In January 2017, TA As­so­ci­ates, a lead­ing global growth pri­vate eq­uity firm, an­nounced it has com­pleted an in­vest­ment in Munich, Germany-based think project!, a provider of cross-en­ter­prise col­lab­o­ra­tion and in­for­ma­tion man­age­ment soft­ware to the con­struc­tion and en­gi­neer­ing in­dus­tries. Fi­nan­cial terms of the trans­ac­tion were (unfortunately) not dis­closed.

J. Mor­gan Sei­gler, a man­ag­ing di­rec­tor at TA As­so­ci­ates (who will join the think project! Board of Di­rec­tors) said:

“We be­lieve think project! is an ex­cep­tional com­pany that has es­tab­lished it­self as a lead­ing provider in a rel­a­tively unique, yet rapidly grow­ing sec­tor. Under the di­rec­tion of Thomas Bach­maier and his tal­ented man­age­ment team, think project! has en­joyed con­sis­tent growth in its core Ger­man mar­ket and in­ter­na­tion­ally. We are de­lighted to part­ner with a com­pany with such a strong foun­da­tion and wel­come the op­por­tu­nity to sup­port the con­tin­ued evo­lu­tion of think project!.”

think project! CEO Thomas Backmaier said:

“Since our found­ing, think project! has con­tin­u­ously strived to serve our cus­tomers and to help them achieve their goals by cater­ing to their in­di­vid­ual needs. We would like to thank co-Founder and for­mer in­vestor, WAL­TER Beteili­gun­gen und Im­mo­bilien AG, for their his­tor­i­cal sup­port, and are con­fi­dent that our new part­ner­ship with TA As­so­ci­ates will serve to strengthen our brand and fur­ther our growth. We are thrilled to begin work­ing with such an ex­pe­ri­enced and well-re­spected firm, and look for­ward to ben­e­fit­ing from TA’s valu­able in­sight and sup­port.”

Founded in 2000, think project! of­fers a SaaS, multi-ten­ant plat­form used by more than 100,000 users across over 8,000 pro­jects in 40 coun­tries. think project! de­liv­ers a read­ily avail­able and shape­able com­mon data en­vi­ron­ment (CDE) for con­struc­tion and en­gi­neer­ing pro­jects. Since 2015, its so­lu­tions have been build­ing in­for­ma­tion mod­el­ing (BIM)-en­abled, offering ap­pli­ca­tion pro­gram in­ter­faces (APIs) for close in­te­gra­tion with other busi­ness ap­pli­ca­tions and can be ac­cessed via mul­ti­ple touch­points and de­vices. think project! cur­rently sup­ports asset own­ers and gen­eral con­trac­tors across more than 20 sec­tors, in­clud­ing the en­ergy and au­to­mo­tive in­dus­tries, in­fra­struc­ture and gov­ern­ment pro­jects.

European battleground

The com­pany now has ap­prox­i­mately 200 em­ploy­ees across its Mu­nich head­quar­ters, its R&D cen­ters in Berlin and Szczecin, and, as Thomas told me last October, has been strengthening across Europe – in Spain (it established a joint venture with Madrid-based ProjectCenter in September 2016), Poland, Aus­tria (it ac­quired 70% of Aus­trian sales part­ner i-pm in June 2016), the Nether­lands, France (it acquired 60% of Lascom AEC, France’s market leader in product lifecycle management (PLM) and cross-enterprise collaboration software in September 2015), and in Germany (it acquired domestic competitor Conetics in October 2016).

The think project! news release repeats figures also used by global leader, Melbourne, Australia-based Aconex (who acquired think project’s Anglo-German rival Conject in March 2016) saying the global ad­dress­able mar­ket for con­struc­tion col­lab­o­ra­tion soft­ware is es­ti­mated by Frost & Sul­li­van at $5.6 bil­lion with a cur­rent pen­e­tra­tion of less than 10%, im­ply­ing a pre­sent mar­ket size of roughly $500 mil­lion. Ac­cord­ing to re­search from PwC, the global in­fra­struc­ture con­struc­tion mar­ket is ex­pected to grow 6.5% an­nu­ally to $9 tril­lion by 2025.

Naveen A. Wad­hera, a man­ag­ing di­rec­tor at TA As­so­ci­ates, adds:

“With our focus on in­vest­ing in prof­itable, grow­ing busi­nesses, con­struc­tion soft­ware is a highly at­trac­tive sec­tor for TA. Given its well-es­tab­lished pres­ence in Ger­many and ac­cel­er­at­ing growth in Spain, Poland, the Benelux coun­tries and else­where, we be­lieve think project! is well po­si­tioned as a mar­ket leader in con­ti­nen­tal Eu­rope. We look for­ward to work­ing with the think project! man­age­ment team, build­ing on their suc­cess to date and fur­ther­ing the com­pany’s ex­pan­sion through or­ganic and in­or­ganic growth.”

Established in Belgium in 2012 but now spreading its European operations more widely (the UK, Germany and the Netherlands are among the early targets), AproPlan markets itself as “the construction software that lets you keep track of your progress and collaborate with your team.”

I met AproPlan’s CEO Thomas Goubau when he visited London in January, accompanied by experienced UK sales manager Nick Pruce (ex-4Projects and Docia). Goubau has a consulting background, including time at BT, and started out by trying to create “Outlook for the construction sector.” He soon realised this was “completely wrong” and decided to focus on what he saw as the industry’s key needs: open and transparent communication via a simple interface.

Mobile process management

Local competition relating to process management or workflow tools was limited (he mentioned France’s Finalcad, US-based Plangrid, and the UK’s SnagR), and AproPlan didn’t want to enter the feature-rich document collaboration space market then dominated by players such as Conject or ThinkProject, so Goubau’s business is focused on workflow in the field. In my view similar in some respects to KyKloud (post), maybe also Dome’s iSnag/Dome Connect and Zutec (post), AproPlan supports asset owners and managers and their professional teams engaged in repetitive data recording tasks; Goubau cited the example of a pharmaceutical business which has now integrated AproPlan with its SAP system to help manage asset management and compliance processes.

However, it can also be applied by contractors and professional services businesses (the company’s website highlights processes or reports for architects and engineers, for example) and to subcontractors to manage common checklist-based processes (Goubau repeatedly summarised the offering as “What, where and when”) such as snagging, health and safety, security and environmental inspections, as well as some basic document management. Firms can also manage access rights so that some process information might only be viewable by employees of their business.

Contractors BAM and CFE were among early AproPlan adopters in Belgium, Goubau said (“BAM use us for process management, checklists and snagging”). Such customers can then invite members of their supply chains to use the cloud-based system (hosted in Europe on Microsoft’s Azure platform), but he is keen to build relationships with asset owners/operators (like the ‘big pharma’ corporate) who might make AproPlan mandatory across their projects.

AproPlan pricing

Like many mobile SaaS solutions, the application’s pricing model starts with a free ‘taster’ option; beyond this, Pro and Expert plans are priced at €29 and €49 per user per calendar month respectively, with Enterprise plans priced according to customer needs and including API facilities for integration with other enterprise solutions. Goubau described the 30-strong company’s product strategy as “Mobile and API first,” with support for iOS and Android devices; AproPlan is also working on back-end integrations with vendors of what he regards as complementary tools – for example, Denmark’s GenieBelt (post), fellow Belgian businesses Chapoo and ProjectLibrary, and FM solution Archibus – and potentially with the providers of common data environments used for managing building information modelling (BIM) data.

In January, Goubau said AproPlan had 48,000 users from 3,500 different customer organisations, many of whom started with a modest level of adoption, but then grew in terms of both functionality and number of users (he called AproPlan’s adoption strategy “Land and expand“). Total project value he put at around €10bn, with AproPlan currently generating around €1.5m in recurring revenues, and moving “from startup to scale-up” with a funding round in progress (underlining this transition, AproPlan last week finished second in the “Scale-up of the year” category of Belgium’s Tech Start Up Day Awards).

SaaS collaboration vendor Asite grew its 2016 revenues 14% to just over £6m.

London, UK-based SaaS construction collaboration technology vendor Asite has this week filed its annual report and accounts for the year ending 30 June 2016 with Companies House. The report shows revenues up 14.3% to £6.047m (2015: £5.289m) – at today’s rates, that’s around $US7.47m or €6.93m. Operating profit for the period increased by an impressive 31.1% to £0.993m (2015: £0.757m).

As in 2015, the revenue growth lag a little behind those of competitors. For the same period, global market leader Aconex last year announced underlying organic revenues up 31% (and inclusion of figures from its March 2016 Conject acquisition ramped this to 50%). In October 2016, Viewpoint for Projects reported its 2015 EMEA revenues were up 48% with 2016 “double digit” revenue growth “very encouraging”.

Asite chief executive Tony Ryan writes in the report:

“When taking into consideration the cost of opening up new operations, I am particularly buoyed by the operating profit result of the business. This gives the Group great scope for growth to the top line going forward. Our cost base is now so well structured that almost all of our investment will be focused on Sales & Marketing and M&A activity.

“We continue to expand into new markets while expanding our product and service base in line with our growing number of clients and the requirements they bring. We have continued to invest in new offices, namely in Africa and the Middle East, to boost our global footprint and revenues.”

International performance

Nonetheless, Asite remains heavily reliant upon the intensely competitive UK market which still accounts for 78% of its revenues. Revenues from Asite’s second biggest sector, Australasia, continued to slide (down from £519k to £439k – “After the reporting date, Asite Limited incorporated a new subsidary [sic], Asite Australia”), but North American revenues continued to grow, from £377k to £424k. Europe, at £242k, is Asite’s next largest market.

A year ago, Ryan blamed a slowdown in Australia’s natural resources market but said “we have a decent pipeline out there, particularly in civils and infrastructure, which we expect to grow.” This plainly didn’t happen, but his confidence regarding the US market appears to be borne out.

