A recent article from McKinsey & Company shows how important it is to challenge existing beliefs about how to secure recurring revenue. The article summarizes several years of data on business model innovation. Most firms have rigid, long-standing beliefs about how they drive revenue. Retail, finance, pharmaceuticals—they all think they know what their clients need, and what they are willing to pay for goods and services.
But what if a traditional business model is outdated, or is facing the threat of disruption? What can incumbent firms do to stay relevant for the long term? The Architecture, Engineering and Construction (AEC) industry is in a similar situation. AEC firms also face challenges with growth. It can be difficult to find new and sustainable business streams.
How AEC Firms Have Profited in the Past
AEC firms primarily drive revenue from standalone consulting assignments. That includes things like facility assessments and capital investments. Assignments come from client needs. Most of those are influenced by larger forces such as real estate demand, building policies and economic cycles. Generally, AEC firms rely on having a regular pipeline of projects.
But what if a different approach can drive both new and sustained revenue for AEC firms?
The New Business Model for AEC Firms
Within the AEC industry, firms are making a change. Instead of relying on project-based revenue, they are shifting to higher strategic value consulting driven by ongoing access to data to provide continuous improvements. Having an interoperable technology platform ensures revenue is future-proof by being agile to adapt to the changing ecosystem of systems and changing business objectives. Ultimately the goal is to provide advisory services throughout a client’s operational lifecycle. This can include:
- advising on client growth
- risk and environmental management
- asset management
- capital planning
For AEC firms making this foray, there are several fundamental considerations:
- Understanding and challenging what clients need and want through thought-provoking dialogue. Do not focus on previous consulting projects as precedent.
- Redefining “value-add” and thinking of multiple ways to achieve profitability. Ask yourself, “What is my organization truly good at, and how can we get paid for it?”
- Thinking of the future for clients instead of reacting and relying on them to create it. What are we seeing on the horizon? How can we be a part of it?
A key focus for the new AEC business model is thinking of ongoing relationships with clients where revenue streams may be smaller but more predictable.
A client may not have access to the same data, software or management software analytics that an AEC firm does. Leveraging that access can help an AEC firm expand beyond their core service offerings and provide services a client may need on a continuing basis.
For example, many firms fail to make the most of building data or best practices from previous assignments and assessments. This happens even though these are key sources for trends and insights. AEC firms with repeat client projects can work with those firms and use analytics to understand inefficiencies and challenges. This provides added value. The main focus with leveraging data is twofold:
- Moving away from static, project-based analyses
- Concentrating on direct client impacts
How 4tell™ Solutions Helps AEC Firms
Using 4tell’s™ Facility Condition Assessment Software is one way to take this approach. It enables AEC firms to move from static, project-based work to more dynamic and client-focused advisory services. It allows firms to integrate building and facility condition data into a single platform for reporting and analysis. That way, firms can help their clients understand their assets better. They’ll also be able to offer solutions to optimize the performance of these assets on a long-term basis.
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