Focus On: AEC*
Top business challenge: Managing growth and acquisitions, integrating disparate offices and processes, and enabling collaboration
Solution: Link offices using interoperability standards and Web-based document management
How IT can help: By developing an infrastructure that supports collaboration with partners and government agencies
*Architecture, engineering and construction
After a midmarket engineering firm acquired a Brazilian subsidiary, management was more than a little confused when the South American unit filed its quarterly report. "The first set of financials was in Portuguese," says the company's CIO, who doesn't want to be identified. "My CFO turned the text upside down. He just couldn't understand it."
That sort of miscommunication is emblematic of the architecture, engineering and construction (AEC) industry. Technology is vital to the business of designing buildings and infrastructure, but disparate systems and sector fragmentation often create the IT equivalent of the Tower of Babel.
And while business is booming, fueled by demand for commercial construction and post-Katrina infrastructure rebuilding, business challenges are also proliferating -- notably managing growth and integrating acquisitions.
"At Earth Tech, we bought 25 firms, and none of them had the same infrastructure," says King Nelson, a partner in the Denver office of consulting firm Tatum LLC and former CIO at the Earth Tech division of engineering firm Tyco International. "We meshed them together by saying, 'You're going to use our stuff.' It wasn't hard to change technology; it was hard to get people to change."
The AEC industry is a major driver of the U.S. economy. Engineering, design and architectural firms -- segments of the industry that are responsible for designing buildings and infrastructure as well as the electrical and mechanical systems that make them work -- represent slightly less than half of the total construction sector. According to a U.S. Census Bureau forecast, that sector will reach $1.16 trillion this year. Construction ranks just behind health care in terms of growth, according to McGraw-Hill Construction, which publishes the trade magazine Engineering News-Record. But given the fragmentation of the industry -- the majority of firms have fewer than 50 employees -- sector growth frequently comes through acquisition.
While residential construction has slowed recently, research firm Reed Construction Data forecasts that spending on nonresidential building projects will increase 10.6% this year, together with an 8.1% increase in spending on nonbuilding projects such as bridges and roads.
But while the industry is growing, it's also bedeviled by communication problems -- a lack of standards, interoperability and collaboration -- both inside and outside organizations. How big a problem is interoperability? A 2004 National Institute of Standards and Technology study estimated that building maintenance organizations wasted almost $16 billion a year because computer-aided design (CAD), engineering and business process software systems couldn't exchange data freely.
This was first published in May 2006