Katerra Inc. is digitalizing construction – from materials to postbuild – to give everyone access to affordable housing.
The United States is experiencing a nationwide housing crisis. But the threat here isn’t busted market bubbles or lagging housing sales. It’s a shortage of 7.4 million affordable rental homes for families earning at or below 30 percent of their area median poverty guideline. And this is despite the 136 million housing units that are occupied or available for purchase or rent.
Conventional wisdom says that construction companies should just produce cheaper housing to help the working poor. But this is easier said than done. A shortage of construction workers, complex land purchasing and financing processes, and the logistics of new construction are holding the industry back.
Katerra, a Silicon Valley construction startup founded in 2015, hopes to revolutionize the construction industry to change the lives of extremely low-income families. By establishing a new business model in an industry that has not seen much change in the last 100 years, the company is on a mission to construct beautiful multifamily residential buildings in drastically less time and half the cost.
Renovating an Old Business Model to Make Housing More Affordable
Katerra is the first vertically integrated construction services company in the United States. As a one-stop shop for construction projects, the startup manufactures its own building and finishing products, runs the factory-to-site supply chain, designs the blueprints, and oversees construction.
While this business model provides ground-breaking value, Katerra knew that it needed to have the right digital foundation in place to support business growth. Because every process impacts the final delivery of the project, it was important that the company maintain undisrupted operations by deploying an ERP system that can address current and future business requirements.
“We are establishing a new business model in an industry that has not seen a transformation in the last 100 years,” shared Grace Liu, CIO.
“We are establishing a new business model in an industry that has not seen a transformation in the last 100 years.”
— Grace Liu, CIO, Kanterra
Breaking New Ground
In a matter of five months, Katerra went live with SAP S/4HANA, a next-generation business suite. This investment allowed the company to establish a truly integrated end-to-end business process – from procurement and finance to manufacturing, logistics, and revenue recognition. Because SAP S/4HANA helps accelerate data analysis, cost control issues are immediately addressed, and revenue-to-recognition cycles are completed on time.
Onsite managers work with their crews in new ways that deliver projects more quickly. Embedded sensors in each hard hat tell managers where every crew member is working and how the construction in progressing.
To manage this massive volume of data, Katerra’s IT team chose the SAP BW/4HANA solution. The data warehouse solution is integrated with a variety of data sources from SAP and other third parties and serves as an extension to SAP S/4HANA. Katerra takes all of its information from the home office and construction site, sends it to SAP BW/4HANA, and runs real-time analytics. With low-latency reporting capabilities, business users can access reports and analytics at the moment of need.
“We can now compare data between projects on a real-time basis,” remarked Grace Liu. “Running analytics empowers us to improve workforce productivity and refine the business model.”
“For the first time, we have a truly integrated end-to-end business process in place – from procurement and logistics to finances and revenue recognition.”
— Grace Liu
Simplifying an Industry to Give 7.4 Million Families a Chance at an Affordable Home
Everything Katerra has accomplished in its two-year history is aimed at simplifying the construction industry, which, in turn, makes housing more affordable. According to CIO Grace Liu, the single biggest area where projects lose time and money is limited coordination of labor and materials. Increasing the efficiency of the construction industry requires bringing together information to provide a real-time perspective of the business to every business user and manager.
Now, Katerra has the streamlined processes and data-driven insight it needs to uncover new opportunities to grow the business and deliver on its promises. “Efficiency no longer needs to come at the expense of quality or sustainability. We are now constructing buildings very rapidly at a significantly reduced cost, which brings great value to the citizens of this country and globally,” concluded Grace Liu, CIO. “I truly believe that Katerra is well-positioned to drive change for the construction industry.”
“Efficiency no longer needs to come at the expense of quality or sustainability. We are constructing buildings very rapidly at a significantly reduced cost, which brings great value to the citizens of this country and globally.”
— Grace Liu