Professor David Mosey’s independent review of public sector construction frameworks has called for a new “gold standard” for procurement. Realising this ambition will also require a gold standard construction IT strategy, says Walter Hume of Rimini Street
The intention of the gold standard for procurement in public sector projects is very laudable and essential if construction is to continue to evolve and maintain a sustainable business model.
However, the construction supply chain is probably one of the most complex of any industry, particularly when it comes to public sector projects – made all the more complex by issues such as the pandemic and Brexit. If the construction industry and its public sector counterparts are to be successful in adopting this standard, there needs to be some consideration of the technology implications because these sectors have built up complex IT systems. Unpicking those systems so that supply chains can operate with transparency and collaboratively will require a gold standard IT strategy.
Looking at this from the perspective of a technology company that has a long history working with both construction companies and public sector bodies, there are fundamental IT challenges. It will be critical to choose the right approach if organisations are to manage their costs during the adoption of the gold standard, as it will require significant change to modernise. Too much change could be highly disruptive and at a time of rising costs, construction companies must do everything possible to protect what little profit margins they have.
A threefold solution to gold standard construction IT
Enhance and extend existing IT systems: Not every IT challenge is solved by upgrading or replacing what you have, especially if what you have is stable and performing according to the needs of the business. By optimising you manage your expenditure and extract more value from existing IT systems.
Protect your customisations: Every construction company and public sector organisation has built up its IT footprint over many years. This means there is a high level of unique customisations in these IT systems, especially the supply chain, to address specific requirements. These customisations help ensure your supply chain processes run smoothly. By optimising your existing applications, not replacing them, you avoid disrupting essential business processes.
The smart pathway doesn’t mean a new pathway: There is a common term in enterprise IT called “rip and replace”. Even the sound of it is unpleasant, but if your enterprise software vendor suggests it is the only way to modernise by adopting its brand new cloud-based applications, it means they want you to “rip and replace” what you have. If your dentist said the same thing at a check up on your teeth, you would (quite rightly) run a mile. We would argue you can keep what you have, optimise it to be ready to embrace the gold standard and then gradually move along a smart path to transforming all the elements of your supply chain. You do not unpick complexity by ripping it out, you just create the potential for new, unforeseen problems.
Enabling integration, collaboration and Modern Methods of Construction
So what are the issues? Firstly, both the public sector and construction industry have a wide variety of existing IT systems and if the supply chain is going to operate in a transparent and collaborative manner then it is essential that data flows across the entire supply chain. Unless all parties have a consistent view of what is happening, it is very difficult to ensure consistency and cohesion. This is challenging because different entities will have different versions of applications, so decisions will have to be taken on how best to optimise them to ensure data can be securely shared. Open APIs and data integration tools exist to enable longstanding applications to communicate but there needs to be careful consideration of where existing applications can and should be optimised, where the integration points need to be and whether upgrading to a newer version of an application will make collaboration easier.
Secondly, there is huge pressure on the construction industry to modernise and adopt the latest technologies to deliver more Modern Methods of Construction (MMC). Construction companies need to develop a smart path to MMC to manage investment requirements in areas such as Internet of Things (IoT) for smart sensors to support onsite safety and smart maintenance. These technologies will drive greater efficiencies but also generate significant volumes of data which can be used for analysis and predictive forecasting using automation and artificial intelligence. Having these technologies in place can make supply chains smarter, more transparent and collaborative.
Cloud-based approach to gold standard construction IT
To achieve change, there is a possibility that the construction industry will be tempted to “rip and replace” existing technologies to respond to these challenges and opportunities. Yes, it will be complex to achieve the level of innovation and integration required to respond to the construction playbook, so “starting again” sounds tempting.
However, construction companies have built up a lot of customisations in their existing IT systems, particularly in the area of the supply chain. Unpicking these unique systems and replacing them with cloud-based applications may suggest a neat solution to enable data integration and deliver a modern infrastructure ready to integrate MMC but it is important to consider what could be lost in terms of customisations if those existing systems are removed. A far more pragmatic solution may be building a smart path to transformation that enables an organisation to evolve and optimise existing systems over time and focusing on those MMC systems that will increase collaboration and transparency.
This does not mean that moving to the cloud is the wrong answer. On the contrary, many of our clients are choosing a hybrid approach. Some are moving existing applications to an infrastructure cloud provider like Google, Amazon or Microsoft, which may immediately cut down on the costs of running your own datacentre. Others are retaining some essential applications in-house but focusing their innovation strategies on those best-of-breed cloud applications at the edge of their IT environments, which can deliver competitive advantage – or in this particular scenario, accelerate adoption of the gold standard.
One critical question to consider when adopting this hybrid approach is how best to support this mixture of in-house and cloud-based applications. This too could become highly complex very quickly, with different vendors providing support for cloud-based or in-house environments. The more sensible approach may be to adopt a unified support strategy with one vendor for all your enterprise applications. Having the reassurance of one provider can be important to ensure consistency in service delivery but also strategically it means you have one partner to provide guidance on best ways to optimise and modernise your application environment as you move along the smart path to transformation.
Fundamentally, complexity is the enemy of change and that is no different in achieving the gold standard. Construction companies, and their public sector partners, must carefully consider how best to move towards the standard while minimising disruption to business and controlling costs. IT will play an integral role as companies move towards this standard but there are many factors to weigh up when deciding the best approach. It will require a “gold standard” approach to construction IT but a smart path is to consider how to get the most out of your existing applications while progressing in a targeted manner towards next generation technologies.
Walter Hume
Senior account executive, construction
Tel: +44 (0)20 3763 7463
