Jeff Lucchesi joined San Francisco-based Building Materials Holding Corp. (BMHC) as its chief information officer in August 2004 from Corio, an applications service provider. At the time, he recalls, the home improvement industry's technological sophistication left much to be desired. Two years later, that industry might be only modestly more advanced but, he observes, “It's at a tipping point. Demand for technology has gone from quiet to off the charts” in such areas as field management and distribution. “They all want something.”
Pro dealers around the country are showing a growing avidity for technology to help run their businesses. Their immediate concerns center on improving document management and tracking orders and deliveries, but several companies also are embracing new systems to measure their performance, among a variety of other uses.
That pro dealers are moving in this direction at all is definitely a sea change for an industry that, historically, has been defiant in its resistance to technological solutions for their operations. Even today, that opposition is palpable: The 2006 PROSALES 100 survey of the 100 largest pro dealers found that three-fifths aren't using estimating software and a third don't use inventory or accounting software.
In truth, dealers selling commodities had been under little pressure from suppliers or customers to take on the latest and greatest software and systems. But several factors-including the accelerating consolidation of the housing market into the hands of fewer national and regional builders, and the transformation of dealers themselves into more complex, farther-flung organizations-are changing retailers' Luddite attitudes and forcing them to take a more serious look at how technology can improve their companies' productivity.
That doesn't mean dealers are rushing madly into new systems and software, or that they are going to start opening their wallets wider. This industry continues to lag other business sectors in IT investment, as shown by PROSALES 100 survey respondents, three-quarters of whom said they would spend 0.5% or less of 2006 revenue on IT products. But it's clear that more dealers are turning to technology for tools that help them meet operational challenges and see the implementation of those tools as providing a distinctive competitive advantage.
Most dealers concede that the systems their companies are either testing or rolling out are so new it's impossible to determine whether they are producing the intended benefits. At the very least, however, dealers hope technology will help create more transparent interfaces with their suppliers, contractors, and employees. “I want to bring technology to the forefront for our customers,” says Bernie Koontz, controller for Louisville, Ky.-based Boland Maloney Lumber.
Builder Disconnect Koontz can envision a day when his company's salespeople will use wireless tablet PCs to show products to customers, take measurements, and place orders. He also foresees a Web connection that gives builders access to Boland Maloney's back office for viewing invoices, placing quotes, and staying on top of inventory and pricing.
He's quick to point out, however, that some builders still balk at receiving invoices via e-mail. Indeed, like dealers, builders are relatively slow to invest heavily in IT solutions. In a recent study by our sister publication BUILDER magazine, the largest percentage (21%) of builder respondents indicated that less than 0.1% of annual sales is devoted to IT. Only 20% indicated they spend between 0.1% and 0.2%. The survey also revealed that 30% are using PDAs and only 11% are using tablet PCs.
There will always be tech-phobic factions within an industry that was one of the last to harness the Internet, scan documents, or integrate with other providers, says Dick Citron, president of Farmingdale, N.Y.–based Citron Associates. His Yard Master ERP product has been the long-standing operating system for The Strober Organization, (which, Citron notes in passing, wasn't fully engaged in electronic data interchange with suppliers until it acquired The Contractor Yard from Lowe's two years ago).
Lucchesi of BMHC thinks these pockets of resistance are weakening. “It's still ‘show me' out there, but I'm not getting strong-armed anymore,” he says. Yet dealers admit they aren't as wired to some customers as they'd like. “We offer a connection for builders to log into our system for prices and so forth, but they don't use it,” says Joe Frame, senior vice president for Springdale, Ark.–based National Home Centers. Matt Klyman, vice president of information systems for South Plainfield, N.J.–based Strober, which offers turnkey programs for framing and other building products, speaks for many dealers when he states that software for scheduling installers is “builder-centric,” and often requires dealers providing that service to use two data-entry systems.