Building A Sustainable World

Building a
Sustainable
World
How to survive and thrive
in a digital construction
economy
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SAP Digital Construction Whitepaper (06/16) 2016 SAP SE. All rights reserved
MIKES POINT OF VIEW
Dear Colleagues,
$15 trillion thats the projected size of the construction market by 2030, up from $8 trillion today. 1 A recent
study expects that 75% of the infrastructure that will exist in 2050 does not exist today, and expects that the
design and expected outcomes will be transformative. We will have to double the current infrastructure and
then double it again by 2050.2
This is a huge opportunity for the construction industry; however, projects are getting more complex and
there are many inefficient and wasteful practices. Successful companies will grow by increasing market share,
self-performing to a greater extent, expanding internationally, and even operating some of the assets they
build. The industrialization of construction and the application of proven manufacturing technology and best
practices will help companies drive reliable outcomes and improve margins by increasing productivity and
eliminating waste and the impact of surprises with real-time information. Existing business models will
collapse as construction-ready disruptive technologies like robotics, mobility, virtual design and
construction, and 3D printing redefine design and construction processes. Construction will experience the
dramatic productivity gains seen in other markets, while vastly compressing the 50-year evolutionary process
that took place in the manufacturing industry.
The industry is at an At the same time, many firms experience a dramatic shift in their workforce as skilled craftsmen reach
inflection point where retirement age. The new workers, though more familiar with technology, do not have the hands-on experience
in skilled trades, resulting in a significant decrease in experience on many job sites. Construction companies
digitization will will compete with each other as well as with other industries to secure and retain the best talent. Digital
fundamentally change the technologies will play a major role in attracting and retaining the brightest people capable of transforming the
business models, construction industry.
construction methods, and The industry changes provide unique opportunities for industry leaders. The move to digital is not optional,
the economics of the and it will result in significant advantages for the innovators. We see four key areas being impacted by
construction industry. digitization and the transforming industry:
Digitization of expertise and knowledge will enable organizations to access best practices and highly
Michael Shomberg skilled workers at the point of need via technology and training, thus maintaining high quality and improving
Global Vice President safety
Engineering & Construction
Solutions Digitization of the construction site establishes the modern construction-manufacturing site with
SAP SE prefabrication in factory-like settings and real-time feedback for optimization of resources and equipment
Digitization of intercompany collaboration connects the project team to share the latest information
while delivering at the lowest possible costs
Digitization of commissioning and operations improves the transition from the construction phase to the
operational phase with seamless transfer of data and models while harmonizing the information with the
as-built conditions
At SAP, we did not invent the digital economy, but we understand where its going. We started a journey five
years ago, building the agile platform and solutions needed for the digital economy. This took over $30 billion
in acquisitions and billions in R&D. The results speak for themselves as we are the only company to provide
the tools for end-to-end processes that help CEOs solve their diverse challenges. Our vision is to help
construction companies build a more sustainable world and support the needs of future generations.
This document offers our perspective of the most significant trends, the industry direction, and how SAP can
help in this journey. Now is the time to forge a bold vision for a different kind of data-driven construction
business. Without this vision and the desire to act on it, organizations run the risk of falling behind rapidly
moving competitors. Thank you for your interest, and we look forward to your feedback.
Michael Shomberg
SAP Global VP Engineering & Construction Solutions
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TABLE OF CONTENTS
Executive Summary 4
Embracing Disruption 4
Do You have the Right Strategy? 6
Reimagining 8
Reimagining Business Models 9
Reimagining Business Processes 10
Reimagining Work 11
Digital Business Framework 12

SAPs Digital Framework 13
Digital Core 15
Workforce Engagement 16
SAP HANA: A New Computing Paradigm 17
How Does It All Come Together: Facility Management 18
How to Start 19
SAPs Comprehensive Ecosystem 21
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EXECUTIVE SUMMARY
Uncharted territory of growth, challenges, and disruption
Unprecedented growth
The construction industry is headed for unprecedented growth.
The global population is projected to grow to nine billion by 20503
Two out of three people will live in cities by 20504
The Associated General Contractors of America (AGC) found that 74 percent of the total respondents believe there is a crunchin skill
trades, and 53 percent said they were unable to hire construction professionals such as supervisors, estimators and engineers.5
Worldwide, construction is already one of the largest industry sectors, accounting for more than 11% of global GDP and expected to
grow to 13.2% by 2020.6 These growth statistics are staggering. However, there are several underlying challenges that can derail a
companys ability to grow.
Underlying industry challenges combination of increasing project complexity and decreasing

experience is a risk multiplier: risk to project deliveries, risk to
1. Poor productivity and profitability quality, and risk to employee safety these risks must be
The barriers to entry in construction are still low, leading to a mitigated.
large number of competitors and shrinking margins which
constrain investments. Compounding this is stagnant 4. Lack of sustainability
construction labor productivity over the last 50 years Construction is the #1 global consumer of raw materials and
compared to industrial businesses, which have increased over generates 25-40% of the worlds carbon emissions. 13 This
100% (see chart to the right).7 According to a Construction volume of natural resource utilization is not sustainable and
Owners Association of America (COAA) study, 63% of direct could compromise the environment for the sake of growth.
labor time on mega-construction projects is spent waiting for
materials and equipment, traveling to the area, taking early
breaks, and planning how to do the work. The lack of
productivity is reflected on the bottom line, where typical FLAT LABOR PRODUCTIVITY
margins for construction companies range from 2-8%.8 Poor 300
profitability can inhibit a companys ability to invest in digital
Index of productivity
processes and technology. 250
2. Project performance 200 Nonfarm industries

