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How the “silo effect” is impacting your bottom line

Certified Payroll

You would never ask your personal trainer to create a workout plan based off the notes from your nutritionist. Why? Each profession is unique and asking a professional to perform a task specific to a related profession is undesirable. The same argument holds true for the construction sector too, especially when it comes to technology.

Today’s construction professionals are finding ways to leverage their technology to stay competitive, and rightfully so. Research by the McKinsey Global Institute indicates that digital transformation can result in productivity gains of 14 to 15 percent and cost reductions of 4 to 6 percent. However, since the construction industry is filled with complex projects, these new technologies are often specialized. Translation: This needs able hands to steer them.

While your software may be connected, each software operates for its benefit – not for the benefit of the entire enterprise. When a software isn’t using the same metrics or is operating within the same performance management as another, it increases inefficiencies within your company, and results in a “silo effect”. 

When it comes to digitizing your systems, the silo effect leads to:

  • Miscommunication 
  • Duplication of work
  • Wasted time
  • Inefficient reporting and data
  • Unreliable facts and figures 
  • Lack of coordination 

Therefore, construction companies need to standardize their processes operations, and project reporting across their enterprise. Driving change through standardized technology ensures the process of efficiency, safety, and quality, while also leading to quicker adoption. 

There are also other benefits to standardized digital platforms, including:

  • Mitigated risks
  • Cost effective
  • Improved communication and reporting 
  • Improved management and maintenance
  • Easily share communication among departments
  • Improved security

A 2019 report by McKinsey reported that one E&C company gained an enterprise-wide view of element volumes through digitizing and standardizing element data, which allowed it to standardize specifications and aggregate purchase orders to obtain savings. Another E&C company improved its project margins by 3 to 5 percent by using advanced analytical techniques to analyze past tender data to optimize tender selection and pricing. 

There is good news. There are construction-specific solutions that standardize processes and software across the organization. Therefore, so they speak and understand one another, and work toward the same goal.

CEM Business Solutions can help.

Our trusted advisors evaluate, standardize, collect, and automate your data. Through our consulting services, CEM Business Solutions evaluates your current systems and provides best practices and digitization roadmaps.

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