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Quarter of construction companies lag on digital performance – report

by Liam Turner
A businesswoman using a tablet amid a gloomy construction backdrop

Just 18% of building and construction companies are taking a “rigorous approach” to digital, with the majority failing to focus their investments on areas that drive business performance.

That’s according to a new report from global management consulting firm L.E.K., who collected survey responses from 129 senior executive at building and construction companies as part of wider research of more than 550 senior executives at industrial firms.

Companies in that 18% are reaping benefits, according to the report, reaching new levels of production efficiency, lowering the cost of maintenance or unplanned downtime, and finding new, profitable ways to engage and serve customers.

Another 58% are making “substantial efforts” on at least some digital factors that drive performance — again with a measurable impact on results.

The remaining 24% are followers that report limited success with performance-focussed digital investments, and their results lag.

Companies that do not accelerate their digital investments and do not take a strategic, results-oriented approach risk falling permanently behind, the report found.

The findings, reported in Digital for Industrials: Laying the Groundwork for Success, are part of an L.E.K study that identifies seven critical success factors and points the way to a roadmap for digital industrial success. 

Commenting on the findings, Darren Perry, L.E.K. managing director and a report co-author, said: “The good news is that digital leaders are taking clear steps that other companies can replicate.

“But too many executives are not yet clear on the role of digital in their overall business strategies. Fewer still have a real sense of how to get from their current digital state to where they need to be.

“Those that continue to lag risk finding themselves at a lasting competitive disadvantage to leaders who are accelerating their investments and can use digital to more efficiently run their operations and drive more effective go-to-market programs.”

The respondents

The executives surveyed in the study are responsible for digital initiatives in companies of all sizes, ranging from extremely large (more than $5bn in revenue) to large (between $1bn and $5bn) to midsize (between $100m and $1bn) to small (less than $100m), located in every global region.

The executives hold a variety of responsibilities – 201 are in general management, 138 have commercial responsibilities, 129 are in operations, and 94 are in IT – across all industrial sectors.

Their self-reported assessments of their companies’ digital investments were then compared to objective performance data about those investments’ impact on incremental revenue, market share, customer engagement, supply chain efficiency and internal team productivity.

Based on the combined results, the companies were sorted into three groups — leaders, middle tier and followers.

Reasons for success

According to the study, digital transformation success for industrial companies depends on the clarity of digital vision and strategy; the foundation of leadership, governance, systems, organization and structure to drive the digital program; and the ‘digital pillars’.

The digital pillars constitute the offerings, customer experience tools, technologies, and ways of working that the company activates to implement its digital strategy. 

L.E.K. partner and report co-author Tom Diplock said: “In all, we identified seven critical factors that drive digital success for industrial companies.

“Companies can use them to build a plan to assess and then enhance or overhaul their approach to harnessing the opportunities offered by digital.”

L.E.K. managing director Perry added: “There are many barriers and many challenges to digital success, including difficulty finding talent, dealing with system constraints and validating return on investment.”

“But these barriers can be overcome and industrial companies should not resign themselves to digital followership.

“There is a clear path forward. It is not an easy process — digital affects the entire organization — but those that embrace it, and focus intently on this set of success factors, are likely to remain competitive and see a positive performance impact.”

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