Melbourne-based Software-as-a-Service construction collaboration provider Aconex has today launched Aconex Smart Manuals, effectively a relaunch of an updated suite of products acquired when Aconex bought Grazer in June 2012 (post). The module allows contractors to efficiently capture, review and deliver the documentation required for operation and maintenance of a built asset, and owners can easily maintain that documentation over the operating life of the asset.
Kerri Lee Sinclair, Aconex vice president of operations and maintenance solutions says:
“Aconex Smart Manuals extends the business benefits of the Aconex online collaboration platform to the transition from construction to operation and asset information management. When all project team members collaborate in real time to compile digital documentation – with a complete audit trail – contractors are assured of meeting their obligations, closing the account and moving on to the next project. At the same time, owners can proceed with confidence to realize the full value of their asset through efficient operation and maintenance.”
I had a demonstration of Aconex Smart Manuals last week and talked at length with Kerri about the functionality – a conversation much informed by my experience in launching similar functionality at rival BIW, now Conject, in the early 2000s (see my first Grazer post). Then BIW was facilitating the progressive compilation of the Health & Safety File – a key but hitherto laborious and time-consuming requirement of the UK Construction Design and Management, CDM, Regulations that used to result in numerous ring-binders full of printed information. By enabling its electronic compilation, operation and maintenance information did not have to be retrospectively compiled at the end of a project, and was in a more durable format. Kerri recognised the similarities with Australian experiences, describing the process of manual compilation as “grunt work” often delegated to junior employees, and highlighting the dangers of reliance on paperwork that could be destroyed in a flood or other catastrophe.
Some ten years later, Aconex Smart Manuals offers much the same capability, but with added workflow support, progress visibility and status reporting, and is delivered in three ‘flavours’ to meet different needs and budgets:
- Aconex Smart Manuals enables contractors to define and assign subcontractor tasks and deliverables, automate review and approval processes, monitor all subcontractor actions and performance, maintain a complete and searchable audit trail, and deliver comprehensive, accurate digital manuals to owners. ‘Smart’ differentiators include the ability to navigate graