Driving productivity in construction hinges on technology adoption

A recent survey of Construction Financial Management Association (CFMA) members revealed a consistent narrative within the industry: Digital transformation is not just a trend, but a necessity. The numbers show overall technology spend is on the rise; process improvement tools are saturating the market, with a consistent migration to the cloud driving solution enablement; and companies are battling labor constraints with outsourcing strategies.

Bridging the construction technology gap

The survey, commissioned by RSM US LLP in July 2023, asked over 250 members of the CFMA New England chapter how they prioritize digital transformation in their business. More than half (55%) said digital investment is a top priority for their business, yet 64% rated their digital strategy as “somewhat aligned to business strategy” and only 25% said they have a clear digital strategy. The overall sentiment is that technology enhancement is driving business productivity.

More than three-quarters of survey respondents (77%) expect to increase spending on IT, and 25% anticipate an increase of more than 10%. Drivers of IT spending growth include business application implementations and hardware upgrades or replacement. Further, increased cybersecurity risk has organizations paying a premium for cyber insurance as a defense against costly data breaches.

Facing a technical skills gap amid rapid digital transformation, construction companies are struggling to hire technology specialists. Nearly 30% of respondents said finding the right talent has been somewhat difficult to very difficult. As a result, 60% of survey participants said their organizations are turning to other internal resources to handle the bulk of IT functions, creating friction around priorities. The expectation is that more organizations will look to professional services to help augment teams in support of digital initiatives.

Approximately 95% of respondents said they rely on IT outsourcing and cited network operations, monitoring and cybersecurity as the most common managed services. As the industry continues to leverage strategic outsourcing to combat the talent shortage, more comprehensive solutions will be needed.

The takeaway

The future of construction is digital, and those who embrace it will help lead the way. The critical entry point for most digital transformation is through cloud technology and modernizing the core business application platforms with enterprise resource planning systems and construction management solutions. These upgrades will result in better business processes and data collection that will facilitate increased transparency and data-driven decision making.

Emerging digital strategies include process automation, computer vision, data analytics, security and artificial intelligence, with nearly 50% of survey participants saying they plan to evaluate AI over the next year. Constant evaluation of emerging technologies is critical; therefore, construction companies should look for a strategic advisor who works with a range of clients and can provide keen insights into industry trends.