The construction industry’s adoption of digital technology is growing in an effort to catch up with other industries that are benefitting from modern technology in managing financial and operational complexities. As a result, more and more construction companies are moving away from legacy, on-premise enterprise resources planning (ERP) systems and in favor of cloud-based systems.
As rapid industry growth, tighter margins, and increased project complexity are impacting construction companies, cloud-based ERPs are no longer considered a luxury. Growing demand for flexible, scalable, and efficient systems make cloud systems essential for staying competitive in the construction industry.
Construction companies that use traditional on-site ERPs can face obstacles that reduce productivity or impact profitability. Here are a few challenges legacy systems present:
A cloud-based ERP is an enterprise resource planning solution that’s hosted on remote servers you access via the internet rather than being installed locally on office hardware. Cloud-based systems provide scalable infrastructure to grow with your business, seamless updates by integrating your construction solutions, and accessibility across all devices (web browsers, tablets, and smartphones).
Unlike on-premise ERPs, a cloud ERP can be easier to implement, has lower IT and overhead costs to set up and maintain, and automatically stays up-to-date with all the latest features and security enhancements.
Cloud ERPs benefit your entire company, from procurement to job costing, payroll, and more. Here are seven key benefits you can expect from implementing the cloud-based solution:
With a cloud-based ERP, project teams can access all construction data from anywhere, whether at a construction site, in the back office, or working remotely — virtually eliminating the reliance on outdated spreadsheets, tracking down information by phone, or sending numerous emails back and forth. It facilitates better and faster communication between your field and back office.
You’ll get live access to dashboards with real-time data on job costing, cash flow, and project profitability through a cloud ERP. It allows you to make more informed decisions faster, based on up-to-the-minute data.
Cloud ERPs connect seamlessly with other construction tools, including your procurement systems, payroll platforms like hh2, and project management tools like ProCore. By automatically syncing data between tools, they reduce the need to manually enter data and cut down on errors caused by disconnected systems. For example, you can automatically sync hours from a mobile time tracking app directly into your cloud ERP, simplifying your payroll processing.
Your construction company can save money, as cloud-based ERPs eliminate the need for expensive hardware and IT staff to install and maintain an on-premise system. Plus, subscription-based pricing allows for predictable budgeting.
Cloud-based infrastructure can easily handle increased users, construction projects, and transactions without requiring an overhaul of the system. This factor is especially beneficial for construction companies experiencing growth or taking on more complex projects. With a cloud ERP, a mid-size construction company can take on multi-million-dollar commercial projects and not have to worry about system limitations.
The cloud is built to protect your company’s data through features such as encryption, automatic backups, and regular security updates. Cloud ERPs ensure compliance with all data privacy regulations and industry-specific compliance requirements. They’re designed to minimize downtime due to ransomware or data breaches, so you don’t have to fear losing critical job costing data to a cyber attack or server crash.
Your finance, project management, and procurement teams can work together seamlessly and within one system, streamlining communication across teams. A cloud ERP encourages cross-functional collaboration and eliminates silos, allowing estimators and project managers to share real-time bid data without switching systems.
When transitioning from an on-site ERP to a cloud-based solution, keep the following in mind:
Before choosing your new cloud ERP, first assess your pain points with your current ERP. Are there certain processes it doesn’t cover or areas that need improvement? Keep them in mind when researching your new solution. Also, be sure to involve all of your key stakeholders, such as your CFO, Controller, and Project Managers, to better understand business-critical requirements.
Look for cloud-based ERPs that specialize in construction, such as ProCore, Sage Intacct, or Acumatica, for example. You will also need to ensure that your chosen cloud ERP is compatible with your current tech stack and integrates with the apps and tools you use.
To minimize disruptions, gradually roll out features in stages. For example, start with AP or payroll features first and train your team to ensure quick adoption of the new system. Then, once it's successfully implemented, move on to the next feature.
You can continuously refine and improve your cloud ERP even after implementation. Use real-time reporting to monitor performance metrics and take user feedback into account to further optimize workflows and take full advantage of the ERP’s benefits. This step can also help you maximize your cloud ERP ROI.
Cloud-based ERPs offer numerous benefits for construction companies, including enhanced collaboration and increased efficiency. However, newcomers to cloud-based technology may still have doubts. Below, we cover a few common concerns about cloud ERPs.
Many construction companies worry that cloud-based software and platforms are less secure or prone to data loss, but the opposite is actually true. Cloud ERPs offer enhanced security and governance features, preventing unauthorized access. Cloud providers also use redundant backup features and disaster recovery systems to ensure your data is protected.
While there is an upfront investment in moving to the cloud and its associated subscription costs, it’s balanced out by cost savings and reduced maintenance of an on-premise solution. Cloud-based ERPs typically are more cost-efficient than on-site ERPs since you don’t have to buy hardware or software upfront. It also provides you with a strong return on investment (ROI) over time.
Cloud ERPs often have offline capabilities or mobile apps so you can maintain productivity during an outage. Many also offer syncing features, so any work completed during an outage is quickly updated within your cloud ERP once a connection is restored.
To stay competitive, many construction companies are moving to cloud-based ERPs—but whether you make the switch now or later, hh2 is built to support you every step of the way. Our construction-specific solutions seamlessly integrate with both on-premise and cloud ERPs, ensuring real-time payroll, job cost accuracy, and streamlined operations—no matter where you are in your technology journey.