For the past few months, we have been embarking on a blog series, looking at both emerging technologies—digital twin, metaverse, AR (augmented reality) and VR (virtual reality), and more—and core construction processes that are enabled by technology such as estimating, project management, accounting/job costing, and more. Today, let’s wrap up with final thoughts on the overall technology market, amid changing economic conditions.
Perhaps it is best to start this conversation by noting a confluence of factors are creating a perfect storm that are necessitating the use of technology in construction today. We have a labor shortage, supply-chain crisis, material shortages, and a looming economic recession. Construction, specifically, has tight margins and project deadlines. All of this is pointing to now being the ideal time to leverage digital transformation in new and interesting ways.
Interestingly, even with inflation and market volatility, Gartner suggests CIOs’ investment plans are not expected to be deterred, as it anticipates worldwide IT (information technology) spending will grow 3% in 2022. While IT spending is expected to grow this year, it will be at a much slower pace than 2021, due to cutbacks on PCs, tablets, and printers.
Price increases and delivery uncertainty, exacerbated by the Russian invasion of Ukraine, have accelerated the transition in purchasing preference among CIOs, and enterprises in general, from ownership to service—pushing cloud spending to 18.4% growth in 2021 and expected growth of 22.1% in 2022. Not only is cloud service demand reshaping the IT services industry, but it is also driving spending on servers to 16.6% growth in 2022, as hyperscalers build out their data centers.
Naturally, we are also seeing a skilled labor shortage in many industries, including IT, which will impact spending as well, according to Gartner.
Still, while many construction companies have either embraced digital transformation already or plan to do so in the future, the road is a bumpy one. We have talked about the challenges with implementation, and Gartner suggests a whopping 56% of organizations say they have had a high degree of purchase regret over their largest tech-related purchase.
Although, interestingly, the high regret feelings are often at their peak for buyers that have not started implementation yet, which indicates frustration with the buying experience itself. According to the survey, 67% of people involved in technology-buying decisions are not in IT, which means that anyone could be a tech buyer for their organization.
This is something Peggy Smedley has been talking about a lot on The Peggy Smedley Show, as organizations across all vertical markets are looking to bridge the IT, OT (operational technology) divide. Going forward, construction companies will need to implement new technologies, all while keeping the organization’s objective front and center. As Peggy always says, it is about people, process, and technology—we can’t have one without the other. How is your company embracing this new world of technology?
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