Instead of being a drain on company finances, a well-equipped IT department can actually drive profit
Despite the widespread use of CAD, standard workplace corporate applications and the rise in popularity of new ways of working such as BIM, many organisations in the construction industry appear to treat spend on IT as a cost that should be reduced as far as possible.
In what are often low-margin businesses, the temptation to avoid any spend not directly related to winning or delivering work is perhaps understandable. However, the costs of not optimising IT-related investment can start to cripple businesses. Typical symptoms include:
- Poor visibility of expenditure across the supply chain
- Weak understanding of absolute and relative productivity
- Inability to accurately validate cost models on the basis of actual expenditure
- Poor project and contract controls
- Labour-intensive manual activities that could readily be automated
- High costs supporting a myriad of technologies that may no longer be fit for their original purpose
- Difficulties in implementing changes to existing systems.
The list goes on.
Worse still, investment in technology often has to be justified from the perspective of a single project or contract, meaning that it can be nigh-on impossible to make genuinely strategic investment decisions, resulting in individual departments or contract teams instead making their own tactical decisions. These may be optimised within the specific constraints of a local organisational silo, but are typically far from being so at the corporate level. In such cases, IT departments end up having to support a host of different enterprise-level technologies, typically at different versions and configured in different ways, while buying software licences piecemeal and at non-competitive rates.
More forward-thinking construction organisations are starting to treat their IT departments as profit centres, able to work with their businesses to anticipate future requirements and genuinely add value, rather than be a drag on corporate profitability.
Key factors in effecting this transition are active board-level support to engage in what can be a painful change programme, as well as the ability to develop detailed and accurate business cases to justify the investment. A competent business case modeller who can tease out the direct and indirect benefits of such programmes is an invaluable resource.
Having taken the decision to proceed, it is then absolutely crucial to not only identify a baseline of spend and outputs, but henceforth to track subsequent costs and benefits to inform future investment decisions.
I would welcome readers’ perceptions of the value that information technology adds – or otherwise - to their own organisations, clients and suppliers.
Simon Parsons leads IBM’s Smarter Buildings initiative