In a recent podcast, Brian Fanzo and Daniel Newman, co-hosts of the popular S.M.A.C. Talk (social, mobile, analytics, cloud) Technology Podcasts spoke with Michael Shomberg, global vice president and general manager for the engineering, construction, and operations business unit at SAP, about the challenges and opportunities coming to the forefront in the construction industry. This was an episode of an extraordinary series entitled Digital Industries, which examines how digital transformation is affecting 16 different industries. Listen to a short clip of the podcast:
Construction companies face greater challenges than ever before. Shomberg elucidates:
These surprises, Shomberg explains, are making it difficult for construction companies to meet their cost and/or schedule goals.
Construction labor productivity has been flat for 60 years, which is in direct contrast to industrial business, which have seen a 2X increase in labor productivity in the same time period. Clearly there is a lot of opportunity for the construction industry to improve and learn from other industries.
Challenges and solutions
Digital transformation is a broad term that is going to have an increasingly significant impact on how business is conducted, particularly for construction companies. Industry leaders recognize the need for digitization, what they call the industrialization of construction. Overall, the construction industry has lagged technologically. But now, as technology interconnectivity is now widely available, the industry is at an inflection point. Shomberg says that this means it is possible to take those proven technologies from the manufacturing world and move them to construction. He adds that things like real-time feedback, optimization of procedures, and lean costing to eliminate the waste will help drive efficiency as the size and complexity of projects continue to grow.
Construction leaders also need to address very real demographic shifts in the workforce—both the workforce at large, and as they relate specifically to the construction industry. As baby boomers and even Gen-Xers continue to retire, the “old school” way of managing the day-to-day activities, with Excel and paper, within a construction company will increasingly decline. As veteran authorities retire, they are being replaced with millennials who are comfortable with (and prefer) integrated technology, using hardware like iPads and iPhones and creating an atmosphere in which it’s possible to access real-time feedback through mobile and cloud technologies. This in turn increases efficiency and eliminates surprises.
Technology can be used to share even more rich information to and from the field, as well as to provide visual data from the site in order to forestall surprises. As Shomberg puts it: “If there is an issue, which there always are on construction sites, managers know immediately and can re-plan so as not to have that issue mushroom and maybe become a much bigger problem.”
To the surprise of no one, digital transformation requires fundamental infrastructure changes, such as eliminating multiple databases, abolishing data warehouses, and jettisoning the slow processing of information. Eradicating the manual processing of information means that daily forecasting and daily updates become a reality. Now everybody knows exactly what’s going on, and there is a single plan available for all the troops. This is something that has eluded construction for many years but is now possible thanks to digital connectivity.
To listen this episode of Digital Industries for the construction industry, co-produced by SAP and S.M.A.C. Talk Technology Podcast, click here.
Transforming into a truly digital business is much more than just implementing new technology to meet the demands of a digital age. It’s more than keeping up with the deluge of transformation happening all around us. Digital transformation is about understanding how to harness these changes and incorporate them into your business strategy. It’s about driving agility, connectivity, analytics, and collaboration to run a Live Business. A digital core empowers you with real-time visibility into all mission critical business processes inside your four walls, and in your interactions with customers, suppliers, workforce, Big Data, and the Internet of Things.
For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”
Chairman Zhang’s Flatpack Skyscrapers, BBC News June 11, 2015.
The Internet of Things Is Giving the Construction Industry a New Strategy, IBM Big Data & Analytics Hub, June 4, 2015.