With fall upon us, construction—at least in the northern half of the US—starts to slow a bit. We hope you took into account this summer of where you stand and start thinking of what’s next. It’s time to take a look at your current business and get to know what you can improve. For many construction brands, this should mean reevaluating technology and learning what you need to do to position your company for success.
As we established in our article on construction trends for 2020, few sectors are more technologically divided than construction. With some going all in on technology, making investments in future-ready processes and tools, others are still relying on paper-based processes.
This presents a challenge for the ones holding off—companies who have made investments will be in a position to run while those who haven’t are just learning to walk. While this article explored the dangers, we would today like to explore some of the companies on the right side of the digital divide have gained.
The Many Benefits of Being a Digital Leader
In just a few years, digital technology has connected an ever-growing number of people, sensors and devices, created new business and social networks and ecosystems and transformed our economy. In a recent Harvard Business Review analysis, authors Robert Bock, Marco Iansiti, and Karim R. Lakhani explored what it meant to be on the right side of the digital divide have in common.
Analyzing 344 publicly traded enterprises across all industries, the authors split companies into quartiles, focusing on Digital Leaders (Top 25%) and Digital Laggards (bottom 25%).
There are many ways to compare leaders and laggards. While one can compare the processes embraced and the technology investments made, it’s all talk until the money is on the table. Results matter, and according to the HBR authors, leaders saw just that. Over a 3-year period, HBR Authors looked at average gross margin, average earnings before taxes, and average net income, finding a major disparity:
- Three Year Average Gross Margin: Digital leaders saw a 55% increase. Laggards only saw 37%.
- Three Year Average Earnings before Taxes: Leaders increased 16% while laggards made 11%
- Three Year Average Net Income: Leaders increased 11%, laggards 7%
That said, these advancements didn’t come at an obstructive cost. When asked about their average IT spend as a percentage of revenue, leaders responded 3.5%, a miniscule increase over the 3.2% that laggards are spending. This begs the question: What are leaders doing differently?
Many Things to Gain from Digital Advancement
There are many things digital leaders in the construction industry gain. Improved on-time completion, better governance and controls, and the freedom to focus on human performance improvements. However, two main ways they see these increases in revenue with minimal increases in spending? Decreased costs and increased productivity.
For the construction industry, unexpected costs can pop up anywhere. However, there’s a huge difference between unexpected costs you can control and those you can’t. That said, your ability to focus on controllable costs relies on your ability to know who’s accountable, increase accuracy and visibility, and automate those tasks that hold your business back.
For construction brands, investment in technology can deliver. Need to cut the labor costs and time spent on briefings or project reports? Empower your people with real-time information, mobile technology, and easier tracking. Want to reduce the time spent tallying up project costs, ordering, or invoicing? Automate the process and make it mobile.
Alongside decreases in cost comes increases in productivity. Rather than wasting time waiting for an email, trying to make sense of a spreadsheet, or processing a paper invoice, technology can take care of it for you. Now, your staff can focus on generating new business, your on-site professionals can focus on completing the project, and your finance and executive staff can focus their efforts on whatever is next.
Acumatica: Changing the Game for the Construction Industry
Offering anytime, anywhere access, a single version of the truth, and workflows designed to reduce costs and make your projects more efficient and effective, cloud solutions like Acumatica for Construction are a logical step for companies like yours.
As a leading provider of this solution, Crestwood can help you implement and use this product to improve governance, set your business up for success, and deliver you on a path to future readiness. Let’s get in touch.