The opportunities in construction are growing, but so is project
complexity, where one surprise can wipe out the profits for the 150
whole company. Designs are getting larger and require more
efficiency. Unfortunately, according to an Accenture study, 100
Construction
only 30% of large projects in the energy industry are delivered
50
on budget, and only 15% of projects are completed on time.9
The 2015 KPMG Global Construction Survey suggests 53% of 1960 1970 1980 1990 2000 2010
Year
construction companies suffered one or more underperforming
projects in the previous year.10
3. Shortage of skilled labor

Adding to low productivity and higher risks, the construction More complexity
industry is bracing for a dramatic reduction in workforce
experience due to retiring baby boomers. During the recession, Project complexity
many skilled craftsmen left the industry and never came back.
By 2020, Millennials are expected to represent 50% of the
global workforce.11 Until 2010, the U.S. construction market was More Risk
made up of two generations: the traditionalists and baby
boomers. Now, the workforce has split into four generations: Workforce experience
traditionalists, baby boomers, generation X and millennials.
This present labor diversification is a challenge because of stark
Less experience
differences in work ethic, attitude, outlook and behavior. 12 The
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EXECUTIVE SUMMARY
Embracing disruption
The construction industry is at an inflection point
The construction industry is at an inflection point, analogous to the move from land-line telephony to cellular technology. Digital
technologies are rapidly becoming more capable of meeting constructions challenging and remote environments. Digitization will
change most everything, including the competitors and the barriers to entry. The end result will be a more productive and profitable
industry that builds more sustainable assets. The time to act is now.
The digitization and industrialization of construction has begun and will accelerate rapidly. Knowledge and technology developed by the
other industrialized industries will enable construction to leapfrog to the latest, proven methods.
Construction will greatly compress the 50+ years other CONSTRUCTION COMPANIES FACE AN
industries required to improve productivity INFLECTION POINT
The trial-and-error process used to improved productivity by
other industries will be eliminated
Productivity benefits will be achieved without the huge Business grows
learning curve
Todays construction industry model, where greater than
90% of the companies have less than 100 workers, is not
sustainable, and smaller players cant invest to keep pace 14 Inflection point
Consolidation has already occurred in industrial and civil
segments, where only a few large players remain in each
geography
In commercial construction, new contracting models and
partnerships (e.g., public-private partnerships) are increasing
Business declines
the amount of work a group can self-perform, leading to non-
innovators losing market share
Although residential construction has not seen tremendous
change, urban population growth will drive change here as
well
Only the bold and the nimble will invest and capture these gains, resulting in unprecedented levels of verticalization of thesupply chain
through partnerships and consolidation.
Digital disruption is upon us

3d printing and robotics Internet of Things
Several companies are evaluating the use of 3D CCC, a large Middle Eastern contractor, faced
printing, pouring concrete using robotics and 3D weak demand in 2008 and had two choices:-
designs, for greater precision, 30-60% less become more efficient or go out of business. Now
building materials and 50-80 percent faster it uses the Internet of Things to monitor and
delivery.15 improve the utilization of its assets, saving
approximately $15 million per year.17
Portable and modular buildings
Portakabin, a UK-based construction company Prefabrication and assembly
building portable and modular buildings, was able A Chinese-based contractor built a 57-story
to construct 50% faster than conventional building in just 19 days: 90% of the parts were
building (using 3D/building information modeling pre-manufactured, greatly reducing waste and
(BIM) technology and a factory-like setting to time. The building is able to withstand a 9.0
build), obtain a higher level of precision, and magnitude earthquake and is five times more
deliver on time and within budget.16 energy efficient.18
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EXECUTIVE SUMMARY
REIMAGINE REIMAGINING
BUSINESS MODELS Do you have the right strategy?
In the new digital ecosystem, construction
companies must apply new business models to The unprecedented growth presents enormous opportunities,
deliver maximum customer value and capture new but also considerable challenges. Leading construction
revenue. We see business models emerging in two companies are changing their core business models and
main categories: outdated methods of construction, These leaders are realizing
Finance and operations greatly improved margins, quality, and safety. Digitization of
Vertical integration core business models, processes, and work is forcing all
construction companies to reevaluate where they invest, how
they compete, and if they are prepared.
REIMAGINE
BUSINESS PROCESSES
The digital economy provides construction
companies with the opportunity to reimagine the key
processes behind each of these business models.
Proven innovations can be adapted to construction to
deliver greater value at lower cost.
REIMAGINE
WORK
To realize the productivity gains promised by the
digital inflection point, construction companies must
fundamentally reimage the way work is performed,
leveraging the strengths and compensating for the
inexperience of tomorrows workforce while
increasing automation.
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EXECUTIVE SUMMARY
DIGITIZATION OF CONSTRUCTION
Do you have the right strategy?
The move to digital will provide significant advantages for the innovators. We see four key areas being impacted by digitization and
industry transformation:
Expertise And Knowledge Project collaboration

As a new generation enters the workforce and more Owners, contractors, architects, and other members of the
experienced craftsmen retire, there will be an urgent need to construction team will work on contracts designed to improve
make up for the resulting experience gap. information sharing. They will be compensated based on the
projects success, rather than individual accomplishments.
Capturing and utilizing best practices can no longer be just a
goal; it must be a reality, or accidents, rework, and delays will Project-as-the-tenant collaboration systems will be available
become more commonplace to everyone on the project for up-to-date structured (2D/3D
renderings, job cost, etc.) and unstructured (documents,
The knowledge and experience that helps determine the
procedures, manuals, etc.) information
amount of consumables or small tools required for a job will
have to be translated into a format that can be easily Case studies show change orders can be virtually eliminated,
accessed (e.g., tablets) at the job site RFIs become documentation of decisions already reached in
the field, and general trust and respect is common place
Technology-savvy Millennials will not put up with manual,
paper-based processes This shared stakeholder collaboration will be paramount for
greater success.
Construction sites Skilled labor network

