The aptly named Fourth Industrial Revolution — when modern businesses build and implement a digital roadmap to boost productivity and profitability — has been taking place for decades now. That’s more than enough time to capture data on a wide array of successful digital transformations — and failures. Yet even with a data-driven digital roadmap on the table, overall success rates for the digital transformation of an organization are not that impressive — according to a new McKinsey report, only 16% effectively improve their business’s performance with tangible, long-term sustentation.
With that said, why should businesses keep trying? Perhaps the most helpful insight comes from the construction industry, one of the least digitized sectors in the world, according to the McKinsey Global Institute (MGI) Industry Digitization Index. This lack of successful digital transformation in construction occurs despite the fact that the industry is one of the world’s largest economic sectors, generating $10 trillion worth of services and goods each year. What’s more, the sector employs about 7% of the world’s working-age population — a sizable chunk. Yet its inherent productivity problems leave the industry lagging far behind the economy in its entirety.
To close that gap, a new MGI study suggests that digital transformation in construction is the answer, which estimations say can boost the value of the entire sector by $1.6 trillion. That would add a substantial 2% to the global economy or, in other words, answer almost 50% of the Earth’s infrastructure needs, one-third of which is right here in the United States — a golden opportunity.
Clearly there’s an incredible upside — and a voracious demand — for digital transformation in construction, as well as the related sectors of engineering and commercial real estate (CRE). So what’s the problem? According to the McKinsey study, three main issues affect this industry’s ability to successfully transform:
McKinsey's research identified a number of adoptable digital strategies that construction, engineering and CRE companies can use to avoid potential pitfalls, increase their chances of transformative success and capture greater value from digital in the long run.
This shift in digital engineering requires organizations to either hire skilled workers — or retrain current employees — to create design libraries, automate elements of the drafting process and facilitate a shift from traditional designing to agile development. The ultimate outcome of such a digital transformation in engineering is faster iterations for testing and enhancement, a better utilization of standards and repetition and, ultimately, more availability for engineers to work on more time-worthy and groundbreaking design tasks.
Of course, the digital roadmap is becoming clearer. Data learning continues to pour in, showing us how factors such as the size and location of a company can dictate the success or failure of a digital transformation in construction, engineering or commercial real estate. You can read more of McKinsey’s digital transformation tips here — perhaps most telling is their data on digital competition, showing that fortune favors the companies that make successful digital transformations first.
At Seacoast Bank, we’re here to help. If you have questions about the financial side of your business or want to know more about solutions we offer for business banking, payroll and more, visit seacoastbank.com or call us at 888.669.4050.
Seacoast Bank is one of the largest community banks headquartered in Florida with approximately $6.7 billion in assets and $5.2 billion in deposits. The bank provides integrated financial services including commercial and retail banking, wealth management, and mortgage
services to customers through advanced banking solutions.