Asite staff numbers continue to grow, with the India-based technical team accounting for the largest number – up 40 from 155 to 195. Total Asite headcount grew from 181 to 227, with six additional professional services and sales and marketing staff making up the balance.

Brexit uncertainty has affected Aconex’s projected growth, with the company’s share price tumbling as a result.

It’s been an interesting couple of months for the Melbourne, Australia-based SaaS construction collaboration vendor Aconex. At the end of January, the company provided a half-year trading update and 2017 financial year forecast; there were changes to the executive team, and then it revealed its results for the six months to 31 December 2016. Market sentiment towards the business has changed: the company’s shareprice has more than halved from its July 2016 high, settling below Au$4 for most of February and March.

Shares plunge into a ‘tailspin’

In the 30 January update, Aconex revised down its operating profit forecasts from between 62% and 84% growth to between 10% and 32% growth, blaming lower-than-expected first-half sales in the UK and Americas. Uncertainty around Brexit was partly to blame for the UK performance it said, while delayed decision-making ahead of the US presidential election had affected US sales. A higher proportion of long-term contracts had also resulted in lower short-term revenues, while currency movements in the British pound (which plunged following the June 2016 referendum result) and the Euro had been unfavourable. And CEO Leigh Jasper also talked of some “one-off impacts associated with bringing the Conject business into Aconex.”

Aconex forecast full-year revenue (to 30 June 2017) of Au$160-165 million (c. £98-101m, US$122-126m or €113-117m) compared to the prior forecast of Au$172-180 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year was forecast to be in the range Au$15-18 million – down from the Au$22-$25 million previously forecast.

The news sent Aconex’s shares into “a tailspin” (reported The Australian), tumbling 45% from Au$5.65 to $3.10 by the close of trading – a marked reverse for a company previously regarded positively by most market analysts. The company’s shares last traded at this level in mid-2015, six months after the December 2014 IPO. In July 2017, the shares were trading above $8.40, some four months after its acquisition of the Anglo-German Conject Group, a deal which helped its 2016 revenues to jump 50% (see Conject deal boosts Aconex revenue growth). Share sales by Aconex founders Leigh Jasper and Rob Phillpot in late 2016 also hit the company’s share price.

These forecasts were the last made by an Aconex team including CFO Stephen Recht, who was succeeded by Paul Koppelman at the end of February. Also in February, the company announced the appointment of a new chief technology officer, Craig Fulton, reporting to Rob Phillpot. Fulton, formerly at Australian telcoms giant Telstra, is now responsible for all Aconex product engineering and cloud hosting functions.

First half results

On 21 February, Aconex reported its first half FY17 results, revealing revenues of Au$77 million (c. £47m, US$59m or €55.5m), up 38% on the Au$55.7m for the same period in 2015 (buoyed by the first full half-year contribution of Conject, of course). However, the figure was affected to the tune of Au$4m by negative currency movements (Au$3m of this attributed to the pound’s plunge after the Brexit vote). Profits from core operations for the half year edged up 9% from Au$6.8m to Au$7.4m (c. £4.5m, US$5.6m or €5.2m), with acquisition and integration expenses of Au$3.546m associated with the Conject deal.

Attempting to reassure investors and analysts after the share slump, CEO Leigh Jasper said he expected business to pick up in the next six months, and planned to keep investing in the business:

“We will continue to invest in product, sales, marketing and customer service to capture the large global market opportunity. This investment will further consolidate our market leading position, underpinning our growth for years to come and enabling Aconex to deliver on its mission of connecting teams to build the world.”

However, the results, and Jasper’s forecasts of 20% mid- to long-term growth in a still under-penetrated market, failed to excite investors. Aconex shares fell 6% to Au$3.50 on the ASX (a month later, the price has barely moved – they closed today at Au$3.55), with some analysts concerned about the continued impact of Brexit uncertainty on Aconex’s British operations. Australasia remains Aconex’s most important market but revenues from the region grew just 6% in the half-year (UK-based Asite has seen revenues slide in this market – post), while US revenues have been impacted by a client deals agreed on a per-user basis rather than the project-based (and enterprise agreement) approach usually favoured by the business.

Brexit impacts

The Brexit uncertainty perhaps needs further exploration, as the June 2016 referendum decision not only affected currency exchange rates but reflects continued UK construction industry concern about skills shortages, and has caused doubts about some future projects.

Many projects, particularly in London and the south-east, are heavily reliant on migrant workers, from site-based labourers and tradespeople to architects, engineers and other professionals. The indigenous UK workforce is also ageing, with many existing workers set to retire, and only a limited pipeline of UK-domiciled replacements coming through. As a result, skills shortages are reported across many trades and professions, and industry organisations are calling upon the UK government to exempt some key roles from any Brexit immigration constraints. Moreover, skills shortages are pushing up labour costs on some existing projects, and could affect the economic viability of future projects. And the impact on pound/Euro exchange rates has made the UK less attractive as a workplace to some would-be migrant construction workers, who are now seeking work in mainland Europe markets, deepening the skills gaps and adding to potential inflationary pressures.

The Brexit vote has also caused some client organisations to review where their businesses should be located, with some financial institutions, manufacturers and other organisations considering relocation to other EU states so that they can continue to work effectively within the European market, while EU funding will no longer be available to support some future UK projects. As a result, some decisions about built asset investments have been either postponed or cancelled, affecting the future workload of construction businesses reliant upon these new projects.

This was a contributing factor to the relatively poor performance of the Conject operation in the first half of the current financial year. In his investor presentation, Leigh Jasper described it as “below expectations”, talked of “some softness” in core markets such as the UK, but expected the UK “to rebound off the back of the shock Brexit result”, adding:

The Brexit uncertainty certainly slowed new project decisions and … we saw a significant drop off in UK construction starts in the months after the referendum.

Aconex and its rival construction collaboration technology providers are, of course, heavily dependent upon there being a continued pipeline of new projects. If they have strong relationships with the ultimate clients, their SaaS platforms may still be deployed upon projects which have been relocated from the UK, but – depending upon where these schemes were relocated to – they could find themselves competing with other SaaS vendors (think project! in Germany, for example) with strong client, contractor or consultant relationships in their local markets.

It’s taken nearly two years, but Aconex finally announced the launch of Connected Cost earlier this month, potentially heralding a move into construction payment management.

With its July 2015 acquisition of US-based Worksite, a project cost management solution developed at ARES Project Management LLC, the Melbourne, Australia-based construction collaboration vendor Aconex started working towards integration of project cost management into its core SaaS platform, filling a gap in its product portfolio compared to several competitors, particularly in its strategically important north American market. In a February 2016 financial update (post), Aconex CEO Leigh Jasper said: “We’re already starting to see benefits from the Worksite acquisition. We’ve won a number of deals because of it and some customers are looking for that cost functionality.” The rationale for the March 2016 acquisition of Anglo-German rival Conject also partly underlined this shift (the former BIW Technologies business had added project cost control functionality to its UK platform more than ten years earlier), and Aconex was then talking about the commercial launch of its connected cost module later in calendar year 2016.

This apparently happened in November 2016, but was presumably a ‘soft launch’. Just over a year after the Conject deal, Aconex finally announced its Connected Cost solution earlier this month (read 5 April news release), providing cloud-based cost control across the project lifecycle. According to Aconex, it addresses the problem of disconnected teams and data:

• Siloed information – teams must chase information across organisations and applications, which slows the discovery of issues that can drive up costs and delay schedules.
• Manual updates – typically made via spreadsheets, these introduce errors and duplication that can jeopardize both data integrity and version control.
• Poor visibility – lack of accurate, real-time information makes it impossible to measure performance against budget in a meaningful and proactive way for a single project, much less a portfolio of projects or an enterprise.

Guy Barlow, global commercial director, Connected Cost, at Aconex claims: “only about 5% of projects meet best-in-class predictability in terms of cost and schedule. Approximately 80% run over budget, and the average cost overrun is 70%.”

Aconex’s SaaS Connected Cost solution is said to address industry challenges with collaborative project controls that provide a complete view of cost information across both individual projects and project portfolios. Each organisation using the solution can budget, forecast, track progress and performance, manage entire programmes, manage contracts, and process claims and payments. For example, with earned value management (EVM) capabilities, owners can forecast and report earned value using Cost Performance Index (CPI), Schedule Performance Index (SPI) and other tools.

Aconex to move into CPM

According to an interview in the Australian Financial Review, Aconex is planning to expand into financial services by using operational data about subcontractors and their projects to help lenders price credit to them. Director and co-founder Rob Phillpot, right, says the business is also looking to develop a payments function on the back of Connected Cost product. This would see them competing with, among others, Textura (the leading player in the construction payment management (CPM) market in north America which also expanded into Europe from 2014, and was acquired by Oracle in April 2016 – post), Australian vendor ProgressClaim (post) and UK-based OpenECX (post).

Aconex CEO Leigh Jasper was in the UK recently, and talked to Extranet Evolution. This first instalment of a two three-part interview discusses outcomes of the Conject acquisition and the development of the Connected Cost application.

The day after an Aconex investor presentation in Melbourne was a good time to get an update on the Australian construction collaboration Software-as-a-Service provider’s recent progress from CEO Leigh Jasper. Unusually, he hadn’t delivered part of the presentation himself.

That 4 May briefing was left to new CFO Paul Koppelman and COO Paul Perrott, who reiterated the Au$160-165m (c. £98-101m, US$122-126m or €113-117m) revenue forecast and the Au$15-18 EBITDA forecast given in January, along with expectations of underlying growth of 15-19%, and 20% revenue growth in the medium-long term. They also gave reassuring messages about sales momentum, reduced Brexit-related uncertainty in the UK, improved conditions in the US, and more stable oil prices. Aconex’s share price has rebounded to around Au$4.50 (it’s now recouped about half of that end-of-January plunge).

