By Blaine Crawford, Director, Information Technology, C.W. Driver
The construction industry has fundamentally changed in the last decade and this is a self-evident truth. While some areas of the country are faring better than others, and niche market players seem to be more dominant than ever, the overall trend is a gradual erosion of profit margin. There are many factors contributing to this including fierce competition for fewer quality projects due to fragile economic conditions. It also includes conditions that breed scenarios where more agile newcomers are taking on the larger more established firms that require constant feeding for their large project appetites. This competition forces companies to venture outside their areas of comfort and expertise for the instinctual purpose of self-preservation. There always seems to be that “must win” project that fosters a lapse of judgment that can lead to higher risk and this is never a good situation to be in for an industry already strife with litigation.
When budgets are tight and spending is closely scrutinized, technology initiatives become the unintended collateral damage in the construction industry. Many AEC firms have technology budgets that are less than one half of one percent of gross revenues whereas many other industries typically allocate three percent and upwards. This is a huge discrepancy in technology spending and this is a major challenge that AEC technology leaders need to overcome with creative strategies. Luckily the age of the cloud is here, a sort of another Age of Aquarius but perhaps in the silicon realm. And just to be clear on what the term “the cloud” is referring to as it has been touted as something sexy and trendy in regards to computing, but in practice it is basically just the procurement of a service, whether a software or hardware based function, from another external entity who bears the responsibility of providing an agreed upon performance level. There is nothing magical about this new “cloud.”
Organizations always need to proceed with caution when presented with new strategies to apply to business challenges as rash and ill informed decisions can have a multitude of unintended consequences.
Cloud offerings are extensive and can be confusing if you do not clearly define the requirements of your initiative with a thought out project plan
The cloud offerings available are unbelievably overwhelming which can be both a good and bad thing and this is where technology departments can be a partner to the business as opposed to a financial drain as many are sometimes perceived to be. Proper integration of technology can nurture and encourage further investment and this is where a technology department can show value to the organization and become a business partner versus just a service department.
Cloud offerings are extensive and can be confusing if you do not clearly define the requirements of your initiative with a thought out project plan.
Project planning is inherent concept with AEC firms so it would be a great way to instill confidence to the end users and internal customers. The project plan will also help you narrow the field of possible solution providers. There are two basic cloud strategies to pursue: hybrid and full. The majority of companies will be in some sort of hybrid mode unless you are a newer company that has decided to leverage the cloud for their entire technology infrastructure. We will focus on the former scenario as it provides a much more prevalent and interesting case study.
Firstly, moving or updating current systems to a cloud offering is usually the beginning foray for an organization to get indoctrinated into the cloud age. This initial move can also be the most challenging as it requires a basic shift in the paradigm of the corporate technology thinking and AEC firms in particular are slow to change as we have been building things more or less the same way for thousands of years, from the ground up. Okay that is an oversimplification of the matter but the point is that construction is not a very innovative industry when compared to other high tech or intellectual property type industries. Therefore, a reasonably paced, least disruptive, cloud migration strategy would be to start small with the least complex systems, which will provide a level of confidence for all before attempting the more complex systems. The obvious contenders are web filtering, email, customer relationship management (CRM) and other critical line of business packages while more aggressive implementations would include the complete outsourcing of the technology environment with a combination of infrastructure and software providers.
When implementing a cloud age strategy, common sense and self-restraint need to be practiced as it can be all too easy to move things too fast and too soon without fully understanding what you are signing up for in this new business model. Now you are dealing with subscription billing models versus the straightforward and traditional license ownership model. This service subscription model has innate benefits such as software assurance, full support, no need for specialty skillsets,predictable cost forecasting, reduced asset depreciation costs, agility to change vendors and built-in disaster recovery to list a few. Corresponding disadvantages include forced version upgrades, perceived higher ownership costs, and vender longevity concerns. But by carefully analyzing these pros and cons and formulating a sound use case to executive management, overcoming the initial sticker shock should not be an insurmountable obstacle. Technology skills are important at this point but even the best drafted cloud strategy cannot succeed without a keen ability to navigate the internal corporate political landscape and this is where real technology leadership and salesmanship is important to the organization.
As systems are moved into the cloud, the technology department framework will also fundamentally evolve in ways that we never could have anticipated a decade ago, case in point, look what happened to the corporate Exchange Server Administrator position which was once a haled and high paying career path. There will be human collateral damage but for the CIO or technology director, the opportunity to eliminate costs associated with recruiting and retaining skilled staff to support complex technology systems is a compelling motivator when faced with budget constraints. This cloud strategy will not make you popular with the on premise proponents but it is a matter of making a sound business decision. The cloud computing landscape is evolving at an incredible rate and companies that fully embrace this movement will be in a much better position to preserve profit margins and heal their wounds of the poor business conditions of the last decade.
Whether you consider cloud computing as the advent of a new age in computer science or you look at it in the more holistic view of a new silicon based Age of Aquarius, for the AEC industry this truly is the dawn of a great technological transformation that will forever change the future of construction processes.