Ep 26: Top 3 Things to Know About Picking Your Construction Firm’s ERP (Part 1)

The question is if half the room raises their hand and says they’re considering changing ERPs or upgrading, or whatever they think that means. The real question is how did they get there? What’s the pain they’ve been experiencing that makes them say, “This scares the hell out of me, but I’m thinking about it”? What are the things they think they don’t have, or the pain they’re experiencing, that gets them to that point? Or what’s the advantage they think they’d get with a better system because maybe their system is inadequate?

There’s a pain point of not having reporting, for example. So that’s the topic today. I want to go to Greg first as our resident CFO. Off the top of your head, what would be the first reason you’d think about upgrading your ERP or accounting system?

While you were talking, I was thinking about how people want to make a change because they think there’s something better out there. They also think it might be the easy button, which it absolutely isn’t. What’s interesting is you’re diving into something you don’t yet know will work for you. You’re relying on what someone is telling you.

A big pain point is whether you even need a new system. How do you identify that? People think they need better functionality or better reporting, but are they really not getting any reporting right now? They probably are. So how do you know?

In a room I was in recently, some people said their system is siloed and doesn’t talk to anything else. Construction tech today relies heavily on integrations and third-party software. Their system doesn’t allow integrations, doesn’t have APIs, or doesn’t function the way they want. That was a major driver. They can’t operate a silent system anymore.

That’s a tangible reason. Without a tangible reason, are you just changing because you feel like you should? A lot of people see AI, hear about new tools, and assume there must be something better. A good starting point is asking whether you actually need a new system and why.

Another common reason companies change is because they’ve outgrown their system, especially QuickBooks. It works up to a point, but once companies reach a certain size, it no longer does what they need. It lacks inventory management, resource tracking, retainage, and other construction-specific needs. They rely on workarounds, Excel, and third-party tools. Eventually they want native functionality.

Related to that is using a system that isn’t built for construction. QuickBooks is general-purpose. It works for many industries, but it doesn’t support key construction accounting requirements. Running construction on software not designed for it is a major reason people want to change.

Another driver is the need for new functionality, like multi-entity support. This could be due to private equity ownership, multiple platforms, or opening additional locations. Certified payroll and Davis-Bacon reporting is another big one. When systems can’t handle this, companies outsource payroll, which brings them back to integrations or lack of native tools. The same applies to service work versus construction work and tracking them separately.

All of these reasons come back to functionality. Reporting matters, but if you can’t collect the right data, you can’t report on it.

On the flip side, sometimes companies don’t realize their current software can already do what they need. They may not understand how to use it properly, or they haven’t upgraded in years. There may be new modules or capabilities they’re unaware of.

There’s also a “keeping up with the Joneses” effect. People attend conferences, talk to peers, and hear about new systems. That creates pressure to change even when it may not be necessary. That’s risky. Before changing, ask why you want it and whether you truly need it.

Once you decide you need a new system, the next challenge is figuring out how to evaluate options. Some companies simply move to the newer version of the same brand. Others follow what peers are using without a thorough evaluation. Peer advice can help, but many small and mid-sized businesses don’t have those networks.

A major pitfall is jumping straight into vendor sales funnels. Once you’re in, it gets overwhelming. Companies go into demos without clear goals or use cases. Demos become unstructured, and vendors show what they want you to see rather than what matters to you.

Once you’re in a sales process, the vendor is trying to sell you their product. You may not be getting the full picture. They show ideal scenarios, but there is no perfect system.

Another issue that affects both selection and implementation is trying to recreate old processes in a new system. If you don’t step back and examine your current processes and bottlenecks, you won’t ask the right questions. New systems think differently, and processes will change. If you aren’t prepared for that, frustration is inevitable.

There’s also resistance to change. People want something new until they realize how painful it will be. Pain pushes people back to comfort. Even moving to a newer version of the same brand is still a different product, and people don’t always understand that going in.

Another major mistake is not involving enough people in the selection process. Decisions are often made top-down without including end users like accounting staff, project managers, field teams, or service departments. When those voices aren’t included, critical needs are missed.

Ironically, end users are often excluded because they’re “too busy,” but they’ll be even busier during implementation. Early buy-in and involvement is essential. Poor training and rushed go-lives can lead to burnout and even employee turnover.

You have to begin with the end in mind. Visualize the future state. Think about how workflows and roles will change. The ERP dictates a lot of the logic inside the system, and you need to understand how it works during selection.

Payroll is a good example. Multi-state payroll can be incredibly complex. Bringing payroll teams into the process reveals how much is happening behind the scenes and how much is done outside the ERP. Including representatives from each department creates shared understanding and better decisions.

Cost is another major factor. ERP costs are unpredictable. The price on day one is rarely the price a year later. Add-ons, modules, licenses, support fees, and internal time all add up. There’s no standard pricing model, so comparisons are rarely apples to apples.

Another important factor is who implements the software. Some systems are implemented by the vendor, others by a VAR or reseller. Some clients want local partners. Others want vendor-led implementations. There’s no single right answer, but it should be a conscious decision.

Conference room pilots used to be done in person and now are often virtual. From experience, in-person pilots tend to be more effective. People are focused, and it’s easier to fully test the system. Selection is really about choosing a long-term partner.

Not all VARs are equal. One of the biggest misses in selection is failing to talk to recent customers who have gone through implementation. In construction especially, people are very open about what went well and what didn’t.

A common analogy is that selection is dating and implementation is marriage. Once you commit, you’re in it for a long time. You need to understand what the system does, what it doesn’t do, and what it truly costs.

After selection, you’ll likely never talk to the sales team again. You’ll work with the implementation team. If the implementation model matters to you, ask questions upfront and go in with your eyes open.

From a technical standpoint, most systems are cloud-based. Companies should ask where data is stored, how secure it is, and who has access. IT teams care deeply about data residency and security.

You can’t know everything during selection. There’s always a leap of faith. But you can bring in experts who’ve done this before. One of the biggest challenges is managing expectations around time, cost, and internal workload.

Many companies rush the selection process. Like construction projects, better planning leads to smoother execution. Shortcutting selection is one of the biggest causes of ERP failure. Companies often pull the plug halfway through after spending significant money and energy.

ERP decisions are long-term. A system should last many years. That makes it worth investing the time to ask every question and evaluate every angle.

Most ERP implementations fail in some way—missed timelines, multiple go-live attempts, broken reports, or payroll issues. Success starts with proper selection.

Clear guiding principles—the reasons you decided to change—help teams push through difficult moments. Those north stars keep the project aligned when things get hard.

They close by teasing a future episode focused on implementation and thanking listeners for tuning in.