Meanwhile, Leigh Jasper was visiting the UK. I met him in the former Conject offices in Woking (now with Aconex branding – the UK operation also has an office in central London, and the locations would eventually be rationalised he told me, though this won’t affect the development centre in Nottingham).

Conject integration

The office location (which, pre-Conject, had been BIW Technologies’ head office – and my place of work when I worked for the business) naturally prompted some questions about how integration of the Anglo-German business had progressed since Aconex bought it for A$96m (c. £51m) in March 2016.

Some one-off expenses associated with the Conject deal were noted in the investor presentation, but the merger had involved few redundancies, Jasper said: “maybe a dozen or less” out of 220 (I know few of the Woking-based admin and marketing staff remain, while at least one Middle East employee was let go). The rationale for the acquisition had not been about eliminating a competitor and then stripping out costs, but about growth synergies, improving Aconex’s European footprint, retaining a really strong team (“our sales leaders in the UK are all the Conject guys”), and integrating some of Conject’s sector-leading technologies into the Aconex platform.

Jasper felt the integration of Conject into Aconex had progressed smoothly because many of its people had already gone through a similar process and learned lessons from the previous merger (when Munich-based Conject acquired BIW in December 2010).

Conject customer reaction to the acquisition had been very positive, Jasper said. Customers are not being forced to switch to the Aconex platform; current projects managed on Conject (“which is very cost-effective to host and run”) will continue to be supported until they finish (even if this took 5-6 years). Some Conject customers (Mace was mentioned) have already started new projects on the Aconex platform, he said, and “maybe only one” customer had been lost.

Jasper said the deal had made Aconex a stronger proposition to customers that previously would not have considered either Conject or Aconex:

“In the UK market, we are selling in to new customers where Aconex wouldn’t have won them, but the strength of the product combined with the strength of the sales team means we now have a very strong combination. There was probably a bit of under-investment in the UK-based Conject products and having a stronger Aconex platform has helped.”

UK and European customers can now be confident they are dealing with a company with a strong regional presence, while the deal had also extended the technology capabilities, he said.

Connected Cost

Foremost among these was Conject’s Financial Control module, a mature construction project cost management application that, in its early days, had helped differentiate BIW from its UK rivals. Coupled with Aconex’s July 2015 acquisition of US-based vendor Worksite from ARES Project Management Ltd (which “brought us forward several years in being able to get Connected Cost to market”), Aconex now had a strong cost management team (Jasper singled out one-time Conject professional services director Nick Sansome; post) and a powerful cost tool. Aconex Connected Cost was Beta tested with some customers then made generally available in late 2016 ahead of an April 2017 marketing push. It enables Aconex to compete with US-based vendors whose systems have historically been stronger on cost control than on document collaboration. It was proving a strong differentiator, Jasper said.

“We are seeing really big interest, and a number of deals have already been done on the product. [American carmaker and energy storage company] Tesla is now a customer of ours and is one we wouldn’t have got without Connected Cost, so it’s helping us win more work, and it’s really important to our customers. Particularly in the US, cost is more important to them than collaboration, and I think our cost product is the best SaaS solution on the market, particularly when you compare it to some of the products built 10 or 15 years ago.”

(The second and third parts of this interview includes discussion of BIM, asset management and mobile technologies, and of growth prospects if construction embraces digital transformation.)

In the second part of this now three-part Extranet Evolution interview with Aconex CEO Leigh Jasper (read part one), we talk about building information modelling, FM, mobile and other product development ideas.

Collaborative BIM

Conject’s merger with BIW was a prolonged process, with key developments in areas such as mobile technology and BIM delayed at a time when, particularly in the UK, rival vendors were investing heavily in research and development activities. As a result, Conject lagged behind SaaS collaboration competitors such as Viewpoint (formerly 4Projects), Aconex and Asite in adding mobile applications to its portfolio (buying France’s Wapp6 in January 2014), while the same rivals were also pushing ahead with support for BIM (Conject finally entered the BIM race in March 2015, some three years after 4Projects had already started two BIM R&D projects, and a full eight years after Asite BIM was launched).

Aconex Connected BIM was launched in October 2014, and is marketed as part of the core platform, not a module for which customers have to pay extra. Jasper explained this was part of a wider digital operating system strategy:

“As it’s part of the platform, in a sense everybody uses it, but obviously to varying degrees. Some companies will use it very heavily and put lots of models into the system. Others might use it at a more shallow level. But BIM is a critical part of what we do – it wasn’t going to be something that was optional. We are putting digital building blocks together enabling us to create a collaborative operating system for the construction industry, and BIM is part of that operating system, as is mobility, how we handle documentation, workflows, cost – all these interlink…. Everything needs to be able to link to everything else.”

Jasper said he has seen growing use of Aconex for BIM, bolstered by an approach embracing open BIM standards, such as COBie, IFC and BCF (Aconex’s website features a video about BIM Collaboration Format showing how its platform can be used to share model ‘viewpoints’ generated in Solibri Model Viewer, and to manage the underlying workflows). Involved with BuildingSmart, Aconex’s open philosophy also extends to open APIs:

“The more open companies are on the market the better it will be for adoption of technology. Everything we build we put an API around it, and then our customers can look at what degree they want to integrate with internal systems or even other providers in the market.”

Aconex’s Australian domestic market is not as far advanced as the UK in BIM adoption, Jasper said, partly because the UK had benefitted from the collective incentive of a government mandate:

“Certainly there is a level of BIM adoption in Australia which compared to the US is much higher, but behind the UK and one or two European countries. In the US, BIM became really topical about three or four years ago and we need to get that back. One of the challenges in the US is that people only look at it from their point of view. BIM is one of those things that, the more that owners and contractors work together the better the results for the project team.”

BIM for FM?

We touched on asset information management (“That’s probably the next step for the industry,” Jasper said, “Owners need to be specifying early what they need and then moving towards full asset life cycle and the operations phase”). However, Aconex’s investor pitch currently stops at information handover; Jasper hadn’t detected any huge demand from customers for Aconex to develop an FM solution:

“We see FM as part of that entire story but the reality is that … in our development stack there is still a lot to do in the design and construction phase. In five years, we will have a SaaS FM product as part of the suite, but we are not actively building that at the moment. Conject had such a product, but whether that’s the tool we end up taking forward we are reviewing at the moment. It’s a bit separate to other parts of the business.”

Mobile

By contrast, the functionality of Conject’s mobile tools would be retained: “We are pulling it all into one platform. Any functionality that we don’t have in Aconex Field we are pulling into our solution,” Jasper said. The company’s product development approach is not based on trying to cover every possible requirement: “We are not one for being a mile wide but an inch deep. If we are going to add a function or a module, we want to make sure it’s really good.”

Jasper summarised Aconex’s four functional priority areas as:

• deepening the collaboration tools (developments include currently extending configuration to manage packages of work)
• expanding field and mobility
• extending BIM capabilities, and
• Connected Cost (he talked about “making cost more collaborative”)

Aconex also wants to stay ahead of the game on security (in March 2017, Aconex announced it was seeking certification under the US Federal Risk and Authorization Management Program, FedRAMP – something that will enable Aconex customers to win US federal government projects with advanced security compliance requirements; in the UK, it is already registered on the government’s digital marketplace, GCloud, and we briefly discussed PAS1192-5 – post). Jasper also talked about incorporating scheduling information (currently dominated by Oracle’s Primavera and MS Project) and geolocation services into the platform.

However, this isn’t all about adding functionality to attract new customers. Jasper said the business also needed to keep reminding long-standing customers and existing end-users that the once-familiar Aconex product set was constantly evolving and expanding.

(Coming soon: in the final part of this interview, Leigh Jasper talks about the growth opportunities if construction embraces digital transformation.)

In the final section of this three-part Extranet Evolution interview with Aconex CEO Leigh Jasper (read part one; part two), the focus is digital transformation and long-term growth prospects.

Digitising construction

As a former McKinsey consultant, Jasper was pleased to talk about the McKinsey Global Institute’s ‘Digital Transformation’ reports showing how developed economies (like Australia, US, UK and western Europe) were pushing forward in digitising their construction industries. While the sectors were starting from a low base (in the US, MGI’s December 2015 report showed only agriculture and hunting was less digitised; a June 2016 MGI report showed that, in Europe, construction was bottom of the league), he said this meant there was lots of opportunities for technology providers such as Aconex to help the industry adopt new ways of collaborating.

“Construction is at the bottom in terms of spend on IT, which I see as an opportunity because at some point construction will start spending at the levels of other industries. The nature of the industry is that it’s quite conservative in terms of its adoption of technology, and the UK and Australia, with Germany in some respects, are well ahead of other markets. The [February 2017] McKinsey report shows all the countries that have been early adopters of our technology – collaboration or more general digitisation – have increased labour productivity in construction.”

Returning to the investor presentation and its growth forecasts, Jasper said:

“There is no reason why we can’t grow at 20%-plus for a very long time given the scale of the market. And I reckon we are still only less than 1% of the impact we could have on the global construction market. With all the providers globally, the market is still less than 10% penetrated, and I reckon we are picking up less than 10% of the total processes we could manage over time. As the industry digitises more and more, every process will become digital over time – well, it will have digital as well as physical components. So there is still more impact we could have on the industry, and that’s what gives us confidence we can grow for a very long time.”

We discussed emerging industry standards in areas such as BIM and workflow, and how these have helped providers develop software. “We believe we can be a big part of that standardisation across the industry, and particularly being open with our APIs, we can become part of wider digitisation.”

