The construction industry is one of the least digitized industries in the world, with around 30% of businesses still using paper for site activity records and estimating.

Cloud based project management systems are well established so now it is easier than ever to move away from paper processes and deliver a swift Return On Investment (ROI). Of those that have moved to project management systems, many are operating in the cloud. But does it always provide the best ROI when compared to running software from an on-premise server?

I work with construction businesses and the most common belief is “the cloud” (running your software on infrastructure outside of the business) is the best way to go. However, it really depends on the needs of your business and the ROI, and it doesn’t always work out to be your best choice.

Dave, a successful commercial builder, is a great example of this. When he approached me, he had a couple of his estimators using a well-known estimating software. They were running the software from a cloud server, but it was taking ages to do anything! They tried all sorts of fixes, like logging people out of the server in the hopes that the software would run even a tiny bit better, but to no avail. Dave was stressed and felt he would miss deadlines due to the slow output.

It didn’t take me long to pinpoint the issue. The cloud server was woefully underpowered to run this software, which required a lot of grunt due to its 3D modeling capabilities. An option was to dial up the power of the cloud server to run the software at acceptable speeds. Cloud computing, however, can be expensive, particularly when you need a fair bit of graphical horsepower. In this case Dave was looking at an extra $2000 on his monthly subscription, or $24,000 per year, every year for his cloud server to run the software efficiently.

My suggestion was to install and on-premise server instead, with plenty of horsepower for around $30,000 to purchase outright. On-premise servers are generally replaced every 4 years, meaning the cost per year was around $7,500. In this example the ROI is far better with an on-site server, with a base cost savings of around $66,000 over 4 years.

Now, of course there are other factors to consider, such as the extra maintenance required with an on-premise server, less scalability than a cloud server and needing the infrastructure to safely house the server. But in the end Dave was still going to be miles in front with an on-premise server. Dave went ahead with the on-premise server and his estimators have been extremely efficient ever since and Dave hasn’t had to worry about missing deadlines.

There are other setups and situations with construction companies where a cloud server is my first recommendation. When I worked with Bevan, it became clear his business was a great fit for cloud technology.

Bevan owns a owns a long-standing Civil and Commercial Construction business. He’s been at it for 30 years and has constructed some fantastic buildings in regional Australia. His knowledge of technology was minimal, after all, he is a builder at heart and that was his passion.

His processes were developed decades ago so I wasn’t surprised he was still leveraging a paper-based system. Bevan knew he needed to evolve but didn’t know where to start. He already had a technology support contract with an IT support provider, but they were the kind of “call us if something breaks and we’ll rush over to help” kind of business.

I soon partnered with Bevan and his team and helped them move on from their paper-based system. Within a matter of days, we’d identified a cloud-based project management system that would allow for quick adoption and save them tens of thousands of dollars per project. The cloud-based software would also reduce the likelihood of delivering a project late, meaning less stress of missed deadlines or dealing with liquidated damages. This formerly old school business owner was excited about each innovation that we implemented and is a great example of how cloud-based software can be the answer for your construction company.

While tens of thousands of dollars in savings per project may not sound significant to a construction business with a large revenue, that was a substantial addition to the overall profit for Bevan’s business as the lack of efficiency was causing them to have a very low profit margin.

The important lesson here is that one size does not fit all for construction software and IT Infrastructure. The software does not always have to be running in the cloud.

If the question arises on whether to go to the cloud, choose on-premise servers or a combination of both, you would be wise to speak with your IT provider first so they can advise on the right path, and make sure your IT infrastructure is going to work well with your software.

If your IT provider is capable, I recommend having them do an audit on your systems as soon as possible and involve them with reviewing potential software. Remember that your IT professional should be able to negotiate prices with technology vendors far better than you because they deal with them more often, understand the terminology and the vendors don’t see them as an easy target.

So… to cloud or not to cloud – that is the question. The answer will be unique to your setup and situation and is best answered by exploring all options with your IT professional.

 

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