Michael Brown of Bowery Capital and Kelli Fontaine of Cendana Capital discuss trends and themes using Cendana Capital manager data.
We released the 2016 edition of Opportunities In Vertical Software last week which laid out our point of view on ten specific verticals and the potential for various software solutions to dominate each of these ten verticals in the coming years. As discussed in our prior post, for the next ten weeks we will release content focused around the impact of software on these ten industries. For our inaugural week, we continue with the Construction vertical and follow up on our initial post from yesterday. To get an insiders perspective on where the market for Construction software is headed, we conducted a construction software interview with Deep Bhattacharya to talk through four big questions about the industry. Deep has over 20 years of experience in the Construction vertical starting out his career on the building products side working for Oldcastle and most recently was a part of the executive team at software company Gehry Technologies. Gehry develops, markets and sells web-based 3D project collaboration and building information modeling (BIM) technology and related services to building owners, architects, engineers and contractors worldwide. Gehry Technologies was acquired byTrimble in 2014.
What are some of the most interesting developments in your industry over the last 10 years and how has software added value?
There are 3 major areas that software has added value in the construction industry over the last 10 years:
Building Information Modelling (BIM) technology, borrowed from decades of computer aided design (CAD) development in the aerospace and automotive sectors, has enabled the architectural building community to design with greater precision and efficiency, improve the constructability of building designs, and streamline the iterative design process. BIM technology has widely been instituted over the past decade by the top architectural, engineering and contracting community, and has dramatically reduced cost and schedule overruns, and eliminated waste in several high profile construction projects.
Collaboration (cloud) technology has enabled design team to operate in a “paperless” fashion, and implement lean practices (commonly used in manufacturing) to improve project management and outcomes. Globalization has resulted in increasing geographic dispersion between designers and builders, and it is not uncommon to have a dozen different software packages and standards on a single project. Collaboration technology has optimized the flow of information from the architect’s offices to the construction site to the owner and back, thereby reducing common mistakes that result from traditional methods utilizing paper construction documents .
Automation technology has changed processes that were historically manual such as surveying, material cutting, & site monitoring has allowed increased efficiency in time and cost. Additionally it has resulted in better control and consistency from one project to the next. Unlike in manufacturing, construction teams regularly re-organize around projects, and disperse after projects are completed, so historically it has been difficult to capture learnings.
What are some of the challenges / hurdles that still exist?
The largest hurdles facing the construction space is the fragmentation of the industry. Each layer of a construction project has completely different needs from a software solution. Engineers & architects have higher adoption rates of technology and mainly require software tools that optimize the design process. Further downstream contractors and site workers require tools that allow for adherence to schedules and budget allocations. Contractors and construction site workers have a much lower willingness to adopt technology into their everyday processes.
When looking to enable a process with software what are the most important points for a buyer to think through?
Given the varying nature of construction projects and roles held across projects a software buyer should keep in mind the usability and versatility of the software they purchase. The best tools are ones that will allow for functionality across various constituencies and easily integrate with other tools used on a project to ensure seamless information flow.
What is your vision for the industry in 5-10 years?
Software enablement and utilization is in its infancy within the construction industry. Aerospace took almost 30 years to make a CAD designed aircraft. Architects have been leading the charge to adopt more software, engineers have been using it for long, and general contractors have been slower to adopt these processes. Given that an architect’s job is to wow the client they don’t want to compromise because they are rewarded for pushing the budget. Contractors are working on fixed budgets so they’ll do everything to value engineer a project. Contractors will slowly continue to realize how investments in software will allow them to realize longer term profitability and we will see adoption to continue rising. Down the line the construction workers do not need elaborate software solutions but do require hard core instructions. Leveraging things like mobile to streamline communication and solutions and manage information and material flows is the critical task that software can add value.
Thank you for reading this construction software interview with Deep. Make sure to check out the 2016 edition of Opportunities In Vertical Software for the full report and we will be back tomorrow with our final post on the Construction industry and the software that powers it.
The Bowery Capital Team discusses early stage go-to-market strategy with the Revenue Council
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