However (and consistent with what he said when announcing the 2016 results), Aconex’s growth was unlikely to be delivered by another Conject-style competitor acquisition, Jasper said, forecasting “massive” opportunities for many construction software businesses as the industry digitises:

“We’ll do it organically. There might be some product bolt-ons – we’ll make some ‘build versus buy’ decisions and we have a range of discussions going on regarding potential bolt-ons. Nothing immediate, though.

“We don’t see any others in our space as competition – we are all helping in this drive towards digitisation. If we can take IT spend from 1% to 2-3% in a $10 trillion construction market, the potential is massive.”

My analysis

While not the first SaaS construction collaboration provider to launch, Aconex has expanded out from its Australian roots to become the dominant pure-play provider in the global market (Autodesk and Bentley probably have similar global reach, but SaaS collaboration – Buzzsaw/BIM360 and ProjectWise respectively – are only parts of much bigger software portfolios, much of them based on on-premise installation and usage).

Recognising that SaaS provision quickly transcends national boundaries, and that the Australasian market alone would not satisfy their ambitions, Aconex established footholds in both developed and developing markets around the world. It also looked beyond building projects to embrace civil engineering and natural resource projects. While it suffered occasional setbacks due to regional conflicts (civil war in north Africa, for example) or economic downturns (eg: the global financial crisis, gas and oil price plunges), it seems this wide spread of activity has helped make Aconex more resilient compared to firms reliant on one region or one vertical market.

When Jasper talked about the Aconex technology stack “not being a mile wide but an inch deep”, I felt this might also now apply to their global reach. Its international expansion, particularly in the early days, was often based on creating small outposts, with energetic sales people looking for local early adopters to help grow a local footprint and reputation (not for the first time, someone at a competing SaaS firm last week described Aconex then as “backpackers”!). Aconex, particularly after the Conject acquisition, now has both wide international reach and sufficient depth of financial and human resources to build strong local operations in both developed markets and – probably more important for long-term growth – developing markets.

Aconex can also capitalise upon the technological sophistication of its customer base in the most developed markets such as the UK, Germany and other parts of western Europe, Singapore, Korea and Australasia and the US. As these push forward with BIM and other digital transformations (including – in due course – FM or asset management in the cloud), Aconex can make use of its customer and end-user networks to develop applications and functionality that can then support its customers’ construction and operations in emerging markets. Its ‘open’ philosophy may also help it grow as software partners market the integration opportunities with the Aconex platform.

The company has, understandably, attracted a lot of investor attention, being the first construction SaaS business to do an IPO. There was some uncertainty ahead of the on, off, on again flotation, but Aconex’s initial rise to ‘unicorn’ status in mid 2016 certainly boosted investor confidence in the sector. Partly as a result, several other ‘ConTech’ companies (eg: Finalcad, Plangrid, Procore, think project!) are now well-funded and expanding their marketing and software R&D activities, adding scale and momentum to the industry’s digital transformation.

If early adopter customers start to show a conservative and often sceptical industry that they can improve productivity and deliver projects at higher margins and with greater certainty, then this may encourage other construction companies to upgrade their systems and undertake the necessary people and process transformations to make digital construction ‘business as usual’. Looking long term, Jasper may well see net construction IT spend more than double. The potential is, indeed, massive there.

And, while FM may be off the Aconex product road map for now, if digital transformation eventually extends to owners/operators managing asset information for operational purposes, then the growth potential (and, as operational spend is more consistent over time than construction spend, the resilience of revenues) could be even greater.

Construct.pm is finding customers valuing it for compliance management and for accelerating project management reporting processes.

By coincidence, the day after WeWork acquired FieldLens, I visited a WeWork location in London’s Devonshire Square to talk to a tenant, Construct.pm (which also competes in the UK equivalent of FieldLens’s mainly north American target market).

I first talked to this mobile-first business in December 2015, learning how the Construct.pm form-builder and workflow platform could expedite the creation of processes and then allow users to track their progress. It was then also working with SaaS collaboration vendor Conject (now part of Aconex) to integrate simple sharing of drawings from Conject to users of the Construct.pm platform (see also October 2016 ISG case study).

CEO Ant Erwin and head of sales Mark Coates updated me on Construct.pm’s core strengths, which they saw as mobile data capture and reporting.

Compliance

The site-to-office mobile platform (currently iOS only, but the business is working on an Android version) is being developed to help project manager users accurately capture data while out on-site (“avoiding rubbish in, rubbish out”) and then re-use that data to manage workflows and to provide reports. One area they have particularly focused on is ensuring that any data collected is of high quality – for example, data is checked for completeness, and conditional fields and approval processes help ensure information is accurately captured in the right fields and formats.

Conventional capture of field data using paper-based systems and/or manual entry into Excel spreadsheets is still commonplace across many construction sites, but increased digitisation, including the adoption of BIM, is making professionals more conscious about the need to capture, record and reuse data consistently, both within projects and across a businesses’ projects.

Construct.pm is finding its platform used increasingly for various previously paper-dominated process including permit-to-work workflows (for example, for ‘hot works’ such as welding or brazing) or for delivery tickets – speeding up the automated flow of information from site to head office so that project valuations can be updated in minutes and payments expedited.

“Compliance is an increasingly strong point for us,” said Erwin. “Health and safety, environmental and quality issues have not always been dealt with properly by other apps out on the market, and we forget that some businesses are still getting their heads around Excel in the cloud.” (Other businesses in this sector that I have looked at in the past include HandS HQ and DarleyPCM).

“Many of our clients understand it’s not just about the forms,” Erwin continued. “Their efficiencies come from being able to manage the resulting workflows, being accountable, and avoiding hold-ups.” Construction and design programme improvements, avoidance of mistakes, higher individual productivity, faster approvals, and reduced admin costs are among the benefits reported by customers. Mark Coates also talked of one project which had been won because the contractor had demonstrated use of Construct.pm to the client, showing a commitment to visibility and to adoption of innovative technology that the client had been keen to see: “It’s good for reputation,” he said.

Reporting

Construct.pm is also finding its customers are valuing its platform’s reporting tools, said Erwin.

“More and more, we are surfacing the data. We’ve got the data collection; now it’s about using what we call ‘trackers’ to monitor actions and resulting issues, particularly if there are cost issues. Effectively, we can start to do part of the project managers’ jobs by producing coordinated reports for them. And we are using the latest live data, straight from site, to build these reports. … This means project managers can start to work entirely differently – being able to react based on live data as opposed to the old way, based on information that might be two weeks old.”

He also described how Construct.pm also interfaced with Microsoft Project through an open API to help project managers assess the impacts of issues on project programmes.

Coates said Construct.pm now had 100s of customers, most of them paying a monthly subscription to use the toolset across multiple projects. In some cases, up to 70 subcontractors may be using the platform at the request of the main Tier 1 contractor, but the business was also finding some subcontractors proactively opting to set up their own Construct.pm systems so that they too could report across multiple projects.

Aconex continues to grow revenues, effectively doubling in two years. Two-thirds of its business now comes from outside Australasia.

Melbourne, Australia-based Software-as-a-Service construction collaboration software vendor Aconex has announced its financial results for the year to 30 June 2017, reporting 31% revenue growth for the second year running (results were affected by exchange rates: at a constant currency, growth was 36%). Helped by a better second half-year performance, total revenues were Au$161.2 million (c. £99.3m, US$127.6m, or €108.3m), compared to the previous year‘s Au$123.4m.

EBITDA from core operations was up 10% to Au$15.0 million (c. £9.2m, US$11.9m, or €10.1m). After tax, however, the company recorded a Au$10m statutory loss, mainly due to integration expenses relating to the Conject deal and “amortisation of acquired intangibles”; from core operations, the business posted a net profit of Au$5m.

In the company’s investor presentation, Aconex highlighted that revenues had effectively doubled in two years. It says its platform has managed projects valued at over one trillion dollars in project value across 70 countries, and has 5.3 million project users managing 2.4 billion documents.

CEO Leigh Jasper said that the solid FY17 result reflected a stronger second half performance, a full year contribution from Conject and further penetration of the Company’s international markets which together have significantly strengthened its leading global position.

“Revenue increased in the second half of the year as market conditions improved and we continued to transition project customers to enterprise agreements, especially in ANZ. With Conject fully integrated into the business we also saw stronger revenue growth in Europe. We are truly a global business with two-thirds of our revenues now generated outside Australia and New Zealand.

“To drive greater returns and take advantage of the rapid growth in technology adoption across the industry, we have ramped up our investment in sales & marketing and our operational infrastructure. We have also significantly increased investment in our product, with 22% of revenue committed to research and development. We enhanced our offering and developed several new modules, including Connected Cost [launched in April 2017], and extended our ecosystem. Connected Cost alone has considerably increased our total addressable market and improved our overall win rates in all our regions.

“Meanwhile, our certification for the Federal Risk and Authorization Management Program (FedRAMP) is in process, which will enable us to service government projects with the highest compliance requirements in the world. This is a major competitive advantage.

“In the coming year, we will continue to extend our leadership position through further investment in our international markets and ongoing product development. We expect to grow revenue by 15 to 19% while increasing EBITDA and generating positive cash.”

The company says the revenue uplift was driven by the 2016 Conject acquisition, strong growth in its international markets and an improved second half performance in ANZ (despite competitive pressures in its home market). The company’s EBITDA margin reduced slightly from 11.0% in 2016 to 9.3% in 2017, due to the acquisition of the Conject business (Aconex says it incurred Au$7.9m in related acquisition, restructure and integration costs) and ongoing investment in product, sales, marketing and client service.

Sales and marketing expenses grew 28% to Au$59.2m as Aconex bolstered its international sales teams to drive further market penetration. The company also increased investment in engineering and product development – partly due to addition of the Worksite and Conject engineering teams.

