Home » Digital transformation has become essential – so why does construction still lag?

Digital transformation has become essential – so why does construction still lag?

by BDigital_Admin
Mike Donoghue

Mike Donoghue, IT director at Protrade and managing director at IT consultancy Economit, says that, until the construction sector takes a leap of faith on digital transformation, it will continue to chuck good money after bad

In a world dominated by the growth of digital transformation, why is it that the construction sector, which is so crucial to the global economy, continues to show slow progress?

Digital transformation is revolutionising the way we work. It’s making companies more streamlined and efficient in their operation and far more strategic in their approach as a result of the data it’s capable of delivering. 

However, many companies within the construction sector and the associated supply chain, remain hesitant to make the change and there’s not just one reason behind it. Of those factors, the complexity of the technology, a lack of understanding of the potential benefits, and a fear of disrupting existing processes are all putting industry leaders off.

And as a result, the construction sector, across multiple countries, has been slow in adoption, a fact highlighted only at the beginning of this decade in an IDC survey that found only 13% of construction firms were well on their way to digitising their operations.

Even last year, 40% of construction companies across Europe and America stated access to digital infrastructure represented a long-term barrier to their future investment activities – though this figure is down from 46% in 2021.

Furthermore, data shows that, potentially, the worldwide cost reductions by employing digital technologies in engineering and construction in 2025 would be just under one trillion US dollars.

Until the construction sector takes a leap of faith on digital transformation, it will continue to chuck good money after bad – just when embracing digital has mission critical.

The danger of patching legacy applications

Technology has come a long way in such a short space of time. Yet, the construction sector hasn’t kept pace with that change and, as a result, many firms and companies are still operating legacy applications that require good money to be thrown after bad. The majority have got gaping holes that need to be filled and patching that hole up to make do simply doesn’t cut it any more.

We’re at a junction where those businesses need to wake up to the constraints and limitations of the ERP (Enterprise Resource Planning) systems they are using.

“We live in an age where new software products are quickly brought to market – if you’re not positioned well enough to take advantage, your business is missing a trick”

The Cloud has changed everything. The degree of technical quality that is available at our fingertips is incredible. You don’t need on-premise hardware or complicated infrastructure to take advantage of enterprise applications that required a great deal of investment to licence and configure a decade or so ago. 

Now, we live in an age where new software products are quickly brought to market, and if you’re not aligned or positioned well enough to take advantage of them, then your business is missing a trick.

The opportunity is there in the construction industry, and it’s those firms that engage with it that will gain a huge advantage over competitors.

Take action now

Let’s be frank, digital transformation is not easy to achieve. It’s a costly process, both financially and in time.

And that’s why you have to start sooner rather than later. Digital transformation is tailored to the individual company, and there isn’t a one-size fits all approach to this. For example, a distribution company turning over up to £40m is going to be very different to a business that is turning over £4m. 

But for organisations looking at growth – and not necessarily growth by taking on more and more hands – technology can do a lot of work for you.

The benefits of digital transformation

While some of the benefits of adopting digital transformation were mentioned earlier in this article, they can’t be restricted to a single sentence.

There’s far more to consider here. Specifically for construction, it includes:

  • Increased efficiency – digital transformation can help improve operational performance and reduce costs through better process management and automation
  • Improved collaboration – adopting digital transformation enables better communication between teams, departments, and clients, enabling better
  • coordination and understanding
  • Increased accuracy – automation, software, and other digital tools can help reduce errors and increase accuracy in construction projects
  • Improved project management – digital tools can help project managers better track progress, reduce delays, and better allocate resources
  • Better data analysis – those tools can also help improve data gathering and analytics, allowing better decision-making and more informed project planning
  • Improved customer experience – digital tools can help improve the customer experience by providing more accurate estimates, better communication, and faster turnaround times
  • Greater flexibility – digital transformation can help construction companies better respond to changes

Case study: Protrade

Let’s start with some context. 

Protrade is a UK-based supplier of premium power tools and accessories. They have multiple depots spread out across the East Midlands and their journey towards achieving digital transformation began in April 2022. The company was one of the first distribution companies to invest in a networked computer system within the sector, but the need to upgrade and maximise opportunity by investing was recognised within its leadership team.

Even before that, we had gone through a lot of elements of digital transformation, concentrating on the infrastructure foundations before moving on to think about a line of business applications. 

The company had aged ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems that were restricted by how they integrated with other technologies. Achieving that integration, namely how applications communicate with each other, was essential. 

Without investing in digital transformation, the system stunted the company’s growth over time. As a result, we jumped with both feet into the Cloud as well as the implementation of Microsoft Dynamics 365, Customer Engagement, and Business Central to replace the current ERP and CRM systems. 

The result will give the business a better overview of its current stock levels, ensuring that it isn’t operating a day behind. That, and how the systems engage with the company’s website and other sales channels, will be significant. It’s going to be instantaneous, won’t require daily updates, and there won’t be a need to wait for data to filter through from one legacy system to another. 

We’re talking about modern web-based services now that talk directly via API integrations at a platform level. These applications are also far better to use, coming with a slick user interface, and you do all of your work within a browser with one set of credentials. 

It will deliver a modern way of working.

The right time to invest?

The above question can only really be answered with another question: when do you want your growth plans to start?

Implementing eCommerce is mission-critical to any growth strategy, a priority number one with big flashing red lights coming off of it.

At this point, the companies I fear most for are those that don’t yet have an understanding of their position in terms of digital transformation and, more importantly, don’t have a strategy to transform if they are not already doing so.

Image: Mike Donoghue

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