Gamuda Rise NewsletterGamuda Rise NewsletterWong Tsien Loong
The construction industry accounts for 6% of global GDP[1]. In Malaysia, we contribute 4.7% of GDP, which is valued at RM71 billion annually (2019 estimate[2]). Over 60% of that value is in real estate, to deliver residential and non-residential buildings.
The scale of our industry is such that we are the biggest consumers of raw materials and resources, consuming 50% of global steel production and 3 billion tonnes of raw material.
However, productivity in our industry still lags. By some estimates, over the past 25 years, productivity in construction is a quarter of manufacturing[3]. In a world where sustainability is gaining tremendous traction, we have a poor record.
This on-going pandemic has shown how vulnerable we are as an organisation. Even before the pandemic, we were already contending with a slew of domestic and external difficulties. Low margins, ultra-competitive landscape and political uncertainties constrain growth.
The rise of new forms of digital technologies could help us in some ways, and we have seen promising gains through our digital procurement that is powered by SAP Ariba. However, to further leverage on digital technologies such as analytics and artificial intelligence, we are hampered by our disparate legacy and manual systems.
Data, when it even exists, is stored in various inconsistent formats residing in islands. It takes tremendous effort to extract and cleanse to be useful because each system is fragmented, isolated and independent.
Analysing data requires significant manual effort off-system (using Microsoft Excel) to extract and aggregate information from different sources. Consequently, the reporting process is slow, and there is less time available for analysis to generate insights. Lack of granularity and visibility impairs proactive control of cost, time and scope overruns.
Hence our decision to bite the bullet, forge ahead to modernise our core systems, and deploy a modern ERP.
ERP is an acronym for enterprise resource planning. It is an integrated enterprise platform to manage day-to-day business activities such as accounting, budgeting, procurement, project management, compliance and supply chain operations.
The initial concept of ERP was of four core, integrated modules aimed primarily at manufacturing and retail companies: financials, HR, order management and manufacturing (now we see why manufacturing has improved productivity!). However, since then ERP has expanded to become the organisation’s end-to-end process and information backbone.
Correctly implemented, ERP help enhance profitability and productivity by:
ERP is more than a software – it requires Gamuda to retool how we operate. The systems, processes, roles and organisational culture that have served us well through the last four decades will not be sufficient in enabling us to realise our strategic goals and reclaim market share. Our legacy systems with siloed data were not designed for usability and insight.
With a modern ERP, we are embarking on a program of transforming how we operate as an organisation by leveraging technology where appropriate, but most importantly by focusing on information as a corporate asset.
To transform and become a data-driven organisation, we have to re-establish our foundation. By implementing a modern ERP, we will deliver a new operating model that will see the replacement or enhancement of core business systems over the next twelve months.
Through a single ERP platform for the Group, we promote better efficiencies, cost reduction and productivity by adopting leading practices that were developed with the likes of global business services (GBS) organisations.
With one database, it removes the opportunity for errors from manual data entry and delivers real-time reporting and analysis. We deploy the same system to other countries as we expand Gamuda’s geographical footprint.
It will become the platform that supports existing and future business models by providing the secure and stable foundation upon which differentiating and innovative capabilities can be realised.
SAP S/4HANA is a new generation cloud ERP platform that will provide the foundation for the Group to streamline current and build future business capabilities.
During the MCO, when we were working remotely, it became apparent that we had to re-think our approach to business continuity, system availability, accessibility, resilience and security. A modern, cloud ERP like SAP S/4HANA ticks all the boxes to enable our mobile, flexible and remote workforce of the future.
SAP S/4HANA is consistent with our move to becoming an agile organisation that is quick and nimble in how we respond to changes in the market; and where teams are built around end-to-end accountability:
With SAP S/4HANA, we will have a backbone for new ways of operation, new services and products where new business models can be developed.
When we improve productivity, we conserve resources. And that is good business.
[1] World Economic Forum (2016) “Shaping the Future of Construction”
[2] Fitch Solutions “Malaysia Infrastructure Report, Q3 2020”
[3] https://www.economist.com/leaders/2017/08/17/the-construction-industrys-productivity-problem