A New Age of Access
Digital technologies have become major disruptors in the construction space as industry professionals seek to improve operations and streamline processes with a continuous eye on efficiency, productivity and safety.
Although the adoption of construction technology is climbing steadily, some contractors still consider high upfront costs, complex deployments and the need for ongoing technology upgrades as a barrier to entry. For many, the new everything as a service (XaaS) purchasing model could help bridge the technology gap and facilitate new opportunities for digital connections in the construction space. Like the more common software as a service (SaaS) and infrastructure as a service (IaaS) models, everything as a service offers a “subscription” payment solution, in this case for an entire technology platform.
Although the subscription model is just gaining momentum in the construction sector, it’s big business elsewhere. According to a recent Gartner report, SaaS remains the largest market segment and is forecast to grow to $104.7 billion in 2020. The second-largest market segment is infrastructure as a service (IaaS), which is forecast to grow 13.4% to $50.4 billion in 2020.
In fact, Gartner analysts say that the effects of the global economic downturn are intensifying organizations’ urgency to move off of legacy infrastructure operating models. These subscription services offer greater flexibility, smaller up-front investment and predictable total costs, as well as scalability, on-demand support and automatic updates that traditional (perpetual) licensing models typically lack.
How it works
As more construction technology companies begin to offer subscription models, contractors can expect to see a clearer path to equipment upgrades and increased asset utilization within their companies, among other benefits.
The model gives contractors the ability to purchase construction hardware and software solutions and receive automatic updates to the latest technology versions for a fixed monthly cost. Typically, this also includes benefits like installation, training, service, support and a full warranty for no additional cost.
The technology bundles can include machine control, site positioning systems, correction services, office software and more.
For construction companies, in particular, a subscription model has big benefits. These include:
- Increased productivity. Increased productivity is perhaps the biggest benefit to the subscription model because it enables contractors to purchase the newest technology on the market without a large outlay of cash, and to get free and automatic upgrades to new versions. Productivity is increased by the ability to purchase and continually upgrade select hardware and software solutions with the latest innovations, which is a powerful advantage to any construction firm, especially when coupled with low initial investment.
- Minimize downtime. Because service, support and replacement parts are included in the subscription, contractors can drastically minimize downtime that is otherwise spent on troubleshooting and maintenance. Further, many construction companies don’t fully utilize the capabilities of their construction technology, often because they simply aren’t familiar with all of the functionality. Having boots-on-the-ground support included with the monthly fee makes it easier for contractors to take full advantage of their technology investment without losing time learning by trial and error.
- Reducing maintenance and operating costs. With a subscription model, unpredictable technology costs are a thing of the past. Accidental damage repair, parts and labor are all typically included.
- Save time and money managing assets. When it comes to asset management, the subscription model provides several benefits to contractors. First, some packages include the ability to track the location of devices and machines with detailed activity information, which means contractors no longer have to worry about which machine is on which jobsite and how it’s being used. This also makes it easy to track operations to keep jobs on track and costs down. Second, the automatic upgrades and at-a-glance visibility of firmware versions make it easy to manage hardware, software and firmware versions efficiently. The subscription model also shifts a technology investment from a capital expense to an operating expense, which can offer tax and finance benefits.
According to a recent Deloitte Insights report, flexible technology consumption enabled seven in 10 of those surveyed to reduce the cost of entry for adopting products/services and access a product or solution that otherwise would be too expensive. This also allows contractors to get new solutions into the hands of more users across the organization to foster experimentation and facilitate the increased use of newer technologies, such as AI and IoT-based solutions.
Although the subscription model is relatively new on the construction scene, the model’s many benefits are likely to have contractors subscribing to this new way of purchasing equipment well into the future.
Scott Crozier is with Trimble’s Civil Engineering and Construction Division.