Many activities traditionally performed piecemeal on-site will be Labor unions will have an evolving role, where some aspects of
consolidated and moved to efficient factory-like settings with their role may be replaced by a digitally networked workforce.
safety and equipment availability greatly improved. Skilled craftsmen and staffing firms will post online for available
jobs with large contractors, and contractors will be able to
The use of modern, lean techniques, including a major role for
compare the costs, track record, skill set, availability, etc. of
robotics, will improve quality, greatly reduce waste, and
every person before the hire, similar to Angies List in the
improve costs and schedules
consumer marketplace. Contractors will save a tremendous
Pre-fabricated Lego-like components produced with great amount of time with pre-negotiated contracts based on volume
precision and transferred to the job site where skilled- and certified suppliers, and an Uber-like availability and
enough labor will be directed by 3D models and wearable simplicity will be accompanied by reliable feedback. Unions will
technology to quickly and accurately assemble the have to implement new training programs to help members
components understand the new technologies and processes.
The construction site will be transformed by sensors Commissioning and operations
gathering up-to-date information to improve safety, capture The handover of critical information from the construction
progress, and eliminate unnecessary downtime due to lack of phase to the operational phase will occur seamlessly and
materials or equipment issues without having to re-enter the information into asset systems.
Project status will be continuously transmitted back to BIM data is linked to the ERP and project management
headquarters to ensure contractors are paid faster and based information, providing a visual component throughout the
on progress process. This will help minimize errors and costly rework
Information captured in the design phase will have a common
thread that will be used to populate the information in the
asset management systems
Equipment installed in the construction will have information
on warranty and maintenance stored in an open network that
operators will be able to access well after the construction
phase is completed
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REIMAGINING
HOW ARE INNOVATORS DOING IT?

DIGITIZATION AND
INDUSTRIALIZED PROCESSES
In a digital world, new business models will emerge, disrupting
the industry and requiring new processes for the way we work
and deliver services.
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REIMAGINE EVERYTHING
Key business models
REIMAGINE BUSINESS MODELS
Reimagined business models fundamentally change how contractors perform, how they work together, and
how they retain their workforce.
Extensive verticalization and new contract models Asset or facility-as-a-service

Much like the industrial construction market, where a few Contractors have traditionally delivered their end product to
large Engineering Procurement and Construction (EPCs) an owner to operate and maintain. To improve margins in this
firms have emerged in each geography, commercial and civil low-margin industry, some contractors are financing and
construction will see more joint ventures and consolidation to operating what they construct. This allows construction
provide end-to-end solutions. This evolution has already companies to deliver facilities- and assets-as-a-service.
started in civil construction, where leaders have increased Early examples of this model are public-private partnership
their percentage of self-perform activities through projects. It has become increasingly common for
verticalization and are starting to dominate in each transportation departments to employ public-private
geography. methodologies to construct new roads or bridges, where the
Much of the poor productivity in the construction industry contractor provides the financing and construction of the
can be traced to the design-bid-build delivery method that asset, performs maintenance on it for 20-30 years, and
dominates the industry. This arrangement creates a three- receives payment over time, often via collection of tolls. We
way adversarial relationship between the owner-architect- expect this shared model to grow beyond its roots in the
contractor that inhibits information flow as all parties are cash-strapped public sector into commercial, industrial, and
protecting themselves against the all too common litigation residential construction.
in the industry. Armed with new technologies from BIM to the Internet of
Integrated project delivery contracts will bring a focus Things (IoT) to predictive analytics, contractors will be well-
to what is best for the project to drive true partnerships positioned to translate construction information to
vs. pitting companies against one another. operational insights, thereby increasing their profit margins
Participants will be evaluated based on the outcome of and guaranteeing long-term revenue streams.
the project, rather than just their particular piece. This is
an extension of the design-build concept that allows
contractors to reduce overall project risk and, also
importantly, the owners perception of construction
risk.
As use of integrated project delivery contracts accelerate and
collaboration technology is adopted, true vertical integration
of projects will expand, and customer-perceived risk will
diminish. The implications for supply chain simplification and
cost reduction are significant, with a single entity controlling
all aspects of the project from design to prefabrication and
construction.
Fluor is not just building the Tappan Zee Bridge; it will

also operate the bridge for the next 30 years.19
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Core methodologies
REIMAGINE BUSINESS PROCESSES
Companies understand that, along with business models, antiquated business processes must be
transformed.
Lean methodologies Visual collaboration

