The Scoop on Wi-Fi
How an old-line construction company joined the wireless revolution.
(FORTUNE Small Business) – Brian Stolar was watching a presentation on Asian real estate development in a downtown Tokyo conference room when he received an urgent e-mail over his wireless tablet PC. A potential customer in New York City was demanding that he immediately sign a confidentiality agreement or lose out on purchasing a hot piece of property. Stolar, 49, founder of Pinnacle Communities, a builder of upscale houses based in Millburn, N.J., knew just how to seal the deal. Using a secure server and a Wi-Fi hot spot, he delivered a digitally signed contract to the seller's in-box in seconds flat.
As a midsized construction company with annual revenues of more than $150 million, Pinnacle works with a broad range of development partners, engineers, bankers, lawyers, and subcontractors. The company's 75 employees are constantly shuttling among construction sites all over the tri-state area. And its trailers are often the first structures to occupy dirt lots where broadband communication capability is months or years away.
If a municipal planning board passes a moratorium on building permits, Pinnacle's lawyers must quickly e-mail dozens of revised contracts to clients, development partners, and zoning officials. Or consider the mechanical engineer who discovers that proposed kitchen cabinetry would interfere with the installation of air-conditioning ductwork. The result: a flurry of e-mail correspondence and revised blueprints among engineers, architects, Pinnacle managers, and clients.
While much of the construction industry has yet to move beyond the fax machine, Pinnacle is using wireless technology to get a leg up on its competitors. And Pinnacle is not alone. According to New York City research firm AMI-Partners, 13.6% of all U.S. small businesses were using wireless local area networks (WLANs) by the end of last year, up from 11% in 2003. This penetration is expected to grow almost 15% annually over the next five years.
Developed over the past four years, Pinnacle's wireless network consists of an Internet security system from firewall manufacturer SonicWALL and cellular coverage from carriers Cingular/AT&T Wireless and Verizon Wireless, as well as operating software from Microsoft.
Tiny smoke-detector-like sensors containing radio transceivers perch atop filing cabinets at Pinnacle headquarters, relaying information between the company's server and an arsenal of wireless devices. Pinnacle's mobile employees are armed with laptops, tablet PCs, and web-enabled cellphones, all of which work within 300 feet of the nearest transceiver.
Employees' laptops and tablet PCs switch automatically from cellular to WLAN connectivity, depending on an individual's whereabouts. This ensures that Pinnacle's employees receive the best mobile service possible, because data speed over a WLAN is about ten times faster than cellular transmission. And because Pinnacle's mobile devices are wirelessly enabled, users can easily take advantage of Wi-Fi hot spots all over the country.
Stolar also teamed with Becker Automotive Design in Oxnard, Calif., to convert a Ford Excursion into a conference room on wheels. Completed for a total cost of $80,000, the souped-up SUV features a built-in PC with a 28-inch plasma screen, a wireless keyboard, a printer, and four laptop ports for meetings en route. Stolar simply inserts a Sierra Wireless AirCard into the vehicle's computer to gain access to the Internet and e-mail.
The SUV recently helped Pinnacle seal an important deal. Stolar and his attorney were on their way to negotiate a property deal when Manhattan gridlock turned what should have been a 15-minute hop into an hour-plus nightmare. Desperate to complete the agreement, Stolar asked the seller's attorney to e-mail the contract to him.
Stolar and his attorney viewed the contract on the in-car screen while discussing proposed changes with the seller's attorney over speakerphone. They made the necessary changes and e-mailed the revised contract back to the seller's attorney. At the same time Stolar faxed the contract to one of Pinnacle's development partners who didn't have e-mail access at the time. The deal was sealed by the end of the day.
Although all networks are theoretically vulnerable to hacking, wireless ones are especially difficult to secure. Anyone with good computer skills and bad intentions can easily grab everything from internal memos to credit card numbers. "Wireless technology gives you more ways to get hurt," says Kurt Cumming, a director at inCode Telecom, a California wireless technology consultancy.
Most wireless solutions include security features that prevent hackers from acquiring proprietary information. However, wireless networks and devices must be properly configured so that data is encrypted before being sent over the network. Many small businesses turn to specialized network consultants for help. Pinnacle retained Silicon East, a network support firm in nearby Manalapan, N.J.
Nearly half of Silicon East's business comes from providing computing and telecommunications services to building contractors in New Jersey. In addition to overseeing installation, Silicon East maintains Pinnacle's network connectivity. The arrangement cost Pinnacle $25,000 in setup fees, including parts and labor, and $5,000 a year for troubleshooting and upgrades. Pinnacle also spends $30,000 a year for wireless subscription services. Stolar invested a total of $150,000 (including the SUV) to build Pinnacle's network.
Architectural blueprints are now delivered via e-mail rather than by costly courier services. Employees can respond swiftly to queries from New Jersey's nearly 500 municipalities, each of which has a say over what can and cannot be built within its jurisdiction. And meetings are scheduled in minutes, using online collaborative software from Groove Networks (acquired by Microsoft in April). Groove's starter kit costs $2,295, which includes ten licenses, online training, and e-mail support. Although priced comparably with enterprise-oriented collaborative applications such as IBM's Lotus Notes/Domino and Microsoft Share-Point, Groove relies on peer-to-peer technology that enables communication without a server. Groove allows collaboration between people inside and outside a firewall without constant reconfiguration. That's a big draw for Pinnacle, whose partners often change with each project. Server-based collaborative software such as Lotus Notes, on the other hand, is best suited for ongoing projects that involve an abundance of data.
Stolar estimates that faster communication has shaved one to two weeks off the time it takes Pinnacle to build each house. Pinnacle can thus take on far more projects, contributing—along with a hot real estate market—to a nearly 30% increase in annual revenue, worth more than $45 million. Stolar calculates that enhanced connectivity has made his mobile workforce nearly 40% more productive. As a result, Pinnacle saved $625,000 in salaries alone last year, Stolar says, for an ROI of 417%.
Wireless gizmos can't shingle a roof or predict real estate market trends, but mobile communication technology does help Point, Pinnacle compete against builders with deeper pockets and more staff. That's some strategy for a business whose bread and butter is bricks and mortar.