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SIS Launches Civil-Highway Software that Extends Microsoft Dynamics 365 Finance

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While construction software-as-a-service (SaaS) vendors are enjoying a heavy influx of venture and private equity capital, and legacy software products are being rolled up into portfolios by companies like Trimble, Foundation, Sage and others, Microsoft Dynamics 365 independent software vendors (ISVs) are in an excellent position to serve contractors with solutions built on the software giant’s multi-tenant enterprise resource planning (ERP) application.

Duluth, Ga.-based SIS, LLC, for instance in March released to market a civil-highway version of its Construct 365 product suite.

While SIS has served the construction space with solutions that extend Microsoft Dynamics for years for industry-specific project management, project accounting, job costing, business intelligence and customer relationship management, they added new capabilities aimed squarely at heavy and civil contractors.

In an editorial debriefing call with ForConstructionPros shortly after the launch announcement, SIS Partner Mark Kershteyn described their core construction offering and the decision to offer a product specifically for the heavy-highway-civil market.

“We are the first modern technology-based solution that addresses this functionality,” Kershteyn said. “There are some great companies that have strong functionality for civil and highway, but they are lacking the technology underpinnings we have with Dynamics 365. Especially when it comes to a large enterprise, where they can do everything they used to do in their tier II system except we can do it better, cheaper, faster and more effectively and help transform their business into the future.”

The SIS solution overlays a customer’s subscription to Microsoft Dynamics 365 Finance, a powerful multi-tenant SaaS application, built for and tightly interwoven with the Microsoft Azure Cloud computing environment and relying on a Microsoft SQL Server database. The broad adoption across multiple sectors, with help from vertically-focused ISVs like SIS, have pushed the Dynamics product line to about $4.3 billion in revenue. This broad market acceptance and a deep and broad ecosystem of consultants and complementary partner solutions make Dynamics 365 a safe bet for a large contracting business system of record.

“We have always been focused on construction, specifically specialty contracting—mechanical, electrical, plumbing, at the very large enterprise level,” Kershteyn said. “We address everything from the project management, submittals, requests for information, nonfinancial control all the way to core project accounting, revenue recognition and change orders. We have a solution that addresses organized labor as well as Davis-Bacon compliance for certified payroll. We handle multi-job, multi-union, multi-state requirements with integration to most of the payroll providers like ADP or Ultimate.”

The broad application set SIS already had built out, with its ability to handle union rule and wage requirements, put them in easy striking distance of also delivering a powerful platform for civil-highway. This, combined with the passage of the Infrastructure Investment and Jobs Act, prompted SIS to close the functional gaps required to deliver a thorough solution for the sector.

New Civil and Highway Software Capabilities

To deliver a truly complete heavy-highway-civil solution, SIS augmented its project cost management software with enhanced ability around labor cost, managing pay items and integrations with popular estimating systems HCSS HeavyBid and B2W, formerly Bid 2 Win.

“Now, we can seamlessly take the estimate and get it into our system as a budget and get the material requirement as well as the subcontract requirements, so we can automatically create material requirements inside of the ERP which later could be used for procurement,” Kershteyn said. “Or we can create the subcontracts in our system, by exporting information out of the estimating system, as well as the budget. We have added functionality around equipment. We already had solutions native to Microsoft that managed equipment maintenance—everything from preventive maintenance to internet of things (IoT) connection to geosynching and telematics. We had our own solution that allowed us to charge equipment to a production job. But we added capabilities around how the equipment gets charged, how that data is captured, geofencing and IoT cloud solutions. We also enhanced our labor management solution, so when someone’s labor is captured in the field, we can attach that to a piece of equipment.”

Attaching labor to a piece of equipment improves the ability to assign the right labor code based on the equipment an employee was using. While SIS software does not run payroll and must be integrated with an external platform or service, it records and manages the complex web of union agreements, union reciprocity and certified wage codes. The software can capture gross pay based on all of these factors. Once they get a statement back from a payroll processor, SIS can report labor cost back against jobs for project cost management and tracking purposes, using either standard labor or actual cost, which would include taxes and benefits. SIS software will also use payroll data to create payments for union dues.

While SIS depends on external payroll technology to generate actual cost, the actual cost can still be reported in real time thanks to a single sign-on with the payroll system, if that is the method the contractor uses to track project cost.