Regional performance

International revenues were up 45% year-on-year, while revenues in the ANZ region increased 9% from Au$48.8m in FY16 to Au$53.3m in FY17 due to new business growth and the ongoing conversion of customers to enterprise agreements (with 36 new deals signed), which now represent more than 65% of the region’s revenue. Elsewhere:

• Revenues in Europe and Africa increased 143% from Au$17.5m to $42.6m, principally driven by the full-year contribution of Conject (though revenue was impacted by adverse foreign currency movements, particularly the depreciation of the pound and Euro against the Australian Dollar). The business is now securing larger contracts in mainland Europe, and the UK pipeline was said to be “growing in a challenging market” (in January 2017, the company talked of Brexit uncertainty and revised its October 2016 forecasts causing its shares to slump).
• Middle East revenues increased 11% from Au$22.4m to Au$24.9m.
• Americas revenues increased 16% from Au$21.3m to Au$24.6m.
• Asia revenues increased 19% from Au$13.3m to Au$15.8m.

The Americas and Asia businesses are operating at negative margins as they invest in sales and marketing for future growth, looking to eventually replicate Aconex’s strong performance in the Australasian market.

In the medium term, Aconex says it expects revenue growth of more than 20% with increasing EBITDA.

Market reaction

After the January 2017 slump – to a low of Au$2.92 – Aconex’s shares gradually recovered to hover around Au$4 for most of the past six months. Prior to the results announcement, they were trading on the Australian Securities Exchange at around Au$4.60, but the share closed at Au$4.14, down 10% (and less than half the Au$8.38 high reached just over a year ago), as investors digested the results and reflected on the statutory loss and on Aconex’s sub-20% forecast for FY18 growth (read the AFR‘s Yolanda Redrup and what The Australian said).

CEMAR is focused purely on contract management and its expertise in NEC contracts has helped it achieve leadership in this specialist cloud-based software market.

Gloucester, UK-based construction contract management software vendor CEMAR is single-minded in its focus on construction contracts and on the NEC suite in particular. This focus has seen the company enjoy year-on-year double-digit revenue growth – it generated around £3m in the 2016/17 year to 30 April 2017, and director and COO Nick Woodrow told me it expected revenues to grow 50% to around £4.5m in the current year.

Woodrow joined CEMAR as director and COO in October 2015, when the business had 15 staff. Its success since then has seen its headcount grow to 46 staff, and Woodrow expected it would be over 50 before the end of the financial year. Much of this personnel growth has been in software development, with Agile methodologies strongly favoured, judging from the many whiteboards on the upper floor of CEMAR’s modern office in Barnwood, to which the company moved two years ago.

The NEC battleground

CEMAR was founded by NEC contract expert and civil engineer Ben Walker (now CEO, right) and his father Andy (now retired); Ben’s brother, Dan, is CEMAR’s CIO (Ben and Dan Walker and Nick Woodrow are the business’s shareholders). The business was incorporated in 2005 and initially developed traditional on-premise software (formerly CMToolkit, its CEMAR name is derived from Contract Event Management And Reporting) to track contract events (“it’s about event management, not document management”, Woodrow said – read Ben Walker’s post “Think event, not document”). However, by the end of the decade, the company had switched to a Software-as-a-Service model, competing against collaboration vendors 4Projects and Conject (both awarded NEC3 content provider status in December 2010), plus Asite (not similarly favoured by the NEC but nonetheless providing NEC3 contract support to clients such as Transport for London) and other UK-based NEC3 specialists including Sypro (December 2010 post)* and MPS, plus South Africa’s Contract Communicator.

By this stage, contract change/workflow management had become a fiercely contested battleground among the ‘extranet’ vendors. Sypro sought to differentiate itself by promoting its NEC process reporting tools, and in early 2012 established a partnership with Unit 4/Business Collaborator (the subject of an MBO in late 2014), after MPS had pursued a similar relationship with Denmark’s Docia (acquired by RIB, also in 2014).

While the NEC battleground has quietened in recent years (largely overtaken by the BIM push, of course), CEMAR’s growth suggests contract tools remains a lucrative market. Woodrow told me the business had made significant inroads in market sectors including water and other infrastructure, and in higher education (maps in the company’s business development office were peppered with multiple client locations).

And as international interest in the NEC suite accelerates, partly due to the new and expanding NEC4 suite (which includes a Design Build and Operate variant and is set to include an Alliancing version), Woodrow is optimistic about CEMAR’s future prospects. He highlighted UK prospects in the so-called 6 H’s (HS2, Hinkley, Heathrow, Highways, Housing and Heritage), and about new/revised NEC4 workflows (eg: contractor proposals, proposed instructions, task ordering). CEO Ben Walker is one of NEC’s drafting team, a consultant, tutor and ICE examiner, and CEMAR is acknowledged by name in all NEC4 contracts – something of a marketing coup, in my view (note: the CEMAR solution can also support FIDIC and other contract forms).

Woodrow talked about opportunities in southeast Asia and in New Zealand (coincidentally markets successfully targeted by Conject before its acquisition by Australia’s Aconex in March 2016), and an integration with GroupBC’s Business Collaborator platform, displacing Sypro and set to be presented to BC users at its user conference (28 September 2017). CEMAR’s preferred approach is integration rather than trying to add functionality to cover every need (read Dan Walker’s blog post “One size does not fit all”). We also talked about integrations with ERP solutions, taking advantage of CEMAR’s detailed handling of NEC-related payment application and certification processes – encroaching into the territory of Oracle’s Textura application, among others.

(And while we are on the subject of Oracle, tighter integration with Primavera P6 has to be a consideration – scheduling tools have for too long sat outside the collaboration environment – something that I discussed with Aconex’s Leigh Jasper in May 2017.)

CEMAR in action

Woodrow guided me through the main CEMAR capabilities, concentrating on its core contract management capabilities and on its reporting tools, CEMAR Analytics. Once logged in, authorised users are presented with a dashboard view of their current projects and can then drill down to particular contracts, with their access to information and functions tightly controlled by a highly granular user profile administration system (security provision options include two-factor authentication).

The company prides itself on what Woodrow described as its “obsession” with using the correct contractual terminology (even down to the use of italics or capitalisation of certain words). While CEMAR users might initially be looking to emulate the creation of notifications that resembe familar paper-based correspondence (which it does by way of .pdf letter versions of all communication), Woodrow says they quickly gravitate towards viewing processes as events rather than as series of documents (we talked about demographic changes shifting from paper-oriented user tendencies towards a preference for real-time online information visibility). He also underlined commercial managers’ wish to separate sharing of associated documents or drawings as contractually significant versus including these items for more general “knowledge sharing” purposes (nonetheless, he demonstrated the GroupBC Business Collaborator integration to show how it would be possible to connect recipients to relevant background documentation).

CEMAR Analytics presents powerful summaries of recent and ongoing processes, and can be used to help set the agendas for meetings, Woodrow said. He showed how search tools could be used across processes to, for example, show the aggregated impact of weather events in a set period of time. As well as a wealth of reporting tools, CEMAR includes ‘group reports’ allowing frequently required selections of reports to be combined into longer reports. The existing, already comprehensive presentation of bar and pie-charts and line graphs could improve still further – CEMAR is looking at potential integration of business reporting tools such as Microsoft’s PowerBI (also mentioned by Bentley in November 2017).

The application is peppered with contextual help buttons, helping explain how users can do things and ensuring compliance with the relevant NEC contract – “many of our help desk queries are not about how to use the software but how to manage things under the NEC,” Woodrow told me – and the Zendesk-driven support system also provides numerous video tutorials.

My view

Contracts, and by implication contract change management software, can seem a somewhat dry area of expertise, but compliance with contracts is often critical to the successful delivery of construction projects. While the CEMAR solution may lack the pizzazz of drawing and model sharing environments, it is a modern and user-friendly application in which colour-coded contractual information is logically presented, and the attention to detail (both in terms of contractual terminology as well as software presentation) is one of its major strengths.

The former 4Projects and Conject NEC toolsets no longer enjoy NEC licensed content provider status, and, it seems to me, neither of these (now rebranded) businesses today promote their contract process support quite so overtly – instead they seem happier to talk about BIM, solution ‘ecosystems’ and integration. Maybe the GroupBC relationship might set a precedent (assuming there’s no exclusivity agreement), with CEMAR becoming the standard contract change module for other collaboration/’common data environment’ (CDE) platforms? Meanwhile, CEMAR’s double-digit revenue growth is also impressive – matching, even surpassing, the figures trumpeted by CDE vendors, and suggesting that contract management is just as lucrative a construction SaaS market.

* Disclosure: Sypro is a past client of pwcom.co.uk Ltd, as are Conject (now part of Aconex) and 4Projects (now Viewpoint). I have also provided consultancy services to GroupBC.

UK construction collaboration technology vendor Viewpoint grew revenues 30% in 2016 to £15.1m, reported a £2.5m profit, and is bullish about its 2017 prospects.

Viewpoint‘s EMEA operation has shared its latest financial results with me, showing the Newcastle, UK-based SaaS construction collaboration technology vendor has increased revenues 30% year on year, in the year to 31 December 2016.

Reported revenues for Viewpoint Construction Services Ltd were £15.097m (roughly US$20.47m or €18.49m), compared to 2015’s £11.587m. Growth, while still healthy, was down from the previous “bumper” year’s 48% – reflecting some uncertainty resulting from the UK’s Brexit situation (a factor that softened Aconex’s forecasts in March this year too) and the resulting weakened pound.

While the revenue growth rate may have slowed from the 48% reported in 2015, the result underlines how far Viewpoint’s combined SaaS collaboration and mobile business sits ahead of its principal UK-based competitors. Reading’s GroupBC grew its revenues 33% in 2016, while London’s Asite was up 14% to 30 June 2016.

