Jon Witty is vice president and general manager of Sage Construction and Real Estate solutions, which provides contractors, developers and property managers with a complete solution to manage an entire project life cycle with precision and efficiency. With more than 25 years of experience in technology, enterprise resource planning, project management and construction, Witty is responsible for driving Sage’s business strategy and initiatives in the construction and real estate market. Visit sage.com.
The construction industry has historically lagged behind most other major industries in its adoption of technology. Contractors tend to be pragmatic in what they spend money on and what they feel provides value. Compared to a backhoe or service van, a computer server has less of a clear connection to a contractor’s profitability. Consequently, information technology has often taken a back seat to other, more clear-cut company initiatives and investments.
The Great Recession didn’t help matters either. Many construction firms were forced to limit advances in information technology (IT) to reduce hard costs. Since then, however, the tide seems to be changing. The economic uptick and entrance of more tech-savvy millennials into the workplace have pushed IT adoption forward. Overall IT advances, particularly in much needed mobile apps for the field, have also spurred an interest in construction IT. In fact, according to the Associated General Contractors of America’s (AGC) 2017 Construction Hiring and Business Outlook, 40 percent of contractors reported they were increasing their IT investment in 2017.
Greater adoption of technology, however, doesn’t necessarily translate to thinking strategically about IT. Information technology has and is still often considered merely a cost of doing business. In fact, the 2017 Construction Hiring and Business Outlook indicates that more than half of contractors either don’t have or don’t know if they have a formal IT plan that supports business objectives. Without a strategic plan, IT spending can be reactionary and too focused on solving one issue at a time. As a result, many contractors have a collection of IT software and hardware that doesn’t work well together. The first step to convert IT from a cost center to a revenue generator starts with creating a cohesive strategy that will help drive the business forward.
Viewing IT as a Competitive Business Advantage
Numerous construction applications are now available that are having a direct impact on both top- and bottom-line results for many contractors. Particularly in the areas of field productivity and management, software tools are improving everything from daily field reporting to collaboration with project partners. At the end of the day, contractors who can harness this type of application technology can increase their competitive edge and revenue potential.
How does this happen? For one, customers have a higher level of confidence in contractors who can clearly document a project’s progress, issues that come up and how things are resolved. With this type of information at the ready, conversations between contractors and clients are more data-driven and proactive. Customers don’t have to worry about the details because the contractor can confidently show that everything is covered. Creating a better customer experience ultimately leads to more business.
Application technology can also improve productivity. With today’s labor shortage, construction firms need do the most they can with their current staff. Inefficient processes and time-wasters can’t be tolerated if a contractor wants to take on more work and grow. Applications, such as those used to collect and approve labor time, can speed up processes and reduce errors, while appropriately tracking costs and making sure employees get paid on time.
Building a Strategic IT Plan
Developing a comprehensive strategic IT plan involves sitting down with key people in your company to identify where IT can provide some answers or make improvements. During that meeting, take the following actions.
- Make a list of business problems you would like to solve—Can technology help you address those problems?
- Prioritize your needs—Determine where technology can provide the biggest and most immediate impact. Execute your strategy in stages for the best results.
- Understand the relationship between challenges—This allows you to jointly find solutions that may address multiple problems. For example, you may want a way to reduce your legal risks. At the same time, you could be having problems getting accurate production units in place from the field. Both of these issues could be addressed by automating and improving your daily field reporting.
- Set a budget—Depending on your cost-allocation methodology, not every IT investment needs to be viewed as a general and administrative expense. Some IT-related costs can be billed back to the job. For instance, with project collaboration applications, it is easy to show, per project, the value they bring in terms of improved information sharing, document control, accountability and faster approvals.
Those four items form the bases of an IT strategic plan. Although you may be planning initiatives for this year, look 2, 3 or even 5 years down the road. Investments made today should help to build the IT infrastructure you will need later in the process.
Selling the Plan
As with any business strategy, a number of impediments that could derail your plan. This is where good old-fashioned selling comes into play. Set proper expectations as to how much work will be involved and the impact on the organization to put new technology in place.
It’s inevitable that technology will require people to move out of their comfort zones. From a leadership perspective, it is important to get buy-in from your team. Connect them to the strategy. Focus on telling the story of why the technology ultimately makes the business better and how it can mean more business, higher profits and a greater chance for career growth within the organization.
Starting the Transformation
Developing an information technology strategy isn’t just for large construction firms. Today, computing power and sophisticated applications are easily available to contractors of all sizes—essentially leveling the playing field. Those firms that grab the opportunity to use IT tools as revenue-producing, issue-solving solutions will be prime to transform both their businesses and the construction industry.
Know the Facts
- Thirty-eight percent of contractors have no in-house IT staff.
- Construction companies invest less in IT overall than most major industries.
- The productivity issues the construction industry faces makes it prime for an IT transformation.