The Digital Contractor
As technology evolves, it is changing the way we design, work, and build. In an ideal world, construction contractors are adapting right along with those changes, if not anticipating them. Today’s successful contractors should be digital, and have access to information in the cloud that keeps them informed with up-to-the-minute project visibility and easy communication with co-workers, subcontractors and clients. Digital contractors are mobile and all of their information is secure.
In reality, most contractors do not fit this description. The majority of contractors are operating in a pre-digital world and trying to catch up. Research shows the construction industry as a whole is unwilling to allocate adequate resources to technology. A recent Forrester report found that, on average, construction and engineering companies spent 1.2 percent of their 2017 budgets on technology. Of that tech spending, 34 percent of it was dedicated to outsourcing, 15 percent to telecommunications services, 11 percent to IT staff and just 5 percent to software licensing (see the 2017 Forrester Research Report, “The 2018 Outlook for US Industries and their Tech Budgets”). This is the lowest percentage of IT spend out all of service industries surveyed.
Rapid growth, increasing project sizes and a constantly changing business landscape means more contractors are at risk of being restrained by their own internal operations. Caught in a world of manual processes, they are at risk of having incomplete knowledge of a project’s scope, delayed project financials and inaccurate material management. Add in the fact that clients often demand new technology in every phase of their projects, and it is clear that construction firms must invest more time and money in technology.
The Digital Transformation
From eliminating paper and automating business processes to leveraging massive data sets and personalizing products and services, construction companies need to find ways to make the digital transformation in all aspects of their business.
And they should start with finance. Financial organization is the foundation of a digital transformation. It should include an integrated enterprise resource planning (ERP) system, financials and a highly trained finance team that uses digital solutions to drive value.
Contractors may think they are further along at becoming innovative organizations than they truly are. They may have automated a few business processes (e.g., outsourcing payroll). They may be performing project postmortems to examine how problems occurred. They may be championing new digital initiatives, such as providing mobile platforms and technology to employees on the job site. But these steps are often executed on a project-by-project basis – they aren’t part of a comprehensive digital vision or strategy.
A true digital transformation changes how people work, facilitating open communication, replacing labor-intensive manual and paper-based procedures, standardizing business processes, and ensuring data integrity.
The Right Tools for the Digital Job
There are specific tech tools and systems that should be utilized in order to lead to a more efficient business:
- ERP software integrates core functional areas of a business into a single system, thereby decreasing overhead costs, reducing paperwork, enhancing efficiency and improving decision-making.
- Customer relationship management (CRM) systems manage the details of interactions with customers.
- Analytics technology identifies and analyzes data into meaningful patterns found in captured data.
- Mobile applications enable users to communicate and follow project adjustments remotely.
- Building information modeling (BIM) is a 3-D, model-based process that gives construction professionals insight and tools to efficiently plan, design, construct and manage buildings and infrastructure.
- Various digital project management tools simplify resource allocations, materials management and oversight of projects from start to finish.
- Financial process automation streamlines complex, manual and repetitive accounting or financial reporting processes.
- Robotic process automation software mimics process tasks completed through human interactions within an IT environment.
Understanding and implementing new technology is not always easy. But if construction companies put in the time and effort to implement the right systems, they can realize greater accuracy, communication and profitability with strategic use of digital tools.