Concepts such as just-in-time (JIT) delivery and prefabrication Huge amounts of structured (CAD, BIM) and unstructured
are transforming the construction industry. From supply chain (contracts, submittals, meeting minutes) data are generated
to workforce planning, there are tremendous opportunities to and need to be effectively leveraged throughout the facility
streamline business processes in construction. lifecycle.
The lean processes, perfected in the industrial industry, have New standards, new regulations, and new products make
provided a framework for optimization and reduced waste todays projects more complex and risky than ever
The complex, remote, and one-off nature of construction This goes far beyond document management to the
projects overwhelmed the technology, so that practitioners integration of structured and unstructured data to provide a
operated in silos using minimal technology, relying mainly on more complete view of your project (scope, schedule, cost,
craftsmen to improvise and beyond), thereby visualizing all components to improve
Today business networks enable seamless communication of quality, safety, and profitability
information on a global scale, helping lean practitioners to A minimal increase in upfront costs of about 2% to support
truly make reliable promises optimized design will lead to an average lifecycle savings of
The broader use of lean principles and methods could reduce 20% on total costs20
completion times by 30% and cut costs by 15%20
Predicting the future and changing it for the better
Green methods Predictive software and machine connectivity will transform
Sustainable, green construction is rapidly becoming standard project safety: sensing danger, notifying workers, and
practice, but only for the nimble. stopping equipment before incidents occur
Standards like Leadership in Energy and Environmental Mockup miniaturization using BIM and 3D printing will
Design (LEED) are driving sustainability projects. But to eliminate the need for full-scale mockups, saving time and
achieve and document the performance levels required in money while improving project quality
LEED facilities, contractors must remain nimble Laser scanners will confirm field dimensions to within 1/100
New products such as low-volatile organic compound (VOC) of an inch and communicate with suppliers, ensuring
coatings may require special installation procedures in order prefabricated components connect without fail
to perform, so contractors cant rely on tried and true
methods. They must access and use current, accurate
information to ensure quality
Hatch, a leading Canadian engineering services provider, intends to leave behind advanced sensors and measurement
tools at the conclusion of its engineering projects in order to sense, analyze, and provide better advice to its customers
in maintaining the engineering asset.21
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Automation and information-driven work
REIMAGINE WORK
Reimagined business models and processes need an adaptive workforce with new skills.
Eliminating work through automation find schematics, which they then interact with through
Entire categories of work will be eliminated through augmented reality. These tools help them work faster and
automation. An early example of this is automation of more accurately
invoicing and payment processing, which speeds the First-generation construction robotics are already having
payment process while eliminating errors. Advances in significant impact on construction quality and speed.
computing power, connectivity, and sensor technology are Computers control blade elevation on grading equipment,
opening doors to eliminate ever more complex tasks, such as and small robots perform precision physical tasks from wall
quantity take-offs, scheduling, and forecasting. Improved layout to laying brick. We are now also seeing second-
accuracy and lower costs of the automated processes generation robotics such as 3D printers capable of printing
provide a competitive advantage for early adopters. an entire home in 20 hours. These innovations will enable
the construction industry to rapidly transform from a
manual, low-productivity industry into an automated, high-
Real-time reporting and analysis
productivity industry.
Leaders are leveraging mobile and IoT technologies to
automate productivity reporting and profitability analysis in Open talent economy
near real time. This instant feedback allows workers to
understand how they are performing and enables Digitization will enable the emergence of an open talent
competition through gamification. This is changing how economy that brings together people and work in a borderless
companies operate by allowing them to optimize their workplace.
businesses in near real time. Contractors will be able to scale operations rapidly by
sourcing talent from trade workers to management via the
talent network. Acting as a virtual union hall, the talent
Better, faster decision making
network will maintain training and certification records to
The real-time enterprise created by the technologies validate the qualifications of the candidates. Resourcing
described above requires leaders who make decisions in real processes will need to reflect this paradigm change, allowing
time. To do this, they need access to intelligence in near real resource managers to tap into not only the companys on-
time. Today, high performance analytic engines can turn data payroll talent, but also identify best-of-breed contractors,
into intelligence, which will enable leaders to make better alumni, freelancers, and open source talent, map them
decisions faster, thereby improving productivity and against demand, contact them, and engage them anywhere
profitability. in the world, anytime.
Once a project team is assigned, digital collaboration tools
Interactive technology and robotics and networks provide a borderless workplace for effective
Visionary companies are improving quality and productivity virtual collaboration within the team as well as with
through the use of interactive technology. Office and field partners and clients.
workers use voice recognition, visualization, and augmented Ultimately this will enable vertical integration as
reality to achieve better results. Technicians hands can be organizations can quickly bring together the talent they
freed up using voice recognition to capture information or need to execute any type of project.
Kiewit is connecting to the field to get near real-time status and eliminate downtime waiting for
materials or equipment.22
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DIGITAL BUSINESS
FRAMEWORK
TECHNOLOGY PLATFORM
In a connected world where every company is becoming a
technology company, smarter products and services will refocus
commerce on business outcomes and blur industry lines.
- 12 -
DIGITAL BUSINESS FRAMEWORK
Every firm needs to consider the five pillars of a digital strategy
SAP understands the key drivers of services digitization, and we The five pillars of a digital strategy are:
also understand that the continuously changing requirements
pose big challenges for businesses. The method of reimagining
1. Re-platform core business processes and bring
business models and business processes helps develop the
digitization road map. together business processes, project controls,
visualization, and analytics in real time to be
We have built a digital business framework to support smarter, faster, and simpler
construction firms in developing and executing on their 2. Smarter and engaged workforce across all
enterprise strategy to become transformers that fully leverage employees and contractors
and contribute to the digital network.
3. Supplier collaboration to drive efficiency and
Construction companies must digitize to grow profits and accelerate growth innovation
reduce risk by simplifying their operations. The value of the 4. Harness assets and the Internet of Things to
digital economy is based on how to better create a sustainable drive predictive maintenance and minimize worker
world. Value creation often comes from edge solutions that are and equipment downtime
based on and coordinated by the digital core solutions. It is the 5. Outcome-based transition to operations to insure
platform for innovation and business process optimization,
assets operate at peak efficiency and deliver
connecting the workforce, the talent network, and your clients.
expected results sooner
THIRD-GENERATION PLATFORM FOR CONSTRUCTION
Supplier Collaboration Tenant

& business networks experience
Digital Core
SAP HANA Platform

Workforce Internet of Things
engagement Security & big data
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DIGITAL BUSINESS FRAMEWORK
Reimagine business processes for fundamentally higher performance
CONSTRUCTION SOLUTION TARGET ARCHITECTURE

Digital framework mapping to construction processes
Workforce Supplier Collaboration

Engagement Digital Core Business Networks
Business dev. Supplier and

Project applications
and sales travel network
Estimating Real-time forecasting
Employee profile (skills and Cost control Risk management
certification) Issue and change Scheduling Materials procurement
Recruiting and onboarding management Work planning Subcontracts
Learning and performance Resource management Supplier network
management Supplier relationship
Payroll management
Core ERP Corporate business travel
Procure-to-pay Accounting and Project billing

