by Alan Joch, May 2014
When tradition meets reinvention, amazing things can happen. That’s a lesson four generations of leaders at Graniterock have been learning since the start of the twentieth century. Headquartered in Watsonville, California, the company survived and helped the region recover from the devastating San Francisco earthquake of 1906. It weathered economic downturns from the Great Depression to the more recent Great Recession and in the process grew to employ approximately 1,000 people, top lists of best companies to work for in its region, win the Malcolm Baldrige National Quality Award, and become a driving force in community service activities.
Along the way, Graniterock management has had to keep pace with the construction demands of the era—starting from its roots as an operator of a granite quarry and evolving into a thriving construction materials and construction company that builds roads and airport runways.
“We’re one of the few construction companies that is completely vertically integrated,” says Steve Snodgrass, CFO and CIO at Graniterock. “We mine granite rock and sell it to our other operations. We ship the rock through our transportation division to our plants, where we make ready-mix concrete or asphalt. These products are sold to other contractors as well as to our construction division.”
Now, Graniterock’s leaders are reinventing the company once again—this time with an IT modernization project designed to enhance cost controls; provide better business insights for executive decision-making; and capitalize on today’s latest technologies, including cloud computing and mobile applications.
But while technology is at the core of Graniterock’s latest project, senior staff has not lost sight of the company’s core mission. “We need to be good at crushing stone, selling rock, building airport runways, and everything else the business does,” Snodgrass says. “But we don’t need to be experts in all the different permutations of IT.”
Instead, Graniterock’s staff created a partner ecosystem that will guide the transition from old to new technology and ensure that key business systems successfully support the company in the years ahead.
Construction companies usually aren’t closely associated with IT innovation. At the end of 2012, trade publication Engineering News-Record reported on one study showing that IT spending in construction was the lowest among the 14 industries analyzed. In fact, companies with less than US$250 million in revenue invested about 1.6 percent of their receipts on IT. Larger construction firms, those with US$10 billion in revenue, invest even less—an average of only 1.1 percent of their revenues.
We’re a construction company—we’re not an IT company. . .It would probably have cost us more to host a solution internally, and we would not have done as good a job.
But some forward-looking companies such as Graniterock are bucking this trend. The reason: managers understand that the latest applications offer tools to help them succeed. “There’s a lot of art and science that goes into a construction project,” Snodgrass says. “The science is the financial management aspects of a project; the art is the management expertise and all the ‘if, then’ analyses that need to be done.”
For example, company representatives have signed approximately 17 collective bargaining agreements, and a sophisticated payroll system is required to handle the complexities of those contracts. “We must carve up employee paychecks among every project for a given time period and then produce a report showing how much of the salary is associated with each project to comply with prevailing wage requirements,” Snodgrass explains. “Carving up that information is difficult.”
In addition, company managers are responsible for ensuring that insurance certificates for all subcontractors are up to date. And because construction projects may last anywhere from a week to two years, tracking ongoing costs and projected profits is critical. “We need monitoring tools to make sure we’re within the budget that was part of our original bid,” Snodgrass says.
For more than a decade, Graniterock’s business managers have relied on a combination of Oracle’s JD Edwards World and Oracle’s JD Edwards EnterpriseOne solutions as its core enterprise resource planning (ERP) platform. It’s a unique environment where paper-based systems and green-screen desktop interfaces coexist with cloud-based applications. Directly or indirectly, the JD Edwards system handles everything from payroll, prime and subcontracts, and accounts receivable and payable to equipment expenses, fixed assets, inventory, procurement, credit collection, and property management.
“We can take a transaction from where it loads out on a scale in a truck, all the way to the job cost and the construction division,” says Snodgrass.
The JD Edwards system is also a central repository for a number of Graniterock’s applications, including a bidding system designed for the construction industry. Starting a new project means considering factors such as demolishing an existing structure, excavating the site, pouring concrete, and building the new structure. “We enter all those tasks into the bid software to determine what we think it’s going to cost to develop each project,” Snodgrass says. “That budget then gets uploaded into the JD Edwards system.”
In addition, a standalone application helps manage the several thousand pieces of equipment Graniterock employees use in their work. The program tracks the hours each piece of equipment runs and the time logged by individual operators and even project engineers. This information moves into the system for payroll processing and billing to the requisite project. “Each job gets billed for the equipment and the people, and then pays our team members,” says Snodgrass.
While this environment has had a solid track record for years, cracks are starting to show. Snodgrass calls the payroll system “a convoluted, complex integration” between the internal systems and a third-party processing house. In addition, applications dedicated to various internal cost centers aren’t fully integrated.
Inefficiencies like these led Graniterock officials to act. “It didn’t make sense to add new capabilities onto that house of cards without upgrading our ERP system,” Snodgrass says.
The modernization project began in earnest in the second half of 2013, culminating with plans to go live with the latest version of JD Edwards EnterpriseOne solutions in 2014. Then, over the coming years, the IT team will refresh many of Graniterock’s custom applications.
