The mining boom doesn’t just reward resources companies – organisations in associated fields such as engineering, construction and professional services also reap the benefits of an uptick in activity. Michael Maslen, industry principal – engineering, construction and operations, discussed why these sectors are an emerging area of focus for SAP ANZ.
ISAP: How are the construction and engineering sectors faring at the moment?
MM: There is a couple of industry dynamics that are really causing some anxiety. One is obviously the massive construction downturn, so every single business in this sector is looking at cost containment. I cover companies that service the mining sector, such as mining services and oil and gas services companies, so when the mining sector goes through challenges and downturns, and BHP and Rio slow down their projects, my customers like Transfield, GHD and Leighton suffer as well. So they go through the slings and arrows of both the contraction and expansion of the building sector as well as the mining sector.
Because construction is down, many of the big organisations like Lend Lease and Multiplex which have really made their money in commercial construction, they are now just trying to swing into infrastructure on mining, so they can broaden their portfolio and continue to be profitable and successful.
On the technology front, from a construction sector point of view, technology and innovation are not necessarily the construction industry’s default mode of operation. In fact the only major change to the construction sector in the last 15 years is minor equipment upgrades and the occasional architectural trend. But over the last five to ten years, we have seen the advent of collaboration technologies. Professional services and construction companies are going in boots and all on online collaboration and document sharing for their clients.
Mobility is also coming to the fore, so when businesses have 85 per cent of their workforce out in the field, then mobile access to information becomes absolutely paramount. There is not a single person in this sector who is not wowed by mobile computing and by iPads, to greatly the reduce the time it takes to raise questions and variations and confirm project information. And it’s lighter than carrying around an armful of plans.
We are also seeing the popularisation of Building Information Modelling (BIM). BIM is basically a building development tool that basically meshes three-dimensional modelling with information technology, to improve the way you treat information, coordinate construction documents, and visualise the physical assets being constructed. 3D modelling and CAD design is getting increasingly sophisticated and that’s a big IT driver in the industry today.
ISAP: In the engineering and construction space, what SAP solutions are they favouring?
MM: The project-based contracting type businesses have been slower to adopt basic ERP. So the interest is really in back to basics ERP 101. Across the sector, there are a lot of companies that still rely heavily on spreadsheets, and that still see IT has being a business hindrance rather than a business enabler. So the industry is still very much taking up core foundational project systems, finance and HR, but the they are also being pushed into the more sophisticated world of IT in areas like mobility.
For example, one of the customers I work with extensively is Transfield, and the ability for Transfield to win contracts is predicated on whether or not their workers, that they subcontract to other businesses, are mobile-savvy.
ISAP: What is happening in the professional services market?
MM: On the professional services front, the majority of the customers I work with are in two separate categories: the traditional white collar professional services like engineering, architectural and environmental, and IT services, through to emerging blue collar service-based industries, such as laundry or catering.
Their clients are becoming more savvy, they want more transparency in the contracts that they are taking with those professional services organisations. The commoditisation of these sectors is also driving these business, which must ‘differentiate or die’.
ISAP: What is the outlook for SAP’s penetration into those sectors?
MM: It is quite positive. When we look at these sectors, there are two or three businesses that dominate, and those companies have made their technology decision one way or the other. But there are many organisations out there that haven’t made the move into an integrated technology platform like SAP or Oracle. A lot of them might be running systems that may have worked for them in the past where they were running maybe a dozen projects, but now those businesses are expanding and having to increase their workforce.
For example, I am working with a professional services organisation with a workforce of 6000, and they want to grow that to 25,000 over the next 15 years. To be able to do that, they need to have a back office and technology platform that allows them to bring on other businesses quickly. They can’t run off spreadsheets – they need a tier one system to be able to do that. That gives SAP an enormous opportunity to invest and capture that side of the market.
This article was originally published in Inside SAP magazine Summer Edition.