Two of Viewpoint’s principal competitors in the international SaaS space both reported similarly strong revenue growth. In May Germany’s think project! reported 30% sales growth and said underlying revenues grew 17% in 2016, while Aconex enjoyed 31% growth in the year to 31 June 2017 (and its UK operation grew revenues by nearly 40% – see final section below).

Viewpoint EMEA returns to profit

After the losses reported in the past two years, Viewpoint EMEA has returned to profit, declaring a pre-tax profit of £2.495m (roughly US$3.38m or €3.06m), and returning it to the kind of profit trajectory it enjoyed before the February 2013 Viewpoint deal and the December 2014 acquisition of MCS/Priority1 (now Field View). The UK business says it makes up 12% of the global Viewpoint group.

Looking forward

During quarter 4 of 2016, Viewpoint says it saw a growth in sales of 16% compared to quarter 1. There has also been an increase in orders received during the early part of 2017 leading the directors to be confident that sales in 2017 will increase on 2016 levels. Total order intake in 2016 was £10.2m. The company also shared a 12 month view of forecast demand from key customers: at 31 December 2016, the company had orders outstanding of £10.1m.

The number of customers at the year end stood at 207, up 16% from 2015, while the user base continued to grow, increasing 67% from the previous year – a total of over 85,000 new users, or over 7000 new users per month – contributing to a global total of over 450,000 users worldwide, located in 170 different countries. Use of Viewpoint’s Field View has also been expanding: it added over 1400 new projects in 2016, and over 10,000 new users of the mobile platform; the user base created over 1.3 million tasks during the year.

Aconex and Conject financial updates for UK

The above UK vendor graphs incorporate updated figures for the UK operations of Aconex and Conject in the year to 30 June 2016 (Conject’s report was for the six months from its previous year-end of 31 December, as the businesses align their reporting periods). The reports mainly cover the period before the merger of the two parent groups, and before the EU referendum.

• Aconex’s UK operation enjoyed 39% revenue growth, from £3.004m to £4.190m. After 2015’s small £5k loss, the London-based business generated a profit of £474k in the year to June 2016.
• Woking, Surrey-based Conject’s UK operation generated £3.129m revenues in the six months, suggesting a slight slow-down from the previous full year’s revenues of £6.385m. The director’s report says the company recorded a pre-tax loss of £424k “but this included restructuring costs and provisions of £467k following the acquisition” (EBITDA otherwise would have been £59k). New order sales intake of £3.9m was achieved in the half year, with the UK team in particular said to have performed well. The order book (future recognisable revenues) at 30 June 2016, was £12.7m.

When the combined group reported its annual results to 30 June 2017 in August, it said a factor in its 31% revenue growth was its first full-year contribution from the former Conject operation.

BIMShowLive 2018 is coming up in a month’s time – in Newcastle-upon-Tyne, UK, on 28 February and 1 March 2018 – but first there is the little matter of the BIM Awards, being held on 27 February.

To my surprise, I have been shortlisted in the ‘Smartest Blogger’ category, where:

… an individual … posts messaging on their company/personal websites directly related to BIM and digital construction. We’re looking for topical, current and possibly controversial content which has consistently made a genuine and meaningful contribution to the built environment.”

I am flattered to be shortlisted – alongside Rob Jackson of Bond Bryan and BRE’s Dan Rossiter, both of whom write far more knowledgeably about BIM than I do – but the nomination does at least give me an excuse to reflect on the past 12 years or so….

History

ExtranetEvolution started in September 2005 following publication of a book about construction collaboration technologies I wrote for publisher Taylor & Francis (today part of Routledge) while working at what was then BIW Technologies. The blog was originally intended to help me produce a second edition of the book, but it took on a life of its own. By the time I left BIW (later Conject and now part of Aconex) and started out as an independent consultant in February 2009, the blog had become something of a shop window for my expertise, as well as a news and features resource for anyone interested in construction, collaboration, cloud computing, Software-as-a-Service, and related areas such as mobile, social media and BIM. (As I have said many times, “it’s a small niche, but it’s my niche“.)

Initially, a little UK-centric, it has also expanded to include more content about developments in Europe, the US and Australasia, among other places. Since 2005, I have covered a succession of acquisitions and mergers, personnel changes, numerous product launches and industry conferences. I have interviewed senior figures representing most of the major AEC-oriented collaboration vendors, and a great many more startups. I have watched businesses grow – and seen a few die – and recorded their ups and downs along the way.

Statistically speaking

I have used two blogging platforms: first, Typepad and, since 2011, WordPress, publishing nearly 1800 blog posts. Since February 2009 (when my Google Analytics records start), the blog has had 1.24 million page views, and more than 270,000 users.

In 2011, ExtranetEvolution had its then best year, delivering 59,416 page impressions to 23,746 unique visitors. In 2014, I topped 100,000 page views, with content read by nearly 49,000 visitors; my 2015 visitor total was just short of 52,000 – still my best year.

My most visited post is from February 2013 (16 reasons why nobody yet dominates the construction SaaS collaboration sector – viewed over 15,000 times), while the daily peak was 2,641 when I wrote about Aconex’s acquisition of Conject in March 2016. M&A activity is clearly a recurring interest; my 2017 peak was in December, following Oracle’s offer to buy Aconex.

(I have been a little less productive in terms of blog posts in the past two years, mainly for family reasons – my stepmother died in early 2016, my father died in July 2017, and I had three other family bereavements – but also pressure of other work.)

Thanks to everyone who has supported ExtranetEvolution since 2005, and thanks to whoever nominated me for the BIM Awards!

After Trimble’s US$1.2bn bid to acquire Viewpoint, which SaaS construction collaboration business might be the next to be acquired?

Last summer, a year after Aconex had bought Conject and before Oracle had announced its bid to acquire Aconex, I was invited to speak privately to several groups of technology investors about the global SaaS construction collaboration market. A recurring question was “What will be the next big international deal?”

One scenario I suggested was a push by strong US players to grow their presence in other technologically sophisticated construction markets, particularly Europe. I even suggested Trimble might buy Viewpoint, while I also said that Procore would be likely to expand into Europe (having already established itself in Australia), either organically or via a strategic acquisition. Naturally, this prompted the question: “Who might be acquired?” I came up with half a dozen (in no particular order)….

Think Project!

Of the currently independent vendors, Munich, Germany-based Think Project! has the strongest position in central Europe – the business often described itself as the most successful pure-SaaS provider (differentiating itself from Conject who retained some on-premise solutions in its German operations) – and has seen consistent double-digit growth in recent years. In 2016, it grew revenues to almost €30m (c. £25.6m or US$31.6m), up around 17% (May 2017 post), and was expanding beyond its central European market (Germany, Austria, Switzerland, Poland), establishing operations in France and Spain, while also investing in its BIM capabilities.

Procore

The afore-mentioned Procore could also be an acquisition target. As I’ve previously described (in May 2017 post, Procore opens Australia office), Procore has attracted considerable investments since the early 2000s, and in 2016 was said to be worth over US$1bn, with a user base of 1.5 million, and over 2,500 clients across 92 countries (though I suspect deep penetration is limited to a handful of countries); revenues in 2016 were forecast to be around US$55m. While still lagging Aconex at that point, in revenue terms the 700-strong business appeared to be narrowly ahead of US-based e-Builder and some distance ahead of the then European market leaders, Conject, Think Project! and Viewpoint’s EMEA operation.

RIB

If Viewpoint’s combination of ERP and collaboration proved an attractive proposition to Trimble, Germany’s RIB Software is similar in its complexion, with the Stuttgart-based business acquiring Australia’s ProjectCentre in 2012 and Denmark’s Docia in 2014. The business has described itself as “the world’s leading provider of 5D BIM Big Data technology for the construction industry,” and generated revenues of €97.9m (c. £89m or US$115m) in 2016, returning a pre-tax profit of €33m. However, the group’s Software-as-a-Service revenues comprise a relatively modest proportion of total revenues: €12.5m (c. £11.4m or US$14.7m) in 2016. (I notice that last week, 20 April 2018, RIB and Microsoft announced a joint project, MTWO, to develop “the world’s #1 vertical cloud for the construction & real estate industries” – echoing the partnership that Bentley Systems has also been developing with Microsoft; see my October 2017 post, ProjectWise suite expands.)

Asite

UK-based Asite might also be a target. The business took a strategic decision in the early 2000s to base its software development activities in India, and so benefits from a low cost base, but it consistently lagged behind its main UK-based rivals BIW Technologies (later Conject), 4Projects (later Viewpoint), and – for some years – GroupBC. However, it weathered its early loss-making years and finally reported a profit for the year ending December 2009, and has continued to make steady progress.  In the year ending 30 June 2016, Asite revenues reached £6.047m (c. $US7.47m or €6.93m) and the company declared an operating profit for the period of £0.993m. However, Asite remains heavily reliant on the highly competitive UK market which still accounts for 78% of its revenues.

GroupBC

Another UK-based vendor, GroupBC is also currently mainly UK-focused. During the 2000s, when it was known as Business Collaborator, its financial performance put it consistently ahead of Asite, but it then endured a number of ownership changes which hampered its growth and technological development of its software. Bought out by its management in November 2014, the business has been re-energised; in the year to 30 November 2016, it generated revenues of £3.795m (c. US$4.9m or €4.33), and increased profitability (EBITDA) from £0.445m to £0.797m (c. US$1.029m or €0.908m) – a 77% year-on-year increase (July 2017 post) – and is now looking to develop strategic partnerships to help it expand internationally (January 2018 post).

Bricsys 24/7

A sister company of Belgium-based Bricsys might also be of interest. It is a profitable, privately held company providing a cloud-based information management platform known at various times as Vista, Vondle and – until rebranded in October 2018 – Chapoo. The SaaS collaboration platform is now branded as Bricsys 24/7 but is still delivered via a separate company, and the company claims it is the number one product in use in the Benelux region of western Europe. However, its development team shares many of the same developers involved with Bricsys’s core CAD and BIM design authoring products, so, if an acquirer is only interested in the cloud collaboration platform, it may be a less straightforward proposition.

