It’s an essential part of every construction leader’s job to ensure their budget and resources are driving efficiency and creating value for the business. This often includes evaluating new technology investments not just for how well they function, but whether the benefit actually justifies the cost. Without proper scrutiny, what may seem like a great arrangement today could cost a lot more down the line.
When exploring new technology implementations, it’s important to look for ways in which vendors may be shifting risk to your business. When it comes to risk transfer, remember that technology vendors may be looking to protect themselves, not you. Of course, the concept of spreading risk around is nothing new to construction professionals. After all, construction is the business of risk management. Industry pros understand the fair distribution of risk between their business and valued partners, including clients, trade partners, and vendors.
Would you allow your business to assume all of the risk in these relationships? We didn’t think so.
Your partnership with your technology vendor is no different in principle. But the modes of risk can sometimes be unfamiliar territory. It’s important to recognize that vendors can transfer risk to you that you may not even realize you’re taking on.
Here are five ways construction technology vendors may be shifting risk to you:
1. Price Instability
If something seems too good to be true, it probably is. And construction technology is no different. Some vendors lead with low-priced products only to pressure customers into buying higher-priced options later on. Vendors will sometimes price products artificially low initially, only to raise prices when that business model proves unsustainable. Some vendors will price in one-time discounts that can’t be renewed, providing little long-term value.
As any contractor knows and has likely experienced, the lower the cost or bid, the higher the risk if something goes wrong. But in construction there are plenty of mechanisms to control that risk—contract documents that nail down the scope of work, RFIs and Submittals that help create explicit alignment where uncertainty or lack of clarity existed before. Those mechanisms don’t exist when it comes to buying technology. If you buy at a low price, and later find the solution was over-hyped, you’re probably just out of luck. By the same token, you just don’t have the same control over price change in a technology purchase scenario as you do in procuring construction work.
2. Not Innovating
The purpose of adopting construction technology is to equip your team with the tools they need to be as productive and efficient as possible, while enabling them to consistently deliver extraordinary project outcomes. But the implementation process isn’t a one-time sprint to achieve some temporary, incremental fixes. Rather, it’s an ongoing journey of continuous improvement. At least it should be. And any technology you invest in should be on the same trajectory.
If your business is paying a recurring fee for technology that never improves, something is very wrong with that picture. If your current system hasn’t been updated in what seems like ages, or if you feel out of the loop on the latest features, you may be missing out on technology innovations that can help your business run more efficiently and profitably. The problem may be that your technology provider treats your relationship as more transactional, rather than seeing themselves as a true collaborative partner in technology design invested in your success.
A company’s technological capabilities, or lack thereof, can limit the agility and feasibility of complex, innovative projects. Innovation itself is a matter of improving processes and efficiency. If leveraging new technology enables you to reduce your operational costs by 10% without having to give all of the savings to your owners or customers, you can increase your margins. If you’re not innovating, you may be allowing market peers to pass you by.
3. Outdated Products and Tools
A lack of improvement and support for existing applications could indicate they’re at risk of being sunsetted, which could create a host of problems from increased security risks, IT problems, upgrade issues, and more. An outdated system could even result in compliance issues bubbling up.
If you’re using SaaS software and the vendor suddenly sunsets a pivotal product or tool, you could potentially lose the benefit of that solution overnight, throwing processes into disarray as you scramble to find an alternative solution. In the meantime, you’ve lost the time and resources invested in implementing the old system, training your team to use it, and shaping processes around it.
Another risk to guard against is the sunsetting of support. There are plenty of examples of construction technology vendors who have discontinued or reduced support for their products. Others achieve low pricing by providing sub-par support. Some vendors that also provide solutions across other industries may rely on generalist support teams who don’t understand the construction industry and its specific needs.
These tactics may help keep prices low upfront, but they can really undermine your team’s success with the solution in the big picture, which you’ll end up paying for later one way or another.
4. Poor User Experience
In order to be successfully implemented, technology solutions must be highly usable and extremely adoptable. This can be even more important than how much a solution costs, because if your people refuse to use it, you have virtually no chance of a successful rollout.
Using less-capable solutions can also lead to all kinds of problems, from project delays to quality issues to rework. Adopting new technology will always present challenges, and even solutions that claim to be “user-friendly” will likely require some employee training during the initial rollout.
You can get an idea of how difficult that process will be, and whether you’ll be on your own for the implementation, by asking a few questions in advance:
- Do you have adequate staffing and support within your organization to roll this out on your own?
- What do the support and professional services options look like?
- Who is able to access the support?
- How quickly can you get the support you need?
- Does your vendor know your industry and the ways you work?
Failing to adequately train your team in any new technologies your company implements can result in costly mistakes later on. Much of the benefit of construction technology comes from collecting high-quality, actionable data within the system. If your team can’t or won’t use the solution, you might not be getting good data, or any at all, which significantly undercuts the potential returns from your technology investment.
5. Field Facing
Last, but certainly not least, it’s important that any application or other tech product you incorporate into your operation be purpose-built for construction. Even more specifically, built for the field. Construction is a complex and unique industry, and field teams need tools built for the way they work, not the other way around. When evaluating a potential technology partner’s offerings, determine if their product is truly built with construction’s needs in mind or if it’s simply a reskinned technology they’re trying to shoehorn into a construction purpose.
Even for companies with unlimited resources, being efficient and deliberate with those resources is necessary for growth. Construction leaders looking to scale confidently and with stability understand that investing in the industry’s leading solution can actually be a frugal move. That’s especially true when armed with the knowledge that your vendor will be a reliable partner for your business as you grow and diversify
The most successful companies today see technology not just as a cost center, but as a set of strategically important partnerships to invest in. Leaders that understand how the cost of technologies correlate with their value across the business will have the best chance of success. Failing to invest in the right technology with the right vendor can kick off a cascade of short- and long-term implications, which can eventually become a growing threat to project delivery, innovation, and growth.
Leave a Reply