By now, nearly every contractor understands the value of digitization and digital transformation. In our post-COVID ecosystem, firms are betting big on technology and surrendering willingly to the once-terrifying digital future. Unfortunately, black swan events usually incur unnecessary spending. According to McKinsey, more than half of construction firms employ technology used for 1 or 2 use cases. That's a problem.
The 2019 KPMG construction survey suggested that 90 percent of firms in the "top 20 percent" had a solidified tech roadmap and vision. The middle 60 percent had yet to develop this roadmap, despite many considering it "high-value." In other words, many firms went into this black swan event without a plan. And that resulted in a surge of tech spending that wasn't necessarily aimed at the right solutions. Don't get us wrong. It was a necessity. The "digital-or-die" attitude that swept the industry was an absolute necessity in the face of crisis. But as time passes, and we enter into spring, it's time to rethink those Goliath tech stacks.
Here are some tips to help you clean up your tech stack in 2021.
Embracing the Paperless Future
Construction's productivity plague continues to create significant cost sinks for virtually every firm. Over the past two decades, labor-productivity growth in construction has averaged ~1 percent in annual growth. Manufacturing — another slow-to-adapt and largely complex industry — has averaged 3.6 percent. In fact, construction is one of the least productive (in terms of labor-productivity growth) industries on the planet. According to McKinsey, "one reason for the [construction] industry's poor productivity record is that it still relies mainly on paper to manage its processes and deliverables."
Despite the paperless revolution dominating many customer-facing industries, construction has been slow to adopt paperless processes. And it's hurting the industry's bottom-line. There's good news: paperless is achievable today. This isn't a mid-horizon value stream that's discussed in hushed research circles. It has immediate tangibility. Technology and cloud platforms are an easy way to break out of the proverbial productivity gap. On the simple side, you can create digital versions of forms. Eventually, you'll want to digitize core processes, leverage automation, and deploy cloud platforms.
Of course, paper isn't going to disappear. Researchers have been boasting about the "paperless" universe for over 30 years. We're not talking about burning all of your reams. This is about minimizing the amount of paper you consume — leaving only those processes that absolutely require paper. Since cloud platforms are often holistic and encompassing, you can immediately reduce your process load by onboarding the right tech. To be fair, this first component may not necessarily reduce your tech stack (especially if you aren't using tech), but it will reduce your workflows — which is the same principle.
End Spreadsheet Madness
The financial ecosystem in construction has long been dominated by Excel spreadsheets. These long, formula-rich data sheets require significant time investments, expertise, and skill. Not only do spreadsheets sap your time and energy, placing you in what McKinsey calls "weeks of spreadsheet hell" every time you need to review financials, but they create significant expertise gaps. Chances are, your firm has a select few gatekeepers who hold the keys to your entire spreadsheet enterprise. They understand the complex formulas, and they've been working off specific, data-drenched spreadsheets so long that they remain the only individual(s) capable of deciphering them. If they leave your firm, you're in trouble.
Even if we ignore the cybersecurity issues, scalability woes, and auditing frictions that come packaged with spreadsheets, firms are still left with long, complicated sheets of data that take hours, days, weeks, or even months to decode. It's a serious issue. And it's causing revenue leakage for virtually every firm. Obviously, you can't rip spreadsheets out of your company overnight. But incrementally transitioning to a Corporate Performance Management (CPM) platform for financials or CRM for customer data can completely transform your workflows.
Take a Holistic View of Your Tech Architecture
Do you have a tech stack? Or do you have a tech pile? Often, construction firms looking to minimize their tech stack don't actually have a "stack" in the first place. They have a convergence of mish-mashed tools that all operate independently. The intense desire to join the "data-driven AEC firm" crowd has left many firms submerged in unnecessary tech and an abundance of point solutions. It's time to reconsider that strategy. Consider leaning out your stack by finding solutions that are integration-friendly. Ideally, you want a few core "heart" solutions that connect to must-have point solutions.
Implementing a Heart Solution
The fastest, easiest, and most impactful way to revolutionize your tech stack is by adopting heart solutions. These are core technologies that give you a ton of capabilities under one umbrella. So, these solutions are the pillars of your tech stack, and they can be supplemented with specialized point solutions if necessary. Not only should these heart technologies enable your paperless journey, minimize spreadsheets, and forge holistic tech stacks, but they should provide you with cutting-edge capabilities like automation, AI-driven forecasting, and machine learning. In construction, these heart solutions fall into three primary categories:
● Customer Relationship Management (CRM) Solutions
● Enterprise Resource Planning (ERP) Solutions
● Corporate Performance Management (CPM) Solutions
CRMs converge sales and marketing. ERP solutions help you with supply chain management. And CPM solutions provide end-to-end financial insights, risk management, and project data collation. Together, these three solutions balance out construction tech stacks. They're the core. And you'll find it difficult to lean out and balance your tech stack without all three of them — especially in the mid-market and beyond. The goal is to ingest these heart technologies early and build upon them. This way, your roadmap is built from a solidified position based on tangible technology that already exists in your business repertoire.
Briq is a corporate performance management platform built specifically for construction financial professionals.
We join modern technology with hundreds of years of combined construction experience to give you deep insights into your business.
Briq unifies your financial workflows, making them more efficient, accurate and timely.
By automating workflows, consolidating financial data, and enabling real-time reporting, we allow contractors to make efficient and effective financial decisions.