Will Trimble’s US$1.2bn acquisition of Viewpoint be managed as a ‘gradual convergence’ or a ‘rapid managed migration’?

Two days after Trimble’s announcement of its US$1.2bn acquisition of Viewpoint, I attended a Viewpoint UK ‘roadshow’ event in London yesterday (25 April 2018). The presenters carefully avoided saying too much about the deal, but in talking to a couple of delegates the conversation immediately focused on what the acquisition might mean for Viewpoint’s people and technologies. Each time a SaaS construction collaboration vendor has acquired a rival platform, customers and end-users immediately begin to wonder how the enlarged business will manage the previously competing systems. Strategies have varied from what might be described as ‘gradual convergence’ over 4-5 years to ‘rapid managed migration’ within two years.

Gradual convergence

For example, after Germany’s Conject brought UK-based BIW Technologies in December 2010, for example, there were few redundancies and the two SaaS platforms continued to co-exist for some time (and the BIW branding survived until 2012), while Conject’s German business continued to support some on-premise technologies. Eventually, a new platform combining the best of the two SaaS systems began to emerge to support new demands for functionality to support building information modelling (BIM) processes in March 2015.

Rapid managed migration

Contrast Conject’s measured, almost leisurely, approach to that of Aconex. After it acquired Conject in March 2016, there were a few redundancies as sales and administration overheads were rationalised, and Aconex quickly began to talk to existing Conject customers and started to integrated some of Conject’s sector-leading technologies into the Aconex platform. In May 2017, Aconex CEO Leigh Jasper told me customers had not been forced to switch to the Aconex platform; existing projects continued to be managed on Conject’s system, but new projects were started on the Aconex platform.

Aconex’s Connected Cost platform was also said to be a compelling proposition to former BIW/Conject customers who had valued the mature Financial Control functionality, and Conject’s UK BIM experience was also valuable. But there was no huge demand from customers for Aconex to develop an FM solution (one of Conject’s strengths in Germany), Jasper said, so Aconex remained more focused on supporting design and construction processes. By the time Oracle made its bid to acquire Aconex in December 2017, the Conject name had almost disappeared and the rationalisation was largely complete.

What next for Viewpoint for Projects?

In 2018, Trimble has invested $1.7bn to, first, acquire e-Builder (a US SaaS construction management business strongly favoured by US owners) and, second, to acquire Viewpoint (offering ERP, financial and accounting systems used heavily by US contractors, the former 4Projects SaaS platform, acquired in 2013, that historically tended to be targeted at UK constructors, and the former Priority1 mobile platform, acquired in December 2014). These are added to a Trimble collaboration portfolio that already includes the former Meridian systems (notably Prolog), SketchUp, GTeam (relaunched as Trimble Connect in October 2014) and the mobile ProjectSight application – though when the latter was launched in December 2014 it was clear some convergence of the software portfolio had already occured. Other related solutions include Tekla Structures and Tekla BIMsight, the Vico 5D platform, the Manhattan Atrium FM application, and the Sefaira sustainability analysis web toolset (acquired in February 2016).

In short, Trimble has been assembling a portfolio that extends beyond a focus on design and construction to also embrace owner/operator requirements, and which also includes substantial support for (open) BIM. Tekla and Vico provide powerful BIM authoring and management capabilities; both e-Builder and Viewpoint have invested in supporting BIM in their cloud environments; and Viewpoint’s UK business has benefited from detailed involvement in the UK’s government-led BIM adoption programme – widely regarded as an exemplar to other countries.

And while we might expect there to be some rationalisation of overheads, the bigger challenge will be assimilating the two recent acquisitions, which both bring substantial customer and user bases (at yesterday’s London event, Viewpoint said it now had over 315,000 current active users of Viewpoint for Projects on almost 160,000 projects; e-Builder has supported over 200,000 projects), with the Trimble Connect applications. There will be scope for economies of scale in rationalising hosting and other infrastructure provision, and also – as Aconex did following its Conject acquisition – to identify and invest further in the highly valued functionalities of the different SaaS and mobile systems. By developing the ‘best of breed’ capabilities that will retain customer and end-user loyalty, Trimble might encourage them to migrate to enhanced new solutions.

(Some industry watchers fear a far more negative scenario in which the US giant eventually cans the UK-developed system in favour of its US solution(s) – one told me: “In essence it is a client grab. A very expensive one“.)

Once the Viewpoint transaction is completed (anticipated in Q3 of 2018), I expect there will be some rebranding to bring the new solutions into Trimble’s universe (a conversation yesterday contrasted the approach of Trimble – and firms like Autodesk and Bentley – with that of Nemetschek which acts more like a holding company for brands including Allplan, Vectorworks, Graphisoft, SCIA, Maxon, Bluebeam, Solibri and dRofus); e-Builder is already branded as “A Trimble Company”.

NBS’s latest UK BIM survey suggests Viewpoint’s CDE is the widely used, but is the picture distorted by reliance on architects’ responses and under-representation of civil engineering?

Almost since the beginning of the UK’s BIM implementation programme in 2011, NBS‘s annual BIM Survey has shed some light on attitudes to and adoption of building information modelling processes and technologies. Now in its eighth edition, the National BIM Report 2018 (downloadable here) has, for the first time, asked respondents about their adoption of ‘common data environment’, CDE, platforms.

CDE adoption

In line with data presented in the rest of the document, it is clear that BIM is not yet business-as-usual for the majority of respondents. A core part of PAS 1192-2, the report says, is about sharing data within a CDE, and asking about CDE usage helps us to see how many, and how often, organisations practice collaborative BIM (as opposed to non-collaborative or ‘lonely’ BIM).

Among the survey’s 808 respondents, CDE usage varies from around a fifth (21%) who share information in0s a CDE “for all projects”, 23% who use a CDE “for most projects”, and, at the other end of the spectrum, 28% who never share information in a CDE.

An NBS follow-up question asked respondents to list the CDEs they use. This invited free text responses, and some people cited more than one platform, so the percentages do not sum to 100; the survey suggests Viewpoint For Projects is the most widely used CDE ahead of Aconex/Conject (these businesses merged in March 2016) and Asite. Generic file-sharing applications, including Dropbox (neck-and-neck with Autodesk’s BIM360 range), Microsoft’s Sharepoint and Google Drive also featured in the most commonly cited answers – although NBS noted many respondents said they used these general tools for “projects of a less complex nature”. I understand from NBS that some other solutions (eg: GroupBC’s CDE) did not feature in the report’s final list as they got less than five mentions.

How representative is this survey?

In one part of the report (p.19), NBS usefully shows how awareness and adoption of BIM has changed since 2011. This is valuable trend data as NBS has largely deployed the same methodology to collect its data each year, so the composition of its (self-selecting) sample will be broadly the same each time. BIM advocates will be encouraged that adoption apparently continues to increase.

However, the 2018 report (collated from data gathered in the first quarter of 2018) cannot be viewed as a representative snapshot of the whole of the UK construction industry. For a start, the sample is not representative of all parts of the sector. According to the report (p.36), the largest group among the 808 respondents was architects (31%), while other professions represented included architectural technologists, clients, contractors, civil, structural and service engineers, surveyors, and landscape architects.

The dominance of architects in the NBS’s sample is not surprising. As “the knowledge management business of the RIBA”, the NBS provides knowledge, specialist software and services to a customer base with a high proportion of designers. This customer base will also tend to be employed in the design and construction of conventional buildings rather than in infrastructure (highways, rail, utilities, etc) – a factor which, I strongly suspect, contributed to the few mentions of Bentley ProjectWise as a CDE (last week, Bentley highlighted ProjectWise’s use by 43 of the ENR top 50 design forms, mostly for infrastructure related work), while GroupBC’s customer base also features some major civil engineering contractors and utility clients. And despite NBS also providing a range of services for manufacturers, there was no mention of this important industry segment among the BIM survey’s respondents – though manufacturers’ importance as a source of BIM objects is highlighted.

Aconex Services Limited – the UK-based business formerly known as Conject Limited, and before that BIW – had a profitable first year of operation as part of the international SaaS construction collaboration technology group Aconex (the Anglo-German Conject group was acquired by Aconex in March 2016).

In a financial report filed at Companies House in April 2018, the Woking, Surrey-based company reported revenues of £4.902m – or about US$6.45m or €5.59m – in the year to 30 June 2017. The figures are down on those reported for the last full year, to 31 December 2015 (post), when the company generated revenues of nearly £6.4m before altering its reporting cycles to align with Aconex group practices. The revenue drop is also to be expected as the business was operating in tandem with Aconex (UK) Limited, and starting the process of transitioning customers from the Conject system to Aconex applications. The report says:

“Across the company’s markets the organisation continued to grow its client base, and secured a number of new enterprise and programme engagements via its sister company, Aconex (UK) Ltd. Many of our existing clients extended their commitment to us by signing new enterprise agreements.”

The company’s headcount dropped from 61 to 47 (presumably due to post-acquisition rationalisation), resulting in lower operational expenses. However, the healthy EBITDA profit of £1.275m is largely due to inclusion in ‘other operating income’ of a £2.2m figure for “transfer pricing income” (I am not an accountant, but I think this relates to intra-group payments to Conject for provision of services to Aconex).

Now that the Australian-based but internationally operating construction collaboration SaaS vendor Aconex is owned by Oracle it may seem strange to be revisiting its regional financial performance in Europe in the year to 30 June 2017. However, it is useful as a yardstick for the performance of other SaaS construction collaboration vendors, and an indication of the health of the market in general (the business reported separately to the UK-based operations of Conject [see previous post] – acquired by Aconex in March 2016).

