How AEC Leaders Think About Return on Investment

aec leaders return on investment

In a time when the market is saturated with a variety of software, finding the right fit for the company can be a tough decision. In addition, there are a variety of other aspects to consider. What are the actual needs of the various teams? Is it intuitive to use? Do teams need to be reskilled to operate it? What capital investment is required, and will it be worth it in the long run?

To discuss these questions, cove.tool hosted a panel discussion titled “Demystifying ROI of AEC Technology.” Here, AEC industry leaders Andy Knauf, Brooke Grammier, and Steven G. Haines break down the decision-making process for the adoption of new software for the company. And, more importantly, how they evaluate the return on investment.

Through the lens of three different AEC leaders, here are the frameworks for how they think through software purchasing and ROI and the broader business context that helps inform their decision making.

Andy Knauf, Chief Information Officer, Mead & Hunt

Before calculating the return, the first step in thinking about a software purchase is to evaluate what is actually needed and how much impact it will have upon implementation. That is a bigger factor than the return at the end.

When asked about the return on investment, Knauff stated that it wasn’t something they thought about or measured anymore. While it was a common concept a few years ago, the way to understand it now is that buying software is like most other business expenses. It is just a tool that has become necessary. Giving the example of security technology, which can easily take up to 15-20% of the budget at times, Knauf noted that it is an essential function that doesn’t necessarily generate revenue. Still, it ensures that the company’s work is protected.

Knauf also noted that companies don’t always have to buy software anymore. Many software companies offer subscriptions. So, AEC firms have the option of trying out that service for a certain period of time, and if it doesn’t work for them, they can always end the subscription or switch to another product. “Usually, subscriptions cost a little bit more, but you're not married to that as long as you probably were in the past,” he said.

In addition to subscriptions, the capital cost of setting up a tech system is also lesser now. A decade ago, data had to be manually moved from one computer to another using portable disks. Now, instead of investing in hardware or personal servers, you have several companies that offer cloud servers you can use to store data. Once again, there is an option to try it out, collapse the server if it doesn’t work for the team, and start a new workflow with another.

Brooke Grammier, Chief Information Officer, DLR Group

Grammier believes that with design technologies, ROI is evaluated in terms of how many man hours were saved by automation. For example, things like security technologies may not give an immediate return, but in the case of a disastrous event, they could easily save days of work that would otherwise be lost.

Much like Knauf, she noted that it had been a few years since she broke down the numbers for an ROI estimation. It is impossible to do certain things without the necessary software, so acquiring them is often a suggestion that comes from the business teams now, as opposed to just the technology teams. And these purchases are often valuable as long as the team is within its allotted budget. And even the most well-projected budgets can be shaken up in the case of a pandemic. But eventually, if found expensive or not as necessary, there is always an option to look for an alternative.

Breaking this down further, she said that there are instances where not purchasing certain software is not even an option. This can be due to government or contractor requirements. And if the company wants to take on such projects, it must acquire the tools required to comply with the specified guidelines. In such cases, the payback from these projects is what drives these software purchasing decisions.

In their firm, the focus is heavy on tools of the future. If the new technology can bring some level of machine learning, AI, or advanced data analytics, DLR Group tends to prioritize it. The aim is to make all the internal processes faster and more efficient so that the designers can focus on designing instead of having to do manual tasks like printing data sheets that could otherwise be automated. It enables designers to do more problem-solving work and less of what they don’t want to do.

Taking risks and adopting new technology also helps create a defense in case something new comes in and disrupts the industry. Grammier added, “We have to move into this world where we're using these new technologies because if we don't, we probably won't be in existence in 10 years from now.”

When thinking about budgets, the nature of jobs has also changed, and a lot of them are technology dependent. This can also result in the company developing tools internally to automate some processes.

Steven G. Haines, Vice President, BVH Integrated Services

“It is not something off to the side,” he said. “It is integral. And when you look at successful businesses, regardless of the sector that they're in, technology is helping drive that business, helping enable that business.”

Making the case for the adoption of new technology, much like the other two panelists, Haines has never been one for extensive ROI spreadsheets. According to him, the return on investment depends on a variety of factors.

There have been instances where the business team approached him to discuss buying some software to be able to provide certain services or cater to new opportunities. And that often leads to discussions about cost and other aspects. Does it make sense to use this tool versus another? What is the cost upfront? What is the cost of ownership? Is it easy for people to learn? How many new opportunities will the company get if they bring on a new piece of software? What will be the fee charged for the services provided?

Going beyond the return on investment, it is also about encouraging innovation in the firm and coming up with better ways of doing things. It is also helpful if these suggestions come from teams that are working on related material because they are aware of what is actually needed and are constantly thinking about it.

Final Thoughts and Key Takeaways: AEC Software and ROI

The lessons from the fireside chat can be distilled into six key takeaways:

  1. The right software can be written off as the cost of doing business with less of a consideration for ROI because you need it to compete or you need it to win business.
  2. Software subscriptions can mitigate risk because there’s less infrastructure, less capital sunk costs, and therefore, less risk. You can try it out, and pivot quickly to something else if it doesn’t fit your team’s workflow.
  3. Soft ROI should be considered along with hard ROI because sometimes there are real, tangible business benefits like time saved or efficiency gains that are harder to quantify.
  4. Leaders should evaluate software purchases with the idea of future-proofing in mind, meaning how the software is built to aggregate, or process data should be an important decision.
  5. Companies willing to take risks and adopt new tech can build a competitive advantage.
  6. Do your due diligence in terms of evaluating software fit for your company. That includes considering other solutions, considering ease of use, and calculating upfront costs and cost of ownership.

For more valuable insights from these AEC leaders, watch the full panel discussion, "Demystifying Return on Investment for AEC Technology."


cove.tool Insights