Yesterday I travelled to London Gatwick Airport and the nearby offices of FMx, the facilities management software business acquired by McLaren Software‘s parent company Idox plc in October (post). The visit included an update on McLaren’s financial performance, an introduction to CAFM Explorer, and discussion of future plans for this business as it is progressively rebranded and integrated into the wider McLaren offering.
McLaren revenues growing
McLaren’s parent company Idox recently announced its latest end-of-year results, revealing revenues were up 50% to £58m (2011: £39m), and pre-tax profits up to £6.9m (£5.6m) in the year to 31 October 2012. Idox’s international revenues increased, with 31% (2011:12%) coming from outside the UK with a particular focus on non-European markets such as the USA and Australia.
McLaren, the group’s engineering information management division accounted for 31% of group revenues (up from 12% in 2011). The result includes revenues generated from the SaaS business formerly known as CTSpace, acquired soon after the start of the financial year, and subsequently rebranded as part of McLaren Software (this was not the parent group’s only acquisition – as well as FMx, there were three others). The review from CEO Richard Kellett-Clarke highlights the impact of recurring SaaS revenues:
Visibility of revenue in the EIM business has also increased during the year with 48% (2011: 36%) of revenues coming from recurring maintenance and Software-as-a-Service (“SaaS”) contracts. … EBITDA for the EIM business increased five-fold to £5.3m (2011: £1.1m), 32% of the Group total. Margins increased to 30% (2011: 23%) which reflects both the increased scale of the business and progress made during the year in rapidly integrating CTSpace to achieve planned cost synergies.
The report gives a financial breakdown of the November 2011 £11.6m acquisition of CTSpace, and it is clear that just over half of the EIM division’s £17.8m turnover was generated by the business formerly known as CTSpace:
The revenue included in the consolidated statement of comprehensive income since 15 November 2011, contributed by CTSpace was £8,996k. CTSpace also contributed a profit after tax of £1,098k for the same period. If CTSpace had been included from 1 November, it would have contributed revenue of £9,398k and a profit after tax of £965k.
However, this does not mean McLaren Software is generating substantial SaaS revenues (yet). CTSpace’s Fusion Enterprise product was – like McLaren’s incumbent systems – an on-premise solution as CTSpace offered both on-premise and SaaS-based revenues.
According to McLaren’s chief marketing officer Tim Taylor, the latter is expected to grow; he told me about recent successes in Australia and China where customers had consciously selected the SaaS solution, Fusion Live, for the delivery phase of major projects. He also anticipated continued growth in France, the UK and Germany, and was aiming to build awareness of the SaaS offering in the USA, where McLaren is still best-known for its on-premise EIM applications, particularly in oil & gas and major asset-intensive projects
CAFM Explorer rebrand
The home page of the CAFM Explorer website already includes a small McLaren Software logo in the bottom left-hand corner, and I understand that it will gradually take on the livery of the rest of the McLaren business in due course (I also learned that, despite its wide use by other FM software vendors, the abbreviation CAFM is claimed as an FMx trademark – its founder being a pioneer of FM software).
At the same time, McLaren is including CAFM Explorer in its wider plans to base its solutions on a common technology base, and – as mentioned at the time of the acquisition in October – to demonstrate to existing and potential customers that it has a suite of built environment solutions covering the whole project life cycle.
CAFM Explorer already includes some web-based functionality, and this is likely to be expanded during 2013 as McLaren invests in creating a comprehensive hosted FM capability that also supports mobile working.
CAFM Explorer comprises a series of modules, and customers (450 of them – including firms such as BP, ABB, Balfour Beatty Engineering Services and Aer Lingus – are currently spread across 45 countries) get all ten as part of the standard offering. These include dashboard reporting, planned and reactive maintenance, work planning, building and asset registers, room booking, cost control (some integration with in-house ERP and other finance systems), and document management. Like other CAFM applications, the platform draws heavily on AutoCAD roots, with users able to use CAD-based information to interrogate databases about buildings, floors, zones, rooms and equipment and people within those spaces.
Clearly, document management and collaboration will be one area where McLaren will deliver greater sophistication (more support for workflow, for example). However, it will also be expanding CAFM Explorer’s web capabilities and its suitability for mobile devices. PDAs have been supported by CAFM Explorer for some time, but McLaren is looking to create a consistent technology that will enable users to access and interact with data across a range of desktop, laptop, tablet and smartphone devices. I was shown some early prototypes of the user interface, and we also touched on integration of private social network tools such as Yammer into the services.
Building information modelling also features in McLaren’s plans for its engineering information management division. It recognises that in some sectors, such as mechanical and electrical engineering of petrochemical facilities or power stations, there are numerous long-time users of on-premise three-dimensional design solutions. Its web and mobile plans also implicitly recognise that these same users and many others will also increasingly want accurate, up-to-date data that can be accessed wherever they happen to be working. And much of this data will also be needed by those who have to manage, operate and maintain a facility throughout its working life.
Through its 2010 acquisition of McLaren, Idox diversified into the private sector, into new areas of software capability and into new geographical markets, a process that it has continued with its CTSpace and FMx purchases. The growing McLaren Software division now has some prestigious customers for its on-premise enterprise solutions, some strong recurring support and maintenance contract revenues, and a network of offices across most of the key markets (plus plans to open further offices in places such as the Middle East and South America). McLaren clearly has ambitious plans to entrench itself in markets where it is already strong and to grow its footprint in new markets.
The hybrid offering of SaaS and on-premise also provides an easy adoption ‘ramp.’ Customers can opt for SaaS to support the involvement of a geographically dispersed, multi-disciplinary, multi-company planning, design, construction, commissioning and handover process; they can then bring the data and applications in-house – and satisfy governance, regulatory and compliance requirements – when it comes to operation and maintenance of the finished facility.
While McLaren’s strength in heavy engineering and major infrastructure projects is clear, it has less of a track record in SaaS and in the architecture, engineering and construction (AEC) sector. Buying CTSpace gave it credibility in both areas; it has already built on its SaaS credentials to launch McLaren Enterprise On-Air (post), and it has the opportunity to build an even stronger AEC offer by incorporating post-construction facilities management support into its portfolio. With five acquisitions in the past year, I would not be surprised if Idox continued along its acquisitive path in 2013 and boosted McLaren’s strengths still further.