I was at a conference at the end of April, and we were discussing new ways to deliver customer outcomes utilizing technology. The topic then shifted to how to utilize technologies that are primarily operational in nature in a capital project.
When it comes to analytics, remote operations, and cloud hosting, there are a wealth of studies showing results from the use of these technologies. The question then becomes why are these technologies not being utilized on new projects?
In my experience, three reasons come to mind:
- Improper standardization of data and use cases;
- Inability to adapt operational cost models to a capital funding mechanism (like a project); and
- Lack of talent with the ability to utilize these tools.
Improper standardization of data and use cases
In past articles, I’ve discussed the need to provide use cases for integration. The same need is present when utilizing bolt-on solutions, like analytics, cloud hosting, and remote operation. Many in our industry desire the results of intuitive analytics-driven maintenance, reduced capital costs for BAS installations, and the augmentation of their staff via remote monitoring and operation.
However, these same folks often are not included in the design discussion because they’re part of the operations team. Because of this, their use cases do not reach the design, and even if these use cases enter the design discussion, they do not make it into the narrative.
As a consulting engineer, you must engage operational resources at your clients’ facilities. Now, I know, margin pressures are tight and these “operational folks” do not pay your fees, but they are a key aspect of a day-two relationship in which you can provide higher margin services to optimize the operations of your customers’ facilities.
In addition to this, you must help customers create a data and use case standard from which to develop these technologies. I will expand on this more in a future article.
Inability to adapt operational cost models to a capital funding mechanism (like a project)
One of the biggest barriers to technology adoption is the “perceived” inability to adapt operational cost models to a capital project. This is actually quite easy to overcome. Just like license costs can be specified and included in “bulk pricing,” you can also take services like analytics and price a five-year license to those solutions for your capital budgeting.
The unknown comes in the cost of operations. This is where planned service comes into play. You can actually work with service providers to develop a planned service model that will price out a five-year service solution to support the operational solutions.
Lack of talent with the ability to utilize these tools
This is the hardest capability to address, and I believe it’s the market that is being missed by consulting engineers and commissioning agents. It’s relatively inexpensive to hire a mechanical engineering grad (or intern) and have him or her provide the services to your end clients at a fee. This is a great source of income at a relatively low risk to your firm as you can shed your resources as your backlog expands and contracts.
The biggest benefit to training a team to execute operational services is the predictability of the solution. Once you develop your processes, the steps for implementing analytics solutions (just one example) are relatively predictable.
It’s this predictability that will generate profit. Once training, you can have a low-cost employee who literally generates two to three times his or her cost of employment in revenue. This can be expanded and contracted as required based on the ebb and flow of your business.
Summing it all up
The market is prime for folks who will help end users augment their talent gap. Ever since 2008, companies are more comfortable with operational services that can be easily shed in case of an economic downturn. By expanding your services to include post-contract technologies, you can begin to engage building owners and generate a profit at the same time.
Another fact that must be considered is that by being present with a customer post-contract, you are positioning yourself well for future capital work. I encourage you to explore operational technologies and how they can grow the revenue and profit of your firm.