By now, everyone in construction knows about the infamous McKinsey research: construction is ranked at the bottom of all the industries for technology adoption. But with COVID forcing even the most offline businesses to get online, 2020 was an opportunity for construction to digitalise.
In this post, we argue that, unlike other industries, COVID isn’t going to have the same level of impact on construction’s modernisation. To understand the definitions surrounding this topic and our predictions for how the industry will change for different reasons, read on.
Understanding digital transformation
When we think of construction technology, we’re usually referring to the technology that makes construction happen. According to JLL, construction technology adoption has increased in certain areas during the pandemic, such as CAD and BIM. But when it comes to the less exciting back-end processes, what keeps the business running and growing, there’s little change.
Digital transformation doesn’t just mean using computers to get your work done. It means completely replacing non-digital and manual processes with digital technology. It can also mean replacing legacy technology with newer, more capable technology (Salesforce’s sweet spot). Every department, from HR, to sales and marketing, through to finance should be connected. Only then can a company’s leadership team truly understand the business and how it’s performing, becoming a data and insight-driven entity.
Going from project-centric to customer-centric
We’ve been speaking to our construction customers for years now about going from being project-centric to customer-centric. Effectively that means breaking down the barriers between:
- different parts of the business and
- supply chain, stakeholders and other external partners.
In today’s global, fast-paced business world, we can only achieve this by working on the cloud. But many construction companies are still not there yet – this is what McKinsey is referring to in its damning industry findings. At BrightGen, we have seen some of the tier 1 and 2 construction companies starting to talk about the need for a solution like Salesforce. But even then, the conversations often come back to price. With low industry profit margins, construction companies can be averse to investing up-front in systems that are not perceived as generating short-term value.
So far in the industry, we see Salesforce being used primarily for work winning – an obvious choice as a first step. This is indicative of tactical, point solution purchasing. By seeing this as an isolated function of the platform, companies are missing out on larger opportunities to utilise the platform for other processes ripe for digital transformation. For example, processes such as project resourcing, marketing, warranty/snagging management and more. That’s why COVID has not advanced digitalisation for the construction industry. By using multiple tools that are not necessarily fit for purpose, construction companies risk hindering productivity even further.
Learning from other industries
Around ten years ago, financial services was in a comparable position to construction when it came to digitalisation. The market was led by the largest organisations. Despite the 2008 crash, the largest, oldest and most successful companies could rely on their brand and perceived security to get by. Luckily for one major firm we worked with, they could see the need to modernise. They came to us with a barely used Salesforce organisation, little visibility at the top across the business, and several business units on interspersed systems.
Over time, we put in the effort to modernise their business bit by bit, with our hard-working advocates within the company. A few years on, as digital disruptors hit the industry, the bigger financial services firms found themselves scrambling to compete. Our customer was meanwhile confident that their business would continue to outperform these new upstarts – because they could now truly assess their business performance.
We see the construction industry looking the same way. COVID has not forced it to change, just like the financial crash of 2008 did not force the financial services industry to change. It will be digital disruptors that force the change. These were once unfathomable in financial services – who would have the finances to do this? What customers would trust in a digital disruptor in that industry? We predict the same will happen to construction.
Relying on the supply chain
At BrightGen, we see how the entire built environment needs to join up. Our customers across real estate, construction and facilities management are at different stages of their digital transformation journey – and of course, it does depend on the company. For example, we are lucky to work with Laing O’Rourke, a tier 1 contractor leading the way when it comes to using Salesforce to modernise their business. Our real estate customers such as Strata Homes, Mount Anvil and Canary Wharf Group are already among the most advanced companies we work with when it comes to digitalisation.
Many construction companies say that they cannot be truly digital until the full supply chain is. However, it is general contractors who can push this. By only accepting digital transactions, the supply chain will be forced into digitalisation. As times change and a digitally-savvy generation takes over, old-fashioned companies reliant on paper will soon lose out to competition.
The change has already happened to some extent across the entire built environment. We cannot go backwards, and can only choose how fast we go forwards. COVID was not the catalyst for digitalising the industry. It will be new companies that threaten to digitally disrupt the status quo that force everyone else into line. We predict this will happen quickly, especially as the main contractors start to report any form of success thanks to digital transformation.
We are helping construction companies transform their organisations using Salesforce. BrightGen are offering free consultation from our experts for all built environment companies this year to help them get ahead of the curve. Book your session.