Contingent labor financial close
management
Statement of work
management Sourcing and procurement
Assets and operations
Supplier and Virtual design Dynamic analytics Mobile field
travel network and construction engagement Commissioning and
turnover
Sensors Facility lifecycle
3D printing management
Robotics Asset information network
Key solutions: SAP S/4HANA Finance, SAP Commercial Project Management,
SAP Hybris Billing, SAP 3D Visual Enterprise, SAP Cloud for Analytics
Big Data & Tenant Experience

Internet of Things
- 14 -
DIGITAL CORE
Single platform provides near real-time information and a single version of the truth
The digital core creates the backbone required for managing projects effectively and distributing the knowledge to
all the stakeholders. The core consists of several key components, enabling the first near real-time project controls
platform that delivers a single trusted version of the truth for project status..
World-class core ERP Unified dashboard and reporting

The SAPs core ERP platform is proven across various Customers can now use the flexible SAP BusinessObjects
industries and disciplines. It provides synchronization of key Business Intelligence Reporting package to create virtually any
functions such as finance, procurement, materials report easily, while using SAP Fiori for a next-generation user
management, and asset operations. experience and SAP Lumira to enable end user data
exploration.
Near real-time project management
The addition of SAP Collaborate Project Management a Through significant innovation and billions in mergers and
project cost, risk, and change management platform is acquisitions, SAP has built the most comprehensive digital
unique in the industry. Built on the same platform as the ERP, platform in the industry. SAP is enabling the digitization and
this enables near real-time control while delivering a single Industrialization of construction for increased sustainability and
version of the truth. No longer are teams forced to rationalize profitability.
different answers between third-party systems and their core
financials. Exponential value is enabled by synchronized change
management, real-time forecasting, and accurate project
status.
Open integrations
SAPs digital core has certified interfaces with industry tools,
such as scheduling and estimating systems, while maintaining
control and a single version of the costs. This seamless
integration with SAP allows contractors, owners, and other
partners to leverage existing tools to accelerate time to value.
Visualization engine
The SAP 3D Visual Enterprise application can harmonize over
120 different 2D/3D design authoring tools and synchronizes
the information with SAP information to provide a unique,
comprehensive view of the as-built information with SAP
operational information.
Mobile access
Through the SAP Mobile Platform, users can integrate
information from the field without restricting their choice of
mobile devices or operating system.
- 15 -
WORKFORCE ENGAGEMENT
The world is getting smarter in the digital economy, but complexity is hampering the
workforce in this pursuit.
Complexity is the enemy of workforce engagement. People are working harder 83%
Of executives indicate theyre
than ever but are not necessarily accomplishing more. Workers do not have increasingly using contingent
access to smart, consumer-grade technology to work faster, better, and more workers24
efficiently. Organizational complexity is driving costs up and slowing down
progress. Four forces need to be addressed:
34%
Changing of the guard Of executives feel that
Over 50% of the workforce will be from the Millennial generation by 2020.23 In
the next 5-10 theyve made progress in
years, as more and skilled workers reach retirement age, the Millennial generation will dominate building a workforce that can
the workforce and demand new technological tools versus manual, paper-based processes. meet future business goals24
Contingent labor is on the rise

To drive agility and lower fixed costs, companies are turning more and more to contractors and 30%
service providers. Competing with other industries for the most talented engineers will require Of executives say their
new tools and technology. In addition, contractors need to track the compliance and safety companies give special
records of these workers. attention to the particular
wants and needs of
Complexity is on the rise Millennials24
Companies do business in more countries across many more channels. Products and services
are becoming more complex. Regulations are changing by the day, and understanding the
requirements in new markets is critical.
Improve your total workforce productivity: Simplify with SAP
Digitize your workforce with SAP: Our total workforce management suite provides the tools to enable you to optimize and engage
your workforce while providing advanced analytics.
Attracting the best workforce: Recruit and onboard the best workforce, simplify their work, and ensure that regulatory and
compliance requirements are met.
Managing the total workforce lifecycle: Manage the total workforce lifecycle from recruiting to onboarding, performance,
compensation, and learning all in one place.
Smarter apps with greater user experience: Enable the workforce to easily access the right information across any device and
through a dramatically simplified user experience.
EMPLOYEE LIFECYCLE SMARTER APPS WITH FLEXIBLE WORKFORCE LIFECYCLE

IMPROVED USER EXPERIENCE
Recruiting/onboarding Recruiting/onboarding
Performance and goals Contextual Time and expense
Succession and development Intuitive Invoicing/payment
Compensation Adaptive and predictive Statement of work
Employee record and payroll Anywhere/anytime Performance management
Travel and expense Secure Workforce analytics
Workforce analytics
Learning
SAP Fiori
- 16 -
SAP HANA PLATFORM A NEW COMPUTING PARADIGM
SAP HANA is the ultimate simplifier and the platform for innovation and digital business
Once the business models and business processes have been reimagined for digital services Gartner
execution, the focus can be directed to the digital core platform and harnessing the power of Big Data
to enable transformation and the desired business outcomes for engineering and construction firms. SAP Fiori UX is a radical
rethinking of the way people
Dream, develop, and deliver with SAP HANA Cloud Platform should interact with an ERP
SAP HANA Cloud Platform gives engineering and construction firms the mobile, system. Based on these
collaboration, integration, and analytics capabilities they need to dream big, develop factors, Gartner believes that
SAP Fiori UX is invaluable.25
fast, and deliver everywhere, with the following capabilities:
Application extensions
Extend current cloud and on-premise solutions for additional customization, enhanced business
flows, and more. ESSAR
Real-time analytics Reports previously taking 15+
hours now run in 48 seconds.
Engage customers, optimize business processes, and unleash new revenues with real-time analytics
Another major take away is
apps, powered by SAP HANA.
great flexibility to drill down to
the individual data in real time,
New cloud apps
which was not feasible in the
Quickly build innovative consumer-grade and industry apps for todays always-on, mobile, social, and conventional dashboards.26
data-driven world.
Extended storage capabilities

