet analysis Untimely or meaningless reports Billing and collection lag Compliance reporting is manual Third parties demand better reports Management awareness is lacking in critical risk management or cost containment areas 11

12 Threats to Sustainability The more we grow the less we know Accuracy or timeliness of reports or processes are overly dependent on the skill of individual users Certain back office or administrative personnel are approaching retirement or life transitions Custom or self written programs and routines are poorly documented or undocumented Software updates not keeping pace with need Software crashes, brownouts, demand for frequent and unexpected maintenance 12

13 Is our software at the beginning of the end? Consolidation has led to forecasted end to support Certain software companies have not reinvested in development o Functionality is inconsistent with need Lack of integration or inability to interface with peripheral technology has led to: o Manual processes and multiple data entry o Inefficiency and wasted investment o Frustration and lack of accountability 13

14 Decision Point Tune up what we have? Improve work flow Better define a processes Training Add a module or peripheral application Overhaul = Acquire new and rebuild our system? Replace accounting and operations software Reorganize administrative and accounting departments Implement a point solution best of breed application 14

15 Whether a Tune Up or Overhaul Financial investment is required Nothing is free Internal resources must be allocated Who will see it is done correctly? External resources may be necessary What do others do? What is missing? A relevant completion date must be identified Management s commitment to change 15

16 Tune Up is a Solution if Processes or reporting are lacking People are open to change and Can learn something new Want to improve the quality of information Can see beyond transactional accounting Tools are appropriate for: Annual volume Management information Customer demands 16

17 Allow Six Months to Tune Up a Process Activity Typical Duration (Months) Assemble a team, assess the current situation 1 Team develops solutions and pilots the new process 3 Implement the new process and de-bug 2 Total 6 A tune up is nothing more than Using what you have already purchased Doing what you should have been doing anyway 17

18 Planning for a Successful Change Initiative Identify the project objectives Define the measurement of success Name a leader and assemble a team Anticipate unintended consequences Estimate internal hours required Budget the cost and benefit. Schedule training requirements Set interim completion dates Commit to a final completion date 18

19 An Overhaul May be Necessary if Software is approaching end of life or unable to produce the required management reports Significant growth has occurred Third parties (customers, surety, bank) require improved financial reporting Manual processes are untimely People with different skills must be recruited and hired 19

20 An Overhaul is Usually Focused on Selecting and implementing a new accounting and operations software Integrating or interfacing other significant tools Peripheral software (estimating or project management) Hardware (new server or internet connection) Data collection devices Personnel changes Managed service provider Controller, CFO, CIO Business analyst Operations manager 20

21 Allow a FULL SEASON for an Overhaul Activity Typical Duration (Months) Decision to shop to buying decision 3 Buy decision to Go-Live with Core Functions (A/P, P/R, A/R, G/L, J/C) 6 Trouble Shooting, Additional modules (Equipment, Project Management) 3 Total = one full season 12 July December is busy season for implementation First come first served! A buy decision late in the year or a complex implementation could easily lengthen the 6 month Go Live to 9 months 21

22 A Successful IT Software Implementation Commitment of ownership/management Business needs are recognized Options are considered Due diligence Life cycle cost Initial cost (acquisition) Annual cost (operating cost) Other impacts Purchase agreement Implementation, conversion, training 22

23 Rethinking How the Work Is Done Begins during system selection Work flow (electronic replaces routing slips and paper) Time reporting Invoice approval and work flow Inventory or equipment costing/billing to jobs Progress billing transparency/support Information management-archiving and locating Human resources (personnel, testing, safety) Subcontractor management (contract, COI, lien waiver) Contract documents (drawings, photos, daily reports) Integration of certain functional groups Executive management reports (dashboards) 23

24 IT Software Due Diligence Scalability Structured, scripted demos Decisions Modules Potential users Key differentiators among systems User reference checking both provided and learned Compatibility with provider Cost should be a consideration, but not the sole deciding factor 24

25 IT Infrastructure Where will the software live? What will it cost? Cloud Resident server Vendor s server Software as a Service (SaaS) a monthly or annual subscription for service and data storage Connectivity and internet speed Security Access and trip wires Backups, disaster recovery and business continuity 25

26 Purchase Agreements Priced by concurrent user license Database (SQL) access licensed by named user Implementation typically an additional cost Pay as you go $175-$250 per hour Allow roughly 70% of purchase price Identify custom reports or routines before making the purchase, not after Limitations of use, inclusions, exclusions are taken very seriously by the vendors 26

27 Have an Implementation Plan and Schedule Server is prepared for new software Data bases are created starting with entities, departments or cost centers, and chart of accounts Employee, vendors, and customer data bases are converted, scrubbed and uploaded Processing is tested Training and more training Go-live De-bug 27

28 Most Common Mistake is Lack of Training Poorly timed training is the second most common mistake Every user in the organization Must be trained Starts with different baseline knowledge Learns differently Learns at a different rate Will learn what they must know Teachers can be Any age Any position Training should be tracked Refreshers are encouraged User conferences a good investment 28

29 Always Measure Progress and Results Positive trend in the number of personnel using the application and number of power users Reduced duration between event and report Reduction in average invoice approval time or number of unapproved invoices Trending over/under billing over project life cycle Improved cash flow Reduction in side (Excel) analyses Reduced records storage cost Increased gross profit per PM 29

30 IT Implementation Lessons Learned On-site training is more effective than online. Pay the freight! Designate an IT project manager The first few hours with your software implementation consultant are the most critical to success. Be forward thinking! Consolidation of entities Chart of accounts Job costing phases Billing Plan beyond payroll and accounts payable. The objective must be a JOB SCHEDULE! 30

31 On the Radar What other IT issues should you be mindful of? 31

32 Making Technology work for you Every contractor is a hacking target! Test your security and improve where necessary Skilled workforce in the office and field is limiting growth and profitability. Right people in the right seats on the bus Eliminate duplicated data entry Reduce reliance on spreadsheets Increase gross profit per PM Interoperability is necessary for efficiency Solutions must communicate with each other Instances of BYOD will become more common IT YOU 32

33 QUESTIONS? 33

34 R.J. (Bob) Sniegowski, P.E. Profile Bob Sniegowski is a principal and construction operations consultant with the CliftonLarsonAllen Construction and Real Estate Group. After working within the construction industry for 24 years, he joined the firm in He is the principal in charge of the construction group s specialized industry consulting practice. Experience in serving clients Bob specializes in operations consulting to construction companies, implementation of technology, dispute resolution support services to attorneys and project management training to various contractors and industry groups. Educational/professional involvement Bob graduated from Michigan Technological University in 1976 with a Bachelor of Science degree in civil engineering and is a registered professional engineer in the states of Georgia and Minnesota. Bob began his construction career in 1974 as a student engineer for Bechtel Associates, followed by a twenty-two year career with Al Johnson Construction Co. where he held the positions of estimator, senior estimator, office engineer, project engineer, project manager, vice-president and president of two different subsidiary companies. Bob has worked nationally on heavy civil works projects such as navigation locks, dams, bridges and tunnels; as well as regionally on grading, paving, and utility highway projects and commercial building construction projects. Bob is an active member of the Associated General Contractors of Minnesota and its annual meeting steering committee. Phone: bob.sniegowski@claconnect.com 34

35 2015 CliftonLarsonAllen LLP Thank you! CLAconnect.com twitter.com/ CLAconnect facebook.com/ cliftonlarsonallen linkedin.com/company/ cliftonlarsonallen 35