Are you being served?

Editorial Type: Technology Focus Date: 09-2018 Views: 1,028 Tags: CAD, Construction PDF Version:
Kenny Ingram, Global Industry Director at IFS, explains why the construction industry needs servitisation and IoT technologies

The construction industry is notoriously renowned for being slow to innovate; especially when compared to other industries such as automotive and aerospace. However, emerging technologies, the diverse threat of global competition, economic disruption, and most recently the high-profile collapse of major contractor Carillion, are effecting the way the UK construction industry has to operate.

In a survey of digital maturity across various industries, the construction and contracting industry was found to have higher confidence with its funding for digital change initiatives than other industries. In fact, 88 percent of surveyed companies considered their funding 'adequate' or 'advantageous', indicating a strong willingness from the construction industry to invest heavily in digital change.

Indeed, construction companies that focus on connecting emerging technologies (such as wearables, augmented reality, voice controlled applications and drones) to improve service, safety and output; capture real-time data, and then collect and analyse the data effectively, will have a significant advantage over competitors emerging from other industries and from overseas.

However, for traditional construction companies to survive and thrive, perhaps the most critical change is the one towards a servitisation model.

The term 'servitisation' refers to a model within industries and companies that promises 'outcome-as-a-service' to customers rather than a one-off sale. Netflix and Spotify are the obvious examples, delivering media-as-a-service rather than customers opting to buy CD's or DVDs, but more and more companies are recognising the benefits of employing a servitisation model - and it's no different in the construction industry.

Construction companies are now looking to performance-based relationships that model the whole-life costs and deliver guaranteed outcomes - and rightly so, as there are major benefits to adopting this approach. By providing ongoing maintenance services construction companies can secure contracts with long expiration dates, which equals a steady, predictable revenue stream. This is more than can be said in most cases for pure-build projects, as companies struggle for a consistent pipeline over and over.

The good news is that the government is echoing this desire to move companies towards outcome and performance-based ways of thinking, as outlined in initiatives such as BIM Level 3 and Digital Built Britain. Construction companies therefore now need to be crystal clear about the core purpose of their asset. For example, a main contractor might win a contract for works to develop a new hospital through guaranteeing a provision of an agreed number of beds over time, or even the health outcome of patients. For the client, everything outside these core metrics could just be extra expense.

As a result of backing by the government we are now seeing many construction companies diversifying to provide facilities and asset management services, and taking the first step to becoming a complete asset lifecycle management (ALM) solution provider. For those looking to capitalise on the increased desire from public services and other clientele for one company to be responsible for the design, build, and ongoing maintenance of an asset (in other words, the complete lifecycle of an asset), it is important to start looking at what technologies should be leveraged throughout each process.

One technology set to be a game-changer for the construction industry, especially from an asset management perspective, is the Internet of Things (IoT).

IoT technologies have the potential to enable construction companies to measure aspects in a detail and quality that has never been possible before; empowering businesses with assets' performance indicators. This enables companies to find the most profitable models - turning service into opportunity.

Leveraging IoT solutions can help construction organisations measure essential key metrics, such as availability, reliability, maintainability, supportability, cost of ownership and end-result, allowing them to operate more like service industries. If harnessed and managed properly, IoT technologies have the potential to lead the UK construction industry into a new era of digital innovation, being at the forefront of smart cities and smart manufacturing, and modern methods of construction. Ultimately, as organisations become more service centric, IoT use in the construction sector will increase.

You only need to look at the manufacturing, telecommunications, and oil & gas industries to see how beneficial IoT has been to business success. Take international drilling contractor Songa Offshore. Songa Offshore is utilising IoT devices to connect thousands of oil rig assets to enhance reliability, further advance maintenance effectiveness, as well as operationalise IoT data in the company's Enterprise Resource Planning (ERP) suite. The contractors' objective is to reduce the time needed for yard stays for the rigs, which means dramatically shortening the unplanned downtime of each rig due to better control of the equipment's condition, resulting in significant cost savings. Songa Offshore has already experienced enhanced asset reliability, longer times between service intervals, longer asset lifespans, and significant cost savings thanks to IoT devices and increased process automation.

Before even thinking about IoT, however, organisations need to ensure they have an integrated IT platform in place that can properly manage, monitor and connect core business processes.

You might assume that most companies are using modern, smart business systems to control complex projects already, but the reality is they are not. The primary business system used in the construction industry is Microsoft Excel, however Excel spreadsheets do not allow for real-time sharing and editing, and data can easily be manipulated. Recent failures in the industry, where books were not properly balanced and visibility into projects and assets was not entirely accurate, show how having an IT management platform mediated by software - with real-time data - is essential for business and a necessary step for the industry as a whole.

When operational intelligence solutions are implemented, an environment capable of conducting intelligent business operations is created. Given the complicated, interconnected nature of supply chains, organisations are advised to look for a solution easily capable of working with other third party systems. This will de-risk and shorten the time to value for IoT implementations, enabling organisations to act on the results of analytics and start down the road to digital transformation.

Once a reliable IT management software is in place, organisations can begin to think about why they need IoT technologies to accomplish their business objectives, and how to initiate an IoT rollout - safely, quickly, and cost effectively.

Any IoT driven business requires data acquisition (communications and networking), analytics and business software to work in unison - and very few companies have all the skills in-house to do this on their own. Most companies seek partnerships. A strong ecosystem of partners, and technology providers that specialise in IT management software, can provide organisations with the world-class solutions and support they need to ensure a sensible and effective IoT rollout is achieved.

Those considering IoT solutions need to look for devices that are completely mappable to the back-end, i.e. closing the loop from device to business application. You'd be surprised at just how many solutions focus on a single element of IoT; for example, connecting the devices, or big data analytics, rather than providing a complete end-to-end IoT solution. Companies need to make the critical connection between analytics and transactional applications, which turn analysis into action and then into value.

Especially for companies just embarking on their IoT journey, IoT investments need to be broken down into small chunks, with specific opportunities realised first. Value and growth can be created through scaling a single asset where it undergoes rigorous testing within a safe environment. Once perfected, the solution can then scale to other assets of the business with complete confidence in performance.

As we've seen with Carillion, it is critical to have the right approach, processes and technologies in place that allow complete visibility, traceability and financial transparency across the business. By tapping into the value of IoT data, companies can predict what's next, rapidly respond to economic changes, and truly become a connected business. In addition, by adopting a servitisation model businesses can create new products and services quicker, increasing competitiveness and margin.

In a historically unpredictable and unstable market, rife with outdated models of thinking, skills shortages across the board, and an imminent threat from competition abroad, UK construction companies need to be creating an agile, flexible, and connected business environment. Having the right back-end IT management software in place; experimenting with the right IoT solutions at scale and then implementing them, is not only an important step for the industry, but critical for the survival of many of the UK's biggest players over the coming years.