Holistically manage all structured, unstructured, and infinite data streams with flexible combinations
of data stream processing, in-memory technology, disk-based columnar storage, and Hadoop-based
storage solutions.
Data footprint reduction

Significantly reduce memory footprint and TCO. In ERP systems, we have seen ~6x reduction by SAP
HANA's dictionary compression. Removing aggregates and actual and historical data separation
further reduces the footprint up to ~10x.
The SAP HANA platform is

Real-time, in-memory platform 10x data footprint reduction for ERP Extended storage, including Hadoop Open architecture
Developer-friendly Embeds mobile and analytics Secure Cloud-ready
New apps and services NEW APPS EXTENSION INTEGRATION
Open programming containers

(Java, XS2)
UX Analytics Integration Security

(Mobile/SAP Fiori) (SAP Lumira) (SAP HANA Cloud (Single sign-on, Identify)
Platform Integration)
SAP HANA IoT

Data platform Libraries Big Data
(SAP HANA DB, SAP ASE) (graph, predictive) (Hadoop, Spark)
Infrastructure delivery
Infrastructure Elastic deployment
SAP data centers Partner data centers Customer data centers
- 17 -
HOW DOES IT ALL COME TOGETHER? EXAMPLE
Each of the five digital business pillars delivers individual business value, but next-generation business processes
often span multiple pillars. This is the case with facility lifecycle management, which uses the building information
models as an information conduit to collect, harmonize, and enrich data throughout the facility lifecycle
DIGITAL BUSINESS SCENARIO: FACILITY LIFECYCLE MANAGEMENT
4
Predictive
reporting and Business
risk analysis networks
2 Integrated 7
project delivery Lean processes 10
1 contract (JIT, prefab)
5 Optimized Real-time
3D design, sourcing of monitoring and Workforce
schedule, materials optimization of 12
engagement
budget and labor assets Seamless
3 8 Automated
Accurate turnover and
progress
estimates via 11 commissioning
reporting and
3D take-offs of assets
Virtual EVM Collaborative
6 Tenant
mockups 9 project
and work 3D procedures, information
experience
simulation Google Glasses, networks
and active
collision
avoidance
Digital core
Time
Scenario description Facility lifecycle management

In the reimagined process, project planning is captured in the This is a digital process for effective project delivery and
digital core and communicated to stakeholders through efficient, seamless transition to operations. It provides an
business networks. Stakeholder feedback enables accurate optimized, visual context to information delivered to the right
estimates and proactive risk identification/analysis back in the person at the right time to improve productivity, reduce errors,
core. Business networks then optimize sourcing of materials and eliminate injuries. This gives users a competitive advantage
and workforce allocation. Virtual mockups are used to ensure by leveraging visualizations to deliver real value.
the workforce clearly understands the plan and the work 10% fewer engineering changes27
environment. The core ensures just-in-time delivery of 45% less rework27
resources and prefabricated components. Business networks 79% lower accident frequency27
allow automated progress reporting and deliver work
instructions and safety information directly to workers via Although digitization has enabled this power, only a small
enhanced reality devices. Real-time monitoring enables a group of firms has harnessed it in their work.
continuous feedback loop that keeps the project on track. As-
built information is collected via the business network and Globalization, shifts in workforce composition, and changing
augmented with commissioning data, facilitating a seamless demographics are affecting the way companies approach
handover to the customer. project execution and facility management. Firms will need to
reimagine their business models and adjust their processes
accordingly to stay competitive in the era of digital
empowerment.
- 18 -
HOW TO START
THE JOURNEY TO A DIGITAL

CONSTRUCTION COMPANY
- 19 -
HOW TO START
THE JOURNEY TO A DIGITAL CONSTRUCTION COMPANY

The journey to define future business models capitalizing on the digital construction economy involves all
aspects of a modern contractor and requires a systematic approach to identify and capture business
opportunities. Companies embarking on the transformation journey to the digital business typically start to
reimagine their business with a focus on business outcomes and customers.
Answering the key questions, How can we better differentiate our services from the competition? and, How
will we preserve margin on bids? will provide the direction for reimagining your business processes and
operational model.
For innovation today, a new level of collaboration is required. As a result, we have developed a framework that
will be a continuous and holistic partnership model designed to drive true collaboration and engagement.
Outlined below are the five steps of SAPs collaborative value and innovation framework.
THE COLLABORATIVE VALUE AND INNOVATION FRAMEWORK
1
1. Strategy alignment: Understand company and SAP
STRATEGY ALIGNMENT
strategic direction and identify initiatives
2.Opportunity assessment: Opportunity deep-dive
based on strategic initiatives and prioritization based
on value
3.Solution road map and ROI: Document end-state
5
solution and business case including benefits, TCO,
ROI, and strategic road map
GOVERNANCE
4 2 4.Value realization: Deliver transformation on time, on
budget, and on value
VALUE REALIZATION OPPORTUNITY
ASSESSMENT 5.Governance: Maximize investments and accelerate
value creation with governance based on executive
engagement, value delivery, and continuous
innovation
3
SOLUTION ROAD MAP
AND ROI
To learn more visit us at:

