McLaren, now incorporating CTSpace, is building a compelling offer to owner-operators and EPC contractors wanting SaaS or on-premise collaboration, and adding AEC-specific experience to the proposition.
Last week I visited the City of London offices of Idox plc to meet Tim Taylor, chief marketing officer of subsidiary McLaren Software, and talk about the business’s merger with Idox’s CTSpace acquisition (see CTSpace disappears) and the resulting combined product portfolio (I subsequently also met McLaren CEO Paul Muir – right).
The first meeting was strongly reminiscent of one I had with Sword-CTSpace in Brentford in May 2010. For a start, I was re-introduced to product manager Andre Gunter, one of the 50 or so people who joined McLaren following CTSpace’s acquisition; and we talked about FusionLive and about the dual offering of both Software-as-a-Service and on-premise platforms for ‘engineering document management, control and collaboration’ (the current, if slightly cumbersome, McLaren strapline). Indeed, McLaren has adopted the CTSpace dual offering approach, with a now larger portfolio incorporating the on-premise, enterprise-class applications already delivered by McLaren.
While at Furnival Street, I was introduced to Idox CEO Richard Kellett-Clarke, right, and he talked through Idox’s recent expansion. The AIM-listed company (turnover: c. £54m; profit c. £18m) has an established customer base in UK local government, where it provides consultation tools and applications to manage planning, environmental health, licensing, and land and property processes (among other things). But it was keen to diversify into the private sector and into other markets (vertical and geographical) which complemented its existing domain knowledge and expertise in managing documents and related data. This prompted, first, the 2010 acquisition of McLaren Software, and, second, almost a year later, the purchase of CTSpace from Sword.
In Richard’s view, investors in the existing McLaren software business had lost direction and the company was likely to benefit from further investment and being part of a bigger group. The acquisition tidied up the business’s balance sheet; the Glasgow location meant it was convenient to integrate its people and form a larger Idox operation in the city; and the parent’s development resource grew through the addition of McLaren teams in India, the US and Belarus. The deal certainly seemed to work: Tim says McLaren revenues grew 30% during 2011 (Paul Muir said McLaren turned over c. £20m).
Both Tim and Richard confirmed that during 2011 McLaren repeatedly found itself in competition with Sword-CTSpace as it pitched to customers in the oil and gas, utilities, transportation and related sectors.
In my view, Sword Group appeared to lose its drive to create a strong Software-as-a-Service arm; certainly, its SaaS champion Heath Davies had departed at the end of 2010 (off to turn around Alterian – see Independent article), and the remaining CTSpace team were struggling within the Sword confines to grow the business and its hybrid offering. Richard confirmed that Sword were receptive when Idox approached them to acquire the business; the deal enabled McLaren to add some established SaaS tools to its product portfolio, it expanded its development resources as people relocated from Brentford to Idox offices in London and Newbury, and there were economies of scale from centralising HR, finance and related overheads.
The hybrid offering
We talked a lot about the document and information management requirements of owner-operators and EPC – engineering, procurement and construction – contractors, and McLaren is targeting these markets, particularly in oil and gas and natural resources (Tim and Andre reeled off lists of customers and recent project wins in north America – from where around 60% of McLaren’s business currently comes – Europe, the Middle East and Australasia – where McLaren has just recruited a new VP to grow its presence there).
According to Tim, McLaren regards its on-premise enterprise solutions as “sticky”, generating strong recurring revenues, but the company also wanted to be extend the reach of its applications beyond internal fire-walls. It now has two gambits:
- first, McLaren Collaboration Workspace (CW), via an application programming interface (API), creates a SaaS integration between an owner-operator or EPCC’s internally-held data and external partner businesses
- second, FusionLive provides a Software-as-a-Service platform that can be used to manage the whole design and construction of a project – outside the firewall – with other McLaren systems then available to import data for future operational needs internally if required.
The CW branding is, I am told, partly coincidental with the former Citadon CW platform, which formed part of the product portfolio in pre-Sword days. This was adopted as an enterprise solution in several large US-based engineering client organisations such as Parsons and Ameren during the mid 2000s and so fits neatly with McLaren’s focus on similar customers while providing some continuity with existing customers.
The hybrid offering also provides a strong Software-as-a-Service option as more corporations adopt cloud-based solutions rather than managing their own IT infrastructures. McLaren can demonstrate strong credentials in enterprise-strength systems, which will give corporations confidence that McLaren can also manage their information needs ‘in the cloud’. Equally, it has now acquired the complementary SaaS domain experience of the CTSpace team, so that it has (a) a credible track record within similarly risk-averse industries where references and previous experience are vital, and (b) US and European-based SaaS experience.
Much of the conversation focused on oil and gas exploration, natural resources and similar process engineering markets. This is obviously a McLaren strength, but, with FusionLive, it retains a SaaS offering to those in the architecture, engineering and construction field needing to deliver a project. The AEC sector raises competition from several vendors (eg: Australia’s Aconex; Europe-based 4Projects, Asite, BIW/conject, think project! and Unit4; and US firms including e-Builder and Autodesk’s Constructware), but these do not currently have strong post-handover operation and maintenance/facilities management capabilities (although conject has promised a new SaaS FM offering later this year) likely to appeal to owner/operators.
McLaren therefore has an opportunity to expand into the AEC market and provide an easy stepping stone for businesses, particularly owner/operators, who – after project handover – may want to bring management and reuse of their design and construction data in-house. Currently, the business is heavily skewed towards its on-premise enterprise market, but if it can successfully mould its sales and marketing activities to cover the whole portfolio, then it stands a good chance of growing a strong and complementary SaaS operation and expanding its AEC footprint.