New report reveals that companies see digital transformation as key to future success.
Digital still crucial for construction sector firms in EMEA and APAC regions
Latest Deltek report reveals that, despite staffing challenges and tighter margins, firms see digital transformation as key to future success.
A new report from global software and solutions provider Deltek has found that while the architecture and engineering (A&E) industry sees digital transformation as important, business priorities have shifted.
This year’s Deltek Clarity: Architecture & Engineering Study for EMEA and APAC, reveals that more than half (55%) of respondents indicate they will lose market share within two years without more progress in digital transformation. Despite this, 29% of the firms say their digital transformation maturity will be ‘advanced’ in five years’ time, compared with 40% in the previous year’s report, suggesting firms may not realise their digital ambitions as quickly as they predicted a year ago.
The study, which helps A&E firms benchmark their performance, identify market conditions and understand industry trends, uncovered that business leaders may be focusing more on addressing what is essential and what is possible in their business.
Nearly 65% of business leaders say that the pandemic highlighted weaknesses in their operations model. Unlike last year’s findings, businesses are now looking at digital transformation in a new context and how they can better leverage technology to run their business. This has an impact on where firms plan to strategically invest. As a result of the rapid change experienced over the last two years, nearly half of firms plan to invest in educating staff on technology trends.
Adrian Malleson, head of economic research and analysis at the Royal Institute of British Architects, commented on the notion of digital transformation in A&E in 2022. “To transform suggests that there’s a beginning, middle and an end, which I think increasingly people are seeing as not the case. It’s an ongoing process, essentially adapting to and engaging with new tools,” he said.
Talent crisis impact on business
Globally, talent shortages are also having a considerable impact across the industry. And, as identified in this year’s study, the impact is being felt in every part of the business. Not only did 43% of respondents identify staff shortages as a top challenge for project management, but nearly a third identified finding and retaining staff as a top challenge for financial leaders. Finding top IT talent was also identified as a key challenge by 34% of respondents, showing that the talent crisis is more than just project engineers and architects.
Developing talent is no easy task. Nearly 30% of firms identified developing the right knowledge and skillset as a key challenge and yet only a third see investing in workforce skillset as a significant growth opportunity. As firms face rising firm costs, more competition to retain their best staff and an evolving workplace model, companies will need to think creatively and digitally about how to address the talent gaps.
Additionally, many report that hybrid working gives them opportunities to partner internationally and enter new markets, with 76% saying they are better positioned to break into new markets or segments than they were 12 months ago.
Technology’s impact on growth
While staffing may be a challenge, firms are optimistic about their opportunities to grow. Nearly a third of firms are focused on geographic expansion in the next three years and 76% indicate they are better positioned to break into new markets than they were 12 months ago. Many firms report that hybrid working gives them opportunities to partner internationally that they would not have been able to do just a few years ago.
Firms also report that technology will play a critical role in their growth strategy and their ability to compete in the markets they serve – 59% of firms report they have lost potential business to competitors with more advanced technologies and 80% of firms indicate that investing in technology to improve operations will help them win more business.
Increased confidence in project and firm performance
As businesses face rising labour costs and overall cost of doing business, firms are concentrating on more closely monitoring key performance indicators. Globally, 65% of firms report confidence in the accuracy of their data related to overall project performance, up from 59% last year. The biggest rise is in confidence in reporting on actual project cost (up from 52% to 65%), suggesting data insights are improving as the industry becomes more digital.
Firms also reported more projects on track from a scheduling and budgeting perspective compared to the previous year, but there is still work to be done to bring the projects that are not on track back in line to meet client expectations and profitability targets.
In terms of remaining competitive and protecting the bottom line, the report also found that over the next three years, UK firms will focus on better managing growth (38%), better forecasting (31%) and business process improvement (31%) in financial management. Sustainability was also seen as a priority for attracting clients and talent, with 79% of UK firms saying that having a formal sustainability policy is crucial to remaining competitive.
Neil Davidson, regional vice president at Deltek, said: “This year’s report paints a very different picture to how firms in EMEA and APAC were approaching digital transformation pre- and during the pandemic. It suggests there has been a pivot in priorities, as firms switch from survival mode to more strategic planning now they have a clearer picture of what the future of their business looks like.
“While there was a more restrained attitude to digital transformation this year, it is a result of accelerated change over the last two years. Companies most likely feel less able to reach an advanced stage of digital maturity because it is constantly evolving. We could see a slight drop in digital investment as firms reassess which technologies they need to and can afford to sustainably invest in. What is clear though, is that 2022 will be the year that A&E companies look to upskill their staff in the wake of the global talent crisis, with in-house education being seen as a priority.”