http://go.sap.com/solution/industry/engineering-
construction-operations.html
- 20 -
SAP COMPREHENSIVE ECOSYSTEM
Orchestrating the world to deliver faster value
Our comprehensive ecosystem for EC&O offers: Our partner ecosystem includes, among others:
A wide range of business services (OEM suppliers, key
vendors)
Special technology services for EC&0 with focus on
IT/OT convergence, geospatial integration, estimating,
CAD integration, etc.
Open architecture: Choice of hardware and software
Complementary and innovative third-party solutions
Reach Partners to serve your business of any size,
anywhere in the world
Forum for influence and knowledge
A large pool of industry experts with broad and deep
skill sets
BUSINESS NETWORK
2.1 million suppliers
200 major travel partners (air, hotel, car)
50K service and contingent labor providers
IMPLEMENTATION
INFLUENCE FORUMS AND EDUCATION SERVICES
32 user groups across all regions
280 + EC&O partner companies
EC&O-specific industry councils
3,200 service partners delivering
SAP community >24 million unique EC&O-specific solutions
visitors per year DRIVING
2,650 SAP University Alliances CUSTOMER
VALUE
PLATFORM AND
INNOVATION INFRASTRUCTURE
1,900+ OEM solution 470 + EC&O partner companies
partners to extend SAP
solutions 1,400 cloud partners
3,200 startups developing CHANNEL AND SME 1,500+ platform partners

SAP HANA apps 870+ EC&O channel partners
4,800 overall channel partners
- 21 -
AUTHORS
Outlined below are major contributors to this white paper.
Michael Shomberg Michael Shomberg is Global Vice President and General

Global VP and General Manager Manager for Engineering, Construction, & Operations industries
at SAP. He is responsible for the companys overall strategy for
Head of Industry Business Unit for
this industry, oversees the global business in the sector, directs
Engineering, Construction & product and solution road maps, and leads go-to-market
Operations activities. Michael has a B.S. in electrical engineering.
Newtown Square, PA, USA
michael.shomberg@sap.com
Johnny Clemmons Johnny Clemmons has been with SAP for five years and is the
Global Chief Engineer Global Chief Engineer in the SAP Industry Business Unit for
Engineering, Construction, & Operations. Johnny is an electrical
Engineering & Construction Industry
engineer with over 15 years experience managing construction
Alabama, USA projects. He came to SAP from the customer side, where he
johnny.clemmons@sap.com held numerous operations and IT positions at construction
companies. Johnny helps clients deliver value through SAP
solutions and is instrumental in defining the engineering and
construction industry solutions and best practice processes.
Dustin Anderson Dustin is a Global Industry Solutions Director for the

Global Solutions Director Engineering, Construction, & Operations Industry Business Unit
at SAP representing North America and Latin America. Prior to
Engineering & Construction Industry
this role, Dustin worked at an SAP partner company
Phoenix, AZ, USA implementing SAP Solutions. Dustin helps clients deliver value
dustin.anderson@sap.com through SAP solutions
Ragunath Ramanathan Ragunath Ramanathan is a Senior Vice President and General

SVP and General Manager Manager of the Services Industries and is based in Germany. In
this role, he leads a ~2 billion global business unit that looks
SAP Services Industries
after the professional services, engineering and construction,
SAP headquarters: Germany travel and transportation, and media industries. He is
ragunath.ramanathan@sap.com responsible for all domains, including development, sales,
services, active global support, global partner operations, and
marketing and communications.
- 22 -
ADDITIONAL RESOURCES
Outlined below is additional external research that was used as supporting material for this white paper.
1. Global Construction 2030: a global forecast for nagement/workforce-management/march-2015- fiori-ux-it-matter