But this isn’t the first time Graniterock executives were ready to upgrade. Update plans percolated in the late 1990s and early in the last decade, but the JD Edwards company was first acquired by a competitor and later Oracle acquired both organizations. So Graniterock’s leaders put their plans on hold. “We didn’t know what the future held for future JD Edwards releases, so we just watched how things developed,” says Brad Stimson, database administrator and the person responsible for the technical details of the current upgrade.
After seeing evidence of Oracle’s ongoing commitment, along with a steady stream of upgrades to the software, Graniterock executives revisited upgrade plans in 2007. But then the recession hit, which ravaged the construction industry and forced the company into its first significant business retraction since the Great Depression.
Managers needed to focus on persevering through a difficult business climate before reconsidering the upgrade—but things began to change in 2013. “That turned out to be a pretty good year for us, and we believed we’d continue to see growth for the foreseeable future,” Snodgrass recalls. “So we said, ‘Let’s do the upgrade in 2014.”
We can take a transaction from where it loads out on a scale in a truck, all the way to the job cost and the construction division.
The staff put modernization plans together in June 2013 and received a formal go-ahead in December. “We just hit the ground running when it came to negotiating the contract and signing the statement of work,” says Kati Saunders, Graniterock’s financial systems manager and the project manager for the modernization effort. Saunders’ responsibilities include acting as the point person between CSS International—an Oracle Platinum Partner with specializations in JD Edwards EnterpriseOne and Oracle E-Business Suite—and business managers within Graniterock.
After relying on the JD Edwards system for so long, staying with the platform was not in doubt for Snodgrass. “Some people in the organization said we should also consider other products out there, but my response was, ‘Why?’” he says. “After 17 years, why would we move to something else when we know this system fits our business needs?”
The fast implementation timetable is made possible by three key factors. First, Graniterock staff is finding the transition to the modern version surprisingly easy. The reason: the sophisticated engineering of the underlying architecture and data model. “The designers of the JD Edwards system really had it figured out at the database level,” Stimson says. “The database and the tight integration of modules always worked in JD Edwards, and they work to this day. We don’t have to integrate a lot of new pieces into the system because they’re already there.”
Second, Stimson says he was pleasantly surprised when he studied documentation for the old and new JD Edwards solutions. “I looked over the information table by table and found the data model stayed pretty stable,” he says. “Most of the changes added columns to a table, while only in a few instances were columns removed. We expect that we can map to the new datasources and then things will work well.”
Graniterock’s managed application services and virtual private cloud partner, Velocity Technology Solutions, will continue to host the upgraded system and facilitate managed disaster recovery services for Graniterock once the project goes into production. Graniterock was an early adopter of a managed solution, and users have enjoyed the guaranteed application and system availability and the focus on their business, economics of their industry and geography, and future strategic adoption of Oracle solutions such as mobile solutions—all made possible by management’s decision to deliver their JD Edwards solutions via private cloud. “We’re a construction company—we’re not an IT company,” Snodgrass notes. “The economics are such that it would probably have cost us more to host a solution internally, and we would not have done as good a job.”
New capabilities will come on top of the business benefits the company has already seen after more than a decade of running the core JD Edwards platform. Once the modern system launches, Graniterock executives expect to see additional business benefits. For example, Graniterock’s biggest expense is for equipment maintenance, such as for two loaders that can each carry 25 tons of rock. These behemoths cost about US$2.7 million each, so keeping them in top working condition is a high priority for the company’s managers.
The JD Edwards EnterpriseOne Capital Asset Management or maintenance modules will help managers track what mechanic performed the last maintenance, how long it took to do the job, and what parts were used, and then update the inventory system with the new information. “If you want to have a world-class maintenance system, it has to be tied in with your cost system,” says Snodgrass.
More-accurate reporting will also aid executives. For example, the new system will combine information from a concrete dispatch system with cost data from JD Edwards solutions to create a single, consolidated report. “That will give us information to make better business decisions,” Snodgrass adds.
Support for mobile devices will be another plus. “We see value in using tablets for anyone who is working with equipment, issuing parts for work orders, and for capital-asset management,” Saunders says. “They will also help us get updates into the system as fast as possible.”
Although the new JD Edwards EnterpriseOne implementation is still under way, the project’s leaders say they’ve already learned some important lessons about managing large upgrades.
One is that, by avoiding customization as much as possible, Graniterock will avoid implementation delays. “Because we’re going from the oldest version to the newest version of JD Edwards EnterpriseOne, we will gain new bells and whistles without any customization on our part,” says Saunders. “In most cases, we should be able to use a vanilla version of JD Edwards solutions for our construction operations.”
Communication is another important element of the project. Saunders is working to keep communications open with the functional staff as the next IT environment is being built, to keep them engaged with the upgrade. “We’re talking about what will be happening from June to October and asking how many days they will need to do their work, and they will need to accomplish their portion in that time,” she says.
Finally, although the managers look forward to the new capabilities to come, they’re not becoming starry-eyed about the latest and greatest technology. Says Snodgrass, “We’ve gone from thinking, ‘This is cool,’ to, ‘Here’s our business problem; how can we use IT to make it more efficient and better?’”
Alan Joch is a New England–based technology writer.