Thanks to the well-structured nature of the application programming interfaces it relies on to communicate with any number of payroll systems the solution can integrate with a variety of other applications. And while SIS is a dedicated Microsoft Gold Partner, Kershteyn says they could easily use their tech to also extend other cloud-based ERP applications in addition to Microsoft Dynamics, including those from SAP, Oracle, IFS, Workday or others.

There may be a market for SIS labor management functionality among other ERP vendor customer bases given that most ERP came from the manufacturing sector, where employees are working from a set location, and if they belong to a union, these rules too are static. Construction, particularly heavy, highway and civil work, often crosses jurisdictional boundaries, triggering shifts in regulatory or union rule requirements that affect rate of pay and work rules.

Market and Price

While years ago, Microsoft Dynamics solutions were aimed at small to middle-sized businesses, the solutions have grown in sophistication, and the size and reach of Microsoft services and implementation partners have also increased to a point where a solution like Dynamics 365 Finance, which SIS extends with its ISV solution, will be a fit for the top end of the middle market and well into the largest enterprise-sized construction companies.

This means SIS and Dynamics 365 will, in a sales setting, compete with Oracle Cloud ERP, SAP, IFS and other up-market enterprise solutions. With its new heavy-highway and civil capabilities, it could also bump heads directly with Viewpoint, now part of the Trimble Construction One product line, countering that solution's deep and proven tool set with a more modern multi-tenant SaaS architecture and a technology backing from the largest software company in the world.

Intacct Construction, UK-based Sage’s flagship product for the sector, is also a multi-tenant architecture but will be relying on an external solution to complete the union labor rule functions delivered directly by SIS.

The company plans to complement rather than compete with solutions from HCSS and B2W, with which it will integrate for estimating. But there is some overlap with these two solutions, both of which have grown over the decades past estimating to handle things like field data capture, which Construction 365 also addresses.

SIS has already developed an integration with the industry’s standard project management solution, Procore, that is heavily used by their mechanical contracting customers. The Construct 365 product also has a lighter weight project management tool that will not compete directly with Procore.

With its Construct 365 application, SIS follows a standard MS Dynamics pricing model where their subscription cost is based on a percentage of the Microsoft Dynamics 365 subscription. That price is also influenced by a per-employee cost component for the labor management functionality, a cost component for every user of the field data capture functionality, and other factors. According to a pricing guide from Microsoft services partner RSM, Dynamics 365 Finance pricing starts at $180 per user per month, with the total cost for a subscription scaling based on the number of users and modules.

The Microsoft Dynamics 365 ISV approach

Microsoft has long relied not only on services and consulting partners, but ISV partners to build out solutions for specific vertical needs. In this way, Microsoft offers a classical software platform strategy, creating a sandbox for their partners to play in, building new solutions and bringing the horizontal Dynamics 365 into vertical industry deals where they otherwise would not have a complete solution. This pattern is also common with Oracle, Salesforce and other enterprise software vendors, but Microsoft is perhaps the most prolific.

"With our product, Microsoft can go confidently into heavy civil construction," Kershteyn said.

As a Microsoft Gold Partner, SIS also resells Dynamics 365 and can therefore deliver a complete solution on their own. As is often the case with ISVs, other Dynamics partners can pull them into deals, as has according to Kershteyn been the case with RSM, Avenade, Microsoft Consulting Services, and others.

BOTTOM LINE: Despite the amount of entrepreneurial activity taking place in construction technology, Microsoft Dynamics 365, paired with an ISV solution for construction, may be one of the most solid solutions for large contractors. Venture-backed companies and smaller bootstrapped or private equity-funded companies will likely be a part of merger and acquisition-based consolidation as the market for construction technology matures. That might bring some disruption for software users, and as multiple software companies roll up into a product line, certain products may fall by the wayside. That is not likely to happen to Microsoft Dynamics 365. In selecting an ISV solution, the stability and size of that partner firm speaks to its staying power—there has been consolidation among Microsoft partners in recent years as well. Adeaca, also based in Atlanta, has a construction offering, as does Dayton, Ohio-based Ellipse Solutions. CEM Business Services out of Montvale, N.J. has a solution heavily targeted at engineer, procure, construct (EPC) contractors. Western Computer, located in Oxnard Canada has its 365 Homebuilder product, aimed at residential construction. But SIS is larger than them all and contractors should feel they are standing on very solid ground opting for Dynamics 365 augmented by Construct 365.

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