This year’s annual POB Capital Investment Study, conducted in partnership with Clear Seas Research, shows that, on average, surveyors and geospatial professionals have kept their spending levels fairly consistent over the last three years, based on revised mean averages. The 2018 capital budgets showed a nice increase from 2017, and then the 2019 planned spending returned to roughly the 2017 level.
To understand these numbers a little better, it is important to consider a number of factors. The 2016 spending levels reported were nearly double the budget forecasts respondents provided when the prior study was conducted. This spike didn’t represent a new level of spending, and the following year capital investment budgets settled back into a more consistent pattern. With some time between that spending spree and current forecasts, it appears the 2016 spending didn’t depress spending in the following years.
A number of factors can drive a spending spike (or the opposite effect). Among them are changes in tax laws that favor spending or that may adversely affect a segment of the profession (e.g. small businesses). Rises or expected increases in interest rates can spur faster action on planned purchases. Political factors that affect government spending can launch or delay major projects. The list can go on.
In an informal poll, POB asked what triggers readers’ decision to purchase new technology or tools. Improvements in productivity or efficiency topped the list when respondents were given one choice. Budget came second in that poll. So, availability of funds (including the cost of money) certainly comes into play. When similar questions were asked as part of the formal study and multiple answers were allowed, productivity gains still ranked at the top of the list, but it was tied with current software and technology becoming outdated or no longer being supported by the manufacturer. Occupying the third slot on both lists was “significant advances” in the technology when compared with what was currently being used.
|
What triggers your decision to purchase new technology? |
Study |
Poll |
|
When it would increase productivity or efficiency |
52% |
27% |
|
When the current software/technology becomes outdated or unsupported |
52% |
13% |
|
When there are significant advancements or features compared to the current software/technology |
48% |
18% |
|
When it is needed to expand or increase business |
38% |
14% |
|
When it is in the budget to purchase |
29% |
23% |
|
When the cost to maintain current software/technology becomes prohibitive |
23% |
5% |
Availability of Funds
The picture of capital investment offered by the responses to these and other questions is one of a market of rational purchasers who watch for advances in technology and, when the tools have improved to a level that provides significant benefits or gains in productivity, they make their moves to upgrade or replace their current tools.
But availability of funds is always a top concern, so POB dug a little deeper into those mean averages. When outliers are removed to provide a more consistent view of 2019 budgets, the mean average of $110,856 may not sound all that significant. One data point that is not apparent in that number is the top budget number reported: $3,000,000.
To get a proper perspective on the wide ranges, POB looked at spending by company size, as defined by gross revenue. Companies with under $500,000 in revenue mirrored the overall pattern of increasing spending in 2018 and then forecasting slightly lower spending levels in 2019. Above that level, however, companies increased spending from 2017 to 2018 and forecast an increase again in 2019.
For the smaller firms with revenues of under $1 million, their mean spending levels of nearly $76,000 represent 8 percent or more of their revenues. The drop in spending from 2018 to 2019 is just 5 percent, which could be largely within a statistical margin for error, so the overall trend is more level than it is down.
Firms with over $1 million in gross revenues, but under $5 million, increased forecast spending by 11 percent for 2019. Larger firms with over $5 million in revenues increased spending by 32 percent for the same period.
|
2017 |
$106,635 |
|
2018 |
$122,854 |
|
2019 |
$110,856 |
|
Expect Increase |
8% |
|
About the Same |
43% |
|
Expect Decrease |
31% |
With a quarter of 2019 capital investment budgets approved and a third prepared and/or submitted for approval, expectations were for comparable to higher spending in 2019. Over half of budgets were in this category and only a third were reducing spending. The remainder were unsure at the time of the study.
|
|
2019 |
2018 |
2017 |
|
Under $1 million in revenues |
$75,987 |
$78,922 |
$72,358 |
|
$1 million to $4,999,999 in revenues |
$98,689 |
$89,139 |
$84,786 |
|
Over $5 million in revenues |
$230,143 |
$174,333 |
$142,371 |
Following a reported spike in spending in 2016, capital investment levels among surveyors and geospatial professionals exhibited a more level pattern. Viewed by company size, smaller companies followed the overall trend of increasing spending in 2018 and forecasting a slight decline in 2019. Larger firms increased spending in 2018 and have forecast an increase in 2019 as well.
