ERP and Big Data key investment areas for digital transformation within the construction sector – MPL Systems

ERP and Big Data key investment areas for digital transformation within the construction sector

16th November, 2017

IFS, the global enterprise applications company, today announces the construction & contracting industry insights from its ERP and Big Data key technologies in search of efficiency Digital Change Survey. The results show that companies are focused on driving process efficiencies through investments in technologies for digital transformation.

The report outlines that the construction, engineering and infrastructure industry is characterized by its delivery of unique projects, which are typically delivered by groups of contractors and sub-contractors working in collaboration. This creates complex, sometimes unpredictable and tight cashflows and, as a result, even tier-one construction firms frequently find themselves in challenging financial positions. Pressure to deliver construction projects on a shorter timescale, for a lower cost and to a higher quality, is found across the board. Foreign competition and non-traditional firms, including asset managers, are creating an additional burden. Consequently, every possible competitive advantage must be found and exploited. Here digital transformation plays a vital role.

Few companies utilize the full potential of data-driven insight

The study highlights that the main driver for digital transformation is process efficiency (44 percent of the respondents,) followed by improved reporting and decision making (39 percent.) Enterprise Resource Planning (ERP) tools (46 percent) are flagged as the number one capability identified for investment, highlighting the need for more mature centralization and management of data internally. This is followed by Big Data and analytics (45 percent) and Infrastructure as a Service (37 percent.)

Some 39 percent of construction sector organizations consider themselves digitally advanced, second only to aviation among the sectors IFS studied. However, this varies significantly by size of company. Over one fifth (21 percent) of the largest ($25bn+) firms consider themselves fully optimized to leverage digital transformation, while the figure is just 11 percent among the smallest ($1-4.99bn) players.

“Construction firms are recognizing that in order to improve efficiency they need to offer services that manage the total lifecycle of an asset, as opposed to purely its construction,” said Kenny Ingram, Global Industry Director for Construction and Contracting at IFS. “This means utilizing tools to monitor and quantify the performance of those assets in real-time. Technologies such as Big Data analytics and ERP software offer powerful platforms to manage this need, and can be used to provide access to additional revenue streams after the asset has been delivered.”

Combatting skills shortages

Leveraging data-driven insight is crucial to the success of construction firms, the report reveals.

Big data analytics tools can study in-depth data to help employees understand how to get the best use of an asset based on what was designed, what was built, what failed when, and how it is performing.

Towards greater collaboration

However, there is a long way to go. Although 69 percent of construction firms are utilizing data-driven insight, just 17 percent are actually gaining a competitive advantage from it – although this figure rises to 24 percent for the largest firms.

About the IFS Digital Change Survey

As processes and infrastructure go digital, they will naturally be exposed to greater online threats.

By Kenny Ingram Kenny is the Global Industry Director for the following industries: Construction, Contracting, Engineering, Infrastructure and Shipbuilding. In addition he is heavily involved in other Project and Asset Lifecycle industries including Oil and Gas, Energy, Utilities and Defence. Kenny’s main responsibilities are to promote the IFS solution to the external marketplace and to educate the IFS workforce on the business issues and challenges these industries face. He is also a key member of the IFS Product Direction Board who are responsible for making decisions on the IFS product strategy. Kenny has been with IFS for 16 years and has worked in the business systems marketplace for over 20 years. He is now regarded as one of the top specialists in Project Based Business systems and has been heavily involved in driving the IFS strategy in this area for the last 16 years. Prior to this Kenny worked in Industry in various positions covering Management & Project Accounting, Supply Chain and Logistics.

That is why cybersecurity is the area respondents claim suffers from the greatest talent deficit (37 percent,) followed by BI (33 percent.) Yet they are responding to this disruption – by upskilling existing talent (55 percent) and recruiting digital talent externally (41 percent,) as well as investing in digital technologies and resources (59 percent.)

Construction industry respondents rate departmental integration at 3.5 on a five-point scale, showing much room for improvement. However, there is a considerable desire for greater collaboration, despite the extra complexity arising from multiple sub-contractors and the joint venture model common in the sector. Nearly three-quarters (72 percent) of respondents claim “the necessity for manual reconciliation between management information systems (MIS) has a negative impact on their business.”

This survey was commissioned by IFS to assess maturity of digital transformation across industries on a global scale. The cross-industry report can be found here. It was conducted as in-depth interviews by the research company Raconteur, who took in the views of 750 decision makers in 16 countries in the oil and gas, aviation, construction and contracting, manufacturing, and service industries. Within construction, 150 respondents participated in the survey. Countries surveyed were USA, Canada, the UK, Sweden, Germany, France, China, Japan, Australia, Norway, Denmark, the Netherlands, Spain, Poland, the Middle East (as a region), and India.