Protecting Your Margins in Construction: Oracle Cloud ERP

Thu 31 Aug 2023 posted by Project Partners


Welcome to the Project Partners’ on-demand webinar series on Oracle Cloud ERP’s benefits for the Engineering and Construction industry.

This industry is no stranger to challenges, whether it’s complex project management needs or stringent budget controls. Amidst these challenges lies an opportunity to revolutionize how projects are planned, executed, and managed. Oracle’s Cloud ERP empowers organizations to unlock efficiency and achieve unprecedented levels of success.

In this interview, our in-house experts, Bruce Maghan, VP of ERP/Project Solutions, and Neeraj Garg, Executive Consultant of Industry Solutions, explore improving and protecting your margins with Oracle Fusion Cloud ERP.

What functionality in Oracle Cloud ERP helps improve margins?

Neeraj: Multiple elements in Oracle Cloud ERP help organizations improve their margins. Functions like the OCR-related invoice scanning that automatically scans overnight invoices into the system. Or that you don’t need many AP employees doing manual entry to the applications for your invoices, and the ability to automate the approval process with workflows all help to improve efficiency and thus margins. Also, from a general ledger perspective, the built-in space database is another general ledger that provides real-time information roll-ups. You have visibility into how you’re doing against your organization’s budgets and forecast in real time.

The core margin improvement functions for a project-driven company come from the project applications and managing your projects. That is where the Cloud PPM module allows you to plan for your margins up front based on your budgets. It also makes sure that your execution budget is going to be as close to what you think you’re going to execute, though it may be different from as sold.

Going into execution, the ability to track all of your costs in near real-time, review your commitments in real-time, and submit your forecasts allows everybody to see where your projects are financially. Look at your issues, your schedules, and your resources, and then do your invoicing and revenue recognition seamlessly out of the box with standard functionality in Cloud ERP.

All of these go a long way in helping you improve margins.

Can you explain the specific cost-saving benefits and potential financial impacts of Oracle Cloud ERP in eliminating the need for on-premise servers and associated maintenance costs for E&C organizations?

Bruce: Traditionally, Oracle E-Business Suite required organizations to purchase servers and set up and maintain an I.T. infrastructure from a people and hardware perspective. With the adoption of Oracle Cloud ERP, organizations can realize cost savings by shifting their focus to their core competencies and reducing their overall cost and risk. These cost savings come from reduced personnel, hardware, and software costs related to I.T. infrastructure.

In addition, Oracle leverages quarterly release patches, eliminating the need to conduct major upgrades on the product as you go forward.

How does Oracle Cloud ERP ensure data security and protection for E&C companies, thus reducing the risk of potential financial losses related to I.T. infrastructure and server vulnerabilities?

Bruce: By allowing E&C firms to focus on their core competencies rather than I.T. infrastructure, Oracle Cloud ERP shifts the risk of designing and maintaining your I.T. infrastructure to the hosting entity, which in this case would be Oracle. So Oracle’s redundancy-driven approach eliminates any risk related to I.T. infrastructure and data server availability because of the redundant data systems and data centers they have across the country.

Can you explain the scalability and flexibility advantages that Oracle Cloud ERP offers in terms of adapting to business changes and demands? And also, how does this translate into improved margins for E&C companies?

Bruce: Sure. Oracle’s quarterly release patch approach continually advances the scalability and flexibility of Cloud ERP. Each quarter, Oracle issues patches that resolve bugs and provide product enhancements and new features, many of which are provided based on customer suggestions.

This approach ensures all customers are always on the latest release of the product. An item to note here is that even though Oracle patches the product every quarter, you’re not required to adopt all the features and functionality that come in those patches because there are separate setup steps that can be leveraged to enable those features as they become available to you.

How does Oracle Cloud ERP handle data storage and backup, ensuring data reliability and minimizing the risk of financial losses due to server failures or data loss incidents?

Bruce: Oracle’s redundancy-driven approach eliminates the risk related to I.T. infrastructure and server availability. We’re talking about redundancy, meaning the defense in depth at their data centers and the fact they have data centers around the world.

This also applies to their backup approach. Your instances are backed up constantly. In addition, server performance and storage capacity are monitored constantly to eliminate the potential for downtime due to server capacities being reached. The point to take away from all of this is that by migrating to Oracle Cloud ERP, you’re removing the risk and costs associated with maintaining I.T. infrastructure and servers related to ERP and shifting that to Oracle.

All of this is covered under your subscriptions to Oracle Cloud ERP.

Can you elaborate on the potential cost savings achieved by E&C companies through integrating Oracle Cloud ERP with a PMIS system?

Neeraj: Absolutely. There are fairly significant cost savings that E&C companies can achieve by adopting an integration of ERP applications like Oracle Cloud ERP with a PMIS application. Let me give you a couple of examples here.

One is the ability to use a heavy-duty scheduling tool like Primavera P6, a PMIS application that can be integrated into Cloud ERP.

Many E&C firm customers will require that you report progress and provide plan updates in a P6 format because they are internally managing their project plan in P6. Using P6 as your native scheduling tool integrated into your ERP to manage your projects, you do not have to do the work twice, once in your ERP and once in PMIS.

Now, you have a single integrated system that you can use to manage your projects and provide updates to your clients without any double work.

A second example of this is document management.

When you work with construction or even with late-stage engineering functions, there’s a lot of collaboration between various organizations: the contractor, the subcontractors, the vendor, the customer, the architects, the engineers, all of them have to collaborate.

And the means for this collaboration are the documents, the audit files, the submittals, and the transmittals. These documents provide information, ask for information, get approvals, and disseminate approved documents across all parties involved. All of these documents need to be tracked very carefully because, in the construction trade, 90% of the projects end up in litigation of some sort. These documents provide the backup information needed to resolve such litigation.

Integrating the PMIS tool, which natively supports this document management with Cloud ERP, provides you with a seamless audit with these documents you can bring up at the snap of a finger should you need it during a litigation function. These examples give you the idea that you can achieve potential cost savings, a significant amount of cost savings, for E&C firms with Oracle Cloud ERP.

This concludes our series on enabling Oracle Fusion Cloud ERP for the construction and engineering industry. For further questions, please reach out to our expert consultants to schedule a conversation!

To view the first episode on Contract Management, click here.

To view the second episode on Supply Chain Management, click here.

To view the third episode on Finance Modules, click here.