|
Approved |
26% |
|
Prepared and Submitted |
14% |
|
Tentative Budget Prepared |
18% |
|
General Idea of Budget |
20% |
|
Not Yet Discussed |
21% |
As we were ringing in the new year, there were still one-fifth of respondents who reported their 2019 capital investment budgets had not been discussed or approved, so there can be more planned spending that has not yet been quantified.
|
|
2019 |
2018 |
|
Equipment |
40% |
50% |
|
Add-ons and Accessories |
12% |
15% |
|
Software |
31% |
20% |
|
Training/Support |
17% |
15% |
Equipment was once again the top category for spending, but software and training/support took up a little more of the 2019 budget compared with 2018 spending.
|
|
2019 |
2018 |
|
BIM |
14% |
1% |
|
CAD |
34% |
40% |
|
Data Collection |
19% |
23% |
|
GIS |
12% |
6% |
|
GPS/GNSS |
13% |
20% |
|
Photogrammetric/Remote Sensing |
8% |
9% |
Budget allocations for software appeared to show some dramatic shifts in BIM and GIS acquisitions planned for 2019. This is more likely the result of an increase in the number of responses from surveyors at companies classified in the “construction” category. All respondents are screened for their involvement in surveying and the primary type of business. Past studies have had similar increases from government/public works, which also influenced some of the results. This doesn’t rule out the possibility of an across-the-board interest in BIM software, but it does suggest the spike may be due in part to an increased response from construction-related businesses.
Summary
There’s an old adage that you never step twice into the same river. Changing markets and changing demographics are just two of the challenges when researching capital investment among surveying firms. Demand can drive increases in focus on a particular market segment, which is reflected in the types of surveys being done and the tools and technology needed to complete the work.
In his inaugural address, President Donald J. Trump spoke about significant increases in funding for infrastructure. It is unlikely this resulted in a spike in purchases of mobile terrestrial LiDAR in anticipation of more road/infrastructure work. On the quiet side, it may have spurred an increase in interest and further research into tools and technologies a firm might need to add in order to support an increase in road/infrastructure survey work. Planned purchases (and actual purchases) would logically have followed as demand increased and contracts were let.
Similarly, if construction or another category experiences growth, it follows that the companies involved in that type of work would increase and improve their resources to support their own growth. It’s difficult to separate how much of the increased interest in construction, BIM, and GIS may be the result of a different demographic of respondents and how much is increased demand. It is likely that the results reflect a combination of factors.
|
|
2019 |
2018 |
|
Surveying |
17% |
48% |
|
Both Surveying and Civil Engineering |
33% |
28% |
|
Civil Engineering |
6% |
9% |
|
Construction |
29% |
5% |
|
Public Works/D.O.T. |
4% |
4% |
|
GIS/Mapping |
3% |
3% |
|
Boundary |
14% |
|
Building/Construction |
34% |
|
Engineering Design |
21% |
|
Hydrographic |
1% |
|
Mortgage/Title |
2% |
|
Road/Infrastructure |
12% |
|
Topographic |
6% |
|
Utilities |
7% |
|
Other |
3% |
One thing that remains consistent is that surveyors and geospatial professionals report their top reason for upgrading or acquiring new technologies and tools is that it improves productivity and efficiency. Coupled with the issue of obsolescence, capital investment is a constant balancing act. Obsolescence may be a dominant factor when faced with a manufacturer discontinuing support for particular models. But, even where improving productivity is the goal, there is a constant tug of war between the need and the budget.
As we go to press with this issue, there are questions about Federal Reserve policy on interest rates and how often (and when) interest rates may be increased in 2019. The federal government is also enduring a partial shutdown. This leaves questions about current and future business that may result directly or indirectly from federal contracts or federal funding.
Despite these uncertainties, some of which were apparent at the time the study was in the field, the outlook appears to continue to be optimistic. At least, it appears respondents are taking a long-term view with their plans to acquire and upgrade their tools.
Editor’s Note: This article is based primarily on a report produced by Clear Seas Research, “2018 Surveying and Mapping Industry Software Study,” Nov. 2018. To learn more about the report or to purchase, visit clearseasresearch.com..
Clear Seas Research is a full service, B-to-B market research company focused on making the complex clear. Custom research solutions include brand positioning, new product development, customer experiences and marketing effectiveness solutions. Clear Seas offers a broad portfolio of primary, syndicated research reports and powers the leading B-to-B panel for corporate researchers, myCLEARopinion Panel, in the architecture, engineering, construction, food, beverage, manufacturing, packaging and security industries. Learn more at clearseasresearch.com.