the construction industry to 2030, PwC global-construction-labor-skill-shortages
www.pwc.com/gx/en/industries/engineering- 26. SAP Customer Success Story, From Insight to
construction/publications/global-construction- 13. World Economic Forum, Shaping the Future of Action - Real-time Enterprise, Page 10
2025.html Construction A Landscape in Transformation, http://www.sapevents.edgesuite.net/SAP_Forum
Jan 2016. /sap-mining-metals-
2. Aurora Almendral, 75% of the Infrastructure That http://www3.weforum.org/docs/WEF_Shaping_t forum/pdfs/MM_Forum_C1.pdf
Will Exist in 2050 Doesnt Exist Today, Next City, he_Future_of_Construction.pdf
Oct. 22, 2014, 27. SAP Estimates*
https://nextcity.org/daily/entry/75-of-the- 14. Small Business Facts. Chapter 5, Course Hero
https://www.coursehero.com/file/6829910/Cha Note: All sources sited as SAP or SAP
infrastructure-that-will-exist-in-2050-doesnt-
pter-5/ benchmarking are based on our research with
exist-today
customers through our benchmarking program
3. World population projected to reach 9.7 billion by 15. WinSun China builds world's first 3D printed villa and/or other direct interactions with customers
2050,United Nations Department of Economics and tallest 3D printed apartment building, January
2015 http://www.3ders.org/articles/20150118- Note: Some images used under license from
and Social Affairs, July, 2015
winsun-builds-world-first-3d-printed-villa-and- Shutterstock.com
http://www.un.org/en/development/desa/news/
population/2015-report.html tallest-3d-printed-building-in-china.html
Note: Logos contained in this document are used with
16. Portakabin Business Case Studies. Page 2 Gray the permission of SAP's partners.
4. World Urbanization Prospects, United Nations,
Department of Economic and Social Affairs, 2014, box
page 5 http://businesscasestudies.co.uk/portakabin/pro
http://esa.un.org/unpd/wup/Publications/Files/ duct-development-innovation-and-the-product-
WUP2014-Highlights.pdf life-cycle/introduction.html#axzz41nHot4Bb
5. Construction Business Owner, March 2015 17. The Internet of Things is giving the construction
http://www.constructionbusinessowner.com/ma industry a new strategy, June 4, 2015
nagement/workforce-management/march-2015- http://www.ibmbigdatahub.com/blog/internet-
global-construction-labor-skill-shortages things-giving-construction-industry-new-strategy
6. Global construction growth to outpace GDP this 18. Chairman Zhang's flatpack skyscrapers, BBC
decade PwC, March 3, 2014 News11 June 2015,
http://in.reuters.com/article/idINIndia- http://www.bbc.com/news/resources/idt-
55293920110303 3cca82c0-af80-4c3a-8a79-84fda5015115
7. International Journal of Business and Social 19. Flour Annual Report. Fluor Team Selected for
Science Vol. 4 No. 7; page 3; July 2013 Tappan Zee Bridge Replacement in New York
http://ijbssnet.com/journals/Vol_4_No_7_July_2 http://investor.fluor.com/phoenix.zhtml?c=12495
013/1.pdf , original data and chart found in 5&p=newsarticle&id=1767956
Teicholz, P. (2013), Labor Productivity Declines
20. Shaping the Future of Construction A Landscape
in the Construction Industry: Causes and
in Transformation: An Introduction, World
Remedies (Another Look), AECbytes Viewpoint
Economic Forum, January 2016, page 6
#67 ,March 2013.
http://www3.weforum.org/docs/WEF_Shaping_t
http://www.aecbytes.com/viewpoint/2013/issue
he_Future_of_Construction.pdf
_67.html
21. Hatch, Company Website
8. CSI Market, Construction Services Industry
https://www.hatch.com/About-
Profitability Ratios chart, Net Margin lines,
Us/Publications/Technical-
http://csimarket.com/Industry/industry_Profitabi
Papers/2015/01/Analysis-Of-Factors-That-
lity_Ratios.php?ind=205
Influence-The-Sensor-Location-Problem-For-
9. How to boost capital project performance, Omar Freeway-Corridors
Abbosh, James Arnott, Michael Grady, Accenture,
22. Kewitt, Procurement Overview, Page 7 & 10,
page 2 https://www.accenture.com/hu-
https://www.kiewit.com/files/6814/2259/1263/
en/insight-outlook-how-to-boost-capital-project-
Procurement_Brochure.pdf
performance.aspx
23. 2015 TCS Global Trend Study on IoT, Press
10. KPMG. Climbing the Curve, Global Construction
Release TCS, July 22, 2015
Survey 2015 , page 7
http://www.tcs.com/news_events/press_release
https://www.kpmg.com/BR/PT/Estudos_Analise
s/Pages/Internet-of-Things-TCS-Global-Trend-
s/artigosepublicacoes/Documents/Build-
Study-2015.aspx
Construction/global-construction-survey-2015.pdf
24. Workforce 2020: Building a strategic workforce
11. Millennials at work, Reshaping the workplace
for the future Oxford Economics, 2014,
PwC, 2011,
http://www.oxfordeconomics.com/workforce202
https://www.pwc.com/en_M1/m1/services/cons
0
ulting/documents/millennials-at-work.pdf
25. SAP Fiori UX: It Is Not a Matter of If, but When and
12. Construction Business Owner, March 2015
How
http://www.constructionbusinessowner.com/ma
https://www.gartner.com/doc/3016622/sap-
- 23 -
www.sap.com/contactsap
SAP Statement of Confidentiality and Exceptions

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may not be disclosed without the permission of SAP. This presentation is not
subject to your license agreement or any other service or subscription
agreement with SAP. SAP has no obligation to pursue any course of business
outlined in this document or any related presentation, or to develop or release
any functionality mentioned therein. This document, or any related presentation
and SAP's strategy and possible future developments, products and or platforms
directions and functionality are all subject to change and may be changed by
SAP at any time for any reason without notice. The information in this document
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In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business
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Building A Sustainable World

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Building a

Digital Business Framework 12

Underlying industry challenges combination of increasing project complexity and decreasing

processes and technology. 250

2. Project performance 200 Nonfarm industries

3. Shortage of skilled labor

Digital disruption is upon us

Expertise And Knowledge Project collaboration

Construction sites Skilled labor network

HOW ARE INNOVATORS DOING IT?

REIMAGINE BUSINESS MODELS

Extensive verticalization and new contract models Asset or facility-as-a-service

Fluor is not just building the Tappan Zee Bridge; it will

REIMAGINE BUSINESS PROCESSES

Lean methodologies Visual collaboration

THIRD-GENERATION PLATFORM FOR CONSTRUCTION

Supplier Collaboration Tenant

SAP HANA Platform

CONSTRUCTION SOLUTION TARGET ARCHITECTURE

Workforce Supplier Collaboration

Business dev. Supplier and

Procure-to-pay Accounting and Project billing

Big Data & Tenant Experience

World-class core ERP Unified dashboard and reporting

Contingent labor is on the rise

Improve your total workforce productivity: Simplify with SAP

EMPLOYEE LIFECYCLE SMARTER APPS WITH FLEXIBLE WORKFORCE LIFECYCLE

Extended storage capabilities

Data footprint reduction

The SAP HANA platform is

New apps and services NEW APPS EXTENSION INTEGRATION

Open programming containers

UX Analytics Integration Security

SAP HANA IoT

DIGITAL BUSINESS SCENARIO: FACILITY LIFECYCLE MANAGEMENT

Scenario description Facility lifecycle management

THE JOURNEY TO A DIGITAL

THE JOURNEY TO A DIGITAL CONSTRUCTION COMPANY

THE COLLABORATIVE VALUE AND INNOVATION FRAMEWORK

To learn more visit us at:

3,200 startups developing CHANNEL AND SME 1,500+ platform partners

Michael Shomberg Michael Shomberg is Global Vice President and General

Dustin Anderson Dustin is a Global Industry Solutions Director for the

Ragunath Ramanathan Ragunath Ramanathan is a Senior Vice President and General

1. Global Construction 2030: a global forecast for nagement/workforce-management/march-2015- fiori-ux-it-matter

SAP Statement of Confidentiality and Exceptions

2016 SAP SE or an SAP affiliate company. All rights reserved (06/16).

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