8 in 10 Canadian building & construction firms expect to spend less than 5% of revenue on digital transformation

Are Canada’s building and construction companies ready to make the bold digital moves needed to transform their businesses and stay relevant for years to come? KPMG in Canada’s new research into Canadian industrials digital readiness suggests that there’s room for improvement if they are to make meaningful progress and create lasting competitive advantage.

Industry overview
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Almost every building and construction survey respondent (90 percent) says that digital transformation is important to the long-term success of their company, though there are signs that building and construction companies’ use of data could use some sophistication. Our research found that:

  • 90 percent of respondents say that their company was investing in digital technology to create a lasting competitive advantage
  • 42 percent report that their company was exploring or implementing changes to its business model as the result of digital transformation
  • 36 percent say their company uses data to support strategy development and conceptual thinking, much less than the overall survey average (59 percent)
  • 24 percent feel their company makes particularly effective use of data analytics to make business decisions
  • 12 percent say that their company currently makes significant use of big data

Cost overruns are a huge problem for the construction industry at any level. Data analytics and augmented decision making can help firms understand where projects go off the rails—and detect the triggers and warning signs early. That can help the company spring into action to get things back on track as quickly as possible.

Lorne Burns, National Industry Leader
Building, Construction & Real Estate, KPMG in Canada

Canadian firms risk falling behind on digital investment

The world’s best-in-class global construction firms are focusing on innovation and making big investments in drones, VR/AR, sensor technologies, Building Information Management software and more. In comparison, Canadian building and construction firms’ digital investment plans seem rather timid.

The surveyed Canadian building and construction companies’ current digital investments tend to be focused around cyber security (75 percent), cloud (42 percent), and demand-driven supply chain (33 percent). Only 9 percent of respondents say they are currently leveraging Internet of Things (IoT)-connected devices, although another 33 percent report that their company is experimenting with them. Other exponential technologies, such as digital twins, intelligent automation, robotics and augmented decision making, aren’t getting a great deal of attention or investment at the moment.

These companies’ future investment plans look similar: cyber security and cloud are expected to be key priorities (82 percent and 72 percent, respectively), with demand-driven supply chain trailing behind (39 percent). One in four (24 percent) say they intend to make more use of IoT devices in the future, with another 30 percent that are still in discussions around doing so. At the same time, 52 percent of respondents say they have no plans to invest in big data over the next few years, but it’s encouraging that 30 percent expect to have conversations about it.

The risk of such limited digital investment ambitions is that it will erode Canadian building and construction companies’ competitive position at a time when forward-thinking industry leaders are leveraging digital technology to become more innovative and more efficient.

More funding will be needed to make bold improvements and keep pace

The big question is whether Canadian building and construction companies will invest enough to do more than make incremental improvements in their existing technology foundation: 82 percent of respondents say they intend to spend less than 5 percent of revenue on their digital transformation effort. That’s useful—but it’s not the sort of investment that will deliver the kind of competitive edge companies seek. These companies should be making bolder plays in digital technology to help improve project management, quality, efficiency and cost controls. Holding back will only cause them to fall further behind the leaders.

Take our survey to benchmark your digital journey to that of your peers and learn how to accelerate your digital agenda.

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