Filed at Companies House in May 2018, the report and accounts for Aconex (UK) Limited for the year ending 30 June 2017 show that the business earned revenues of £5.486m (c. US$7.22m or €6.26m), up 31% on the company’s 2016 performance (though this may reflect the impact of customer revenues gained from the UK Conject operation, and that boost is likely to continue as more former Conject customers make the transition to Aconex). For the same period, it reported an operating loss of £100k, compared to a £410k profit in 2016.

The revenues were derived from the UK (£2.231m), from the rest of Europe (£1.635m), and from Africa (including an operation in Algeria now in liquidation) and the rest of the world (£1.613m), with growth reported across all three geographic sectors: of 34%, 54% and 10% respectively.

Update (29 June 2018) – An email from Oracle says: “As of June 1, 2018, the business of Aconex (UK) Limited will be performed by Oracle Corporation UK Limited.”

SaaS construction collaboration technology provider Asite grew its revenues and profits in the year to 30 June 2018. With AEC acquisitions happening almost monthly, is the London-based vendor the next big target?

According to its just-published annual report (here), the London, UK-headquartered company saw revenues grow 12% from 2017 to £8,004,773 – around US$10.47m or €9.17m. During the same period, operating profit increased 85% to £1,357,702 – around US$1.78m or €1.56m – from 2017’s £733,370.

The revenue growth figure represents a slight slow-down on the 2016-17 year, which saw revenues climb 18%, while the operating profits showed a bounce-back after dipping in 2017 for the first time since the global financial crisis.

This latest report was published less than five months after Asite’s previous results announcement, when it highlighted its investment in new offices in Hong Kong and development of its New Dawn release of Adoddle, launched in March 2018. CEO Tony Ryan’s messages still focus on its growing global footprint and new releases of its Adoodle platform (the latest wheeze has been an instant messaging tool, aMessage); he describes the company’s common data environment as providing “Common Data Everywhere” (another variant on CDE – Bentley Systems has, for example, been talking about its “Connected Data Environment” for some years; post).

Global footprint

Within its “global footprint”, the mature UK market still contributes the largest proportion of Asite’s revenues: 76.9% – up slightly on 2017’s figure; revenues grew by 12%. Revenues were up in every other region apart from the Middle East, for which no figure was supplied (any revenues from that region were presumably rolled into results elsewhere – perhaps with India, where revenues jumped 60%). Elsewhere, revenues were up nearly 31% in Australasia, and 11% in Europe, while revenues grew by a comparatively sluggish 6.5% in north America – dropping it to third place in revenue terms behind the UK and Australasia.

Headcount dropped over the 12 months to June 2018, from 242 to 213 – the bulk of the reductions being born by Asite’s largely India-based technical team which shrank from 205 to 183 people. Excluding directors’ remuneration (some £614,000), the total wages and salaries bill was around £2.6m, meaning the average pay for an Asite employee is just over £12,000 – underlining the low cost-base provided by Asite’s Indian operation.

The next big deal?

Asite is in an interesting position compared to its competitors, particularly those from the UK. Following the acquisitions of BIW by Conject (then Aconex, then Oracle; post), and of 4Projects by Viewpoint (then Trimble; post), Asite is now – in revenue terms – the largest UK-based independent construction collaboration vendor. It must surely be being courted by potential acquirers (perhaps the rapid publication of its latest results and the trumpeting of its 85% profit growth is partly a marketing ploy to would-be suitors? See: the next big AEC SaaS acquisition?)

The UK market is also targeted by other US-based vendors – not just old hands like Autodesk (first Buzzsaw, now BIM 360 Docs) and Bentley (ProjectWise), but more recent arrivals such as Plangrid and Procore. The leading German players RIB and think project! might yet also enter the UK collaboration market – the latter acquired the UK’s CEMAR in May 2018 – while Belgium’s Bricsys 24/7 could be boosted following its recent acquisition by Hexagon (post).

A recently published ‘Construction Technology Report’ from Newcastle-based NBS presents a view of digital adoption, but is flawed by its narrow focus on building design businesses.

In May 2018, the 2018 (8th) annual BIM survey from NBS presented some data on adoption of common data environment (CDE) platforms by UK-based construction businesses. The data suggested a wide continuum: from 21% of firms using a CDE for all projects, to 28% not using any CDE at all.

Survey responses suggested that Viewpoint’s platform (now part of Trimble’s portfolio) was the most widely used, but I had reservations about how representative the sample was. It over-represented architects (hardly surprising, perhaps, given NBS’s RIBA Enterprises history), and swayed towards building design. This mean those working on the UK’s civil engineering infrastructure (highways, rail, utilities, etc) were under-represented. I felt it potentially downplayed the adoption of tools such as Bentley ProjectWise and GroupBC’s CDE, and overplayed the adoption of generic file-sharing applications such as DropBox, Microsoft’s Sharepoint and Google Drive.

Construction Technology Report 2019

For the first time, NBS has undertaken a separate survey looking at the technologies. Recently published, the NBS Construction Technology Report 2019 (available here) is based on quantitative research undertaken in late 2018 to which over 500 people contributed. Little further information about the sample is given though a question (p.13) about internal collaboration is broken down into just two groups: architectural practices and multi-disciplinary practices. Unfortunately, this suggests the survey did not extend to, say, non-architecture design firms, contractors, specialist subcontractors, project managers, manufacturers, clients, etc. Again, NBS results therefore reflect the views of a relatively narrow and building-focused segment of the construction industry.

The sample appears largely positive about the benefits of ‘digitisation’, recognising that a failure to adopt digital technologies could put companies out of business, and accepting that construction lags other sectors in its digital technology adoption (p.11). Clear majorities believed that both internal and external collaboration had changed as a result of technology adoption. Design activities still involve considerable work with documents and spreadsheets (lots of paper on the desk shown on the report’s cover!), referencing standards and specification writing; 2D design (72%)  was still slightly more common than 3D work (67%), but use of ‘project extranets’ or CDEs was only part of the work of 45% of respondents.

The NBS survey then dives deeper into the data for each of these design activities. Perhaps not surprisingly, its sample are prominent users of NBS for specification writing, and the NBS National BIM Library is the most widely used BIM object library (60%), ahead of BIMobject (37%) and BIMstore (36%; post).

The findings regarding extranets and CDEs were presented in two bar charts. The ‘extranet’ solutions were essentially generic file-sharing platforms: Dropbox (62%), Microsoft’s OneDrive (27%) and Sharepoint (26%), and Google Drive (22%) were all a long way ahead of Huddle and Documentum.

A skewed view of CDE adoption

The most frequently selected construction-specific CDEs came from Viewpoint/4Projects (41%), Autodesk’s 360 range (23%), Asite (22%), Aconex/Conject (18%), and Bentley Projectwise (8%). The high figure for Autodesk may well reflect the popularity of Autodesk design tools among this building-led sample – 69% were users of Autodesk CAD and modelling applications (an industry source told Extranet Evolution: “whilst [360] may be licensed, is it used in anger?”). Similarly, the low figure for Bentley Projectwise follows naturally from the under-representation of infrastructure design in the NBS’s sample.

Next was Deltek/Union Square at 7%. This perhaps further confirms the design-led nature of the sample, as Union Square, acquired by Deltek in 2016, grew largely through adoption by SME design firms of its locally-hosted practice management platform, Workspace, and only gradually extended to ‘extranet’ type functionality as a response to a minority of contractor customers. (A competitor commented: “An internal information management system with drawing register/issuing capabilities doesn’t really constitute a CDE.”)

The NBS’s CDE barchart is completed by Procore (5%) Clearbox’s BIMxtra (3%), GroupBC (2%) and Causeway LiveLink (1%). Heavily backed by investors, US-based Procore has only recently started to market itself in the UK; Clearbox is strongly associated with the UK Tier 1 contractor Kier (post); while GroupBC is another solution extensively used on civil engineering infrastructure projects, and is often ‘white labelled’ by its customers – who include the UK’s biggest contractor Balfour Beatty, fellow Tier 1 players Costain and BAM, retailer Sainbury’s, and Thames Water, among others (see October 2017 post).

It’s now about ‘digitalisation’

‘Digitisation’ is the process of converting information into a digital format, and many of the design firm activities described in the NBS Construction Technology Report are clearly in transition from analog practices to being digitally enabled. In his punchy and readable introduction, Stephen Hamil looks to a future where the ‘BIM conversation’ has moved on from a focus solely on the 3D model to “a rich cloud platform of connected technology from multiple providers.” NBS also includes some interesting practice profiles looking at the technology stacks being developed by some design firms. NBS technology offerings such as its cloud-based specification product Chorus (launched in August 2018) are strongly promoted in the document (which ultimately has to be seen for what it is: marketing collateral targeted at NBS’s architecture-led design market).

Pedantically, perhaps we should be talking more about ‘digitalisation‘: “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities – the process of moving to a digital business” (to use Gartner’s definition). I have been speaking to audiences recently* about how businesses need to do more than just adopt new technologies – they need to take on the challenge posed in “Digital Built Britain” in February 2015 and start thinking about new ways of doing things, new ways of thinking, new business models.

Mark Farmer, author of the October 2016 industry report “Modernise or Die”, spoke at the Irish Embassy in London earlier this week, and was clear about the need for construction businesses to change. If they didn’t, he warned, they could find themselves replaced or bypassed (“be substituted or disintermediated“) by more digitally adept and more integrated organisations. Design businesses like those targeted by NBS will not be immune from these changes – the ongoing shift towards more manufacturing-led approaches to construction will require them to rethink their key business relationships and their supporting processes and information practices.

[* For example, I have been talking at designer-oriented events organised by Specifi; the next of these will be in Leeds on 19 March 2019, followed by Birmingham on 2 April and Nottingham on 30 April.]