If You’re Not Predicting the Future, You’re Living in The Past

Our industry has been slow to move into the realm of big data

By GLENN RENNER

In this magazine last month, we forecast that 2018 would be a watershed year for smart home adoption. The trend will be catapulted by interconnectivity and analytics-based automation, which simplify the user experience. This month, we have the same forecast for business operations. In 2018, we will see wide adoption of technology in the building industry, driven by the growing availability of data and analytics that are simple to use and cost efficient.

Of course, technology means different things in a home versus a business. “Alexa, predict the weather,” is a question being asked in smart homes today. In the not-so-distant future, due to rapid integration among product companies, Amazon’s Echo (and other personal assistant products) could alert homeowners to upcoming maintenance and service, and keep homes greener, longer. In this new reality, Alexa will be the one asking the questions, for example, “Mr. Smith, have you changed the air filters?”

Businesses are also experiencing a groundswell of data that is more accessible than ever before. Tools are becoming available to allow builders and builder partners to predict what customers might want, need, or buy in the future, the resources needed to deliver the product, and the risks attached.

The practice is called “predictive analytics” and relies on current and historical data to identify the likelihood of future events. Once reserved for companies with big pockets, the emergence of advanced data-gathering methods, cheaper computing, and interactive and easy-to-use technology has opened predictive analytics to small and mid-sized companies. Companies are responsive to the opportunities, eager as they are to gain competitive advantage.

Our industry has been slow to move into the realm of big data. We’ve relied instead on the predictable sell-through strategies of direct sales and independent and owned distribution. The reasons for delay are sound: when a contractor or builder is working on varied jobs, it is difficult to see a return on the time and money invested in data collection. Our industry is also a fragmented one; large numbers of contractors, subcontractors, tradesmen and building partners may impact a project. As a result, sharing too much information can reveal company secrets to competitors.

This is about to change. Cloud computing solutions are now (or almost) available that make data collection easier and allow for mobile uploads. (Among these is our company’s newest rollout, My HomeSphere for builders.) Additionally, new solutions are in development that enable companies to analyze their own data compared to aggregate data of similar firms, without divulging company information. (e.g., Sage Construction and Real Estate).

Not sure how data analytics can help your company? Here’s a primer:

  1. Improve planning:

With data availability at the company level and in the cloud, builders can analyze a potential market to build homes in the right place, at the right time, with the right amenities. For example, our company has been collecting product usage data through our rebate management system for nearly 20 years. Thanks to predictive analysis tools and better data sharing, we will soon be able to combine this product usage information with housing market data to predict homebuyer preferences based on real sell-through, product availability and spec management. Imagine knowing, in every product category down to the ZIP code level, what the market prefers and where opportunities exist to differentiate your product. See the success it brings? That information will be available as soon as late 2018.

  1. Increase efficiency:

Randy Deutsch, an associate professor in the School of Architecture at the University of Illinois at Urbana-Champaign, says the data boom represents an opportunity to completely transform how firms design, construct, and operate buildings. An example from the commercial sector — a solar-powered building in Chicago — illustrates his point. Using proprietary software, the team captured key project metrics such as total building area, floor area ratio, and daylighting performance. The data empowered the team to design the building based on actual site details instead of conceptual models. The result greatly improved overall efficiency and performance.

At the residential level, builders and manufacturers will soon be able to choose the right products, as noted above. Moreover, they’ll be able to ensure product availability and delivery at exactly the right time, saving costly delays. Manufacturers can plan production and logistics more efficiently, with the exact volumes and models of products that will be needed in a given market for, say, the next 180 days.

  1. Reap the benefits:

Data analytics offers a prediction — not a guarantee. That said, taking steps toward strategic data analysis delivers a real competitive advantage. In a recent report by KPMG (“Make it, or break it,” 2017), construction executives agreed that the use of advanced data analytics, along with integrated project management information systems and information modeling, would deliver the greatest return on investment for the industry.

Glenn Renner is chief executive officer of HomeSphere, the country’s largest digital marketplace connecting major building product manufacturers and local builders. He may be reached at grenner@homesphere.com.