Ask Approyo: How can SAP S/4HANA impact the Construction Industry?
$15 trillion –that’s the projected size of the construction market by 2030, up from $8 trillion today. A recent study expects that 75% of the infrastructure that will exist in 2050 does not exist today, and that the design and expected outcomes will be transformative. We will have to double the current infrastructure and then double it again by 2050.
This is a huge opportunity for the construction industry; however, projects are getting more complex, and there are many inefficient and wasteful practices. Successful companies will grow by increasing market share, self-performing to a greater extent, expanding internationally, and even operating some of the assets they build. The construction industry will apply technology and best practices previously proven in the industrial sector. This industrialization of construction will drive reliable outcomes and improve margins by increasing productivity and eliminating waste and surprises, greatly reducing project risk. Existing business models will collapse as “construction-ready,” disruptive technologies like robotics, enterprise mobility, virtual design and construction, and 3D printing redefine design and processes. New contract and service models, such as integrated project delivery (IPD) and public-private partnerships, will be required to remain competitive. Construction will experience the dramatic productivity gains seen in other industries,while vastly compressing the 50-year evolutionary process that took place in the manufacturing industry.
To execute on this, firms will not only need to reengineer their business processes, but they will also have to evaluate if they have the right technology platform that can deliver on that vision. This platform requires an IT architecture that provides both stability and long-term reliability for core enterprise processes, and, at the same time, allows for flexibility in areas where change is happening on a constant basis. The digital core is the foundation for the core processes that need to run consistently and flexibly. It provides uninterrupted, real-time transactions and analytics, the ability to work with Big Data, and connectivity to line-of-business (LoB) extensions that enable supporting processes such as sourcing networks. This will enable a real-time coupling between project progress and financial controls, allowing firms to bring a focus to what is best for the project to drive true partnerships versus pitting companies against one another, and better enable new models like IPD contracts.
SAP S/4HANA was developed specifically to represent the digital core in this “bi-modal IT architecture.” It provides construction firms with a proven framework to adopt industry best practices while attaining operational excellence, specifically across core financial and project controls.
SAP S/4HANA: sources of value
The value from SAP S/4HANA comes through simplification of the user experience, architecture, and processes.
Simplified user experience: across all devices
SAP S/4HANA empowers front-line users with an user-centric, consumer-grade experience because, for construction firms, it’s the frontline employees that add value on the sites. SAP is driving simplification and innovation in how business users work, with a role-based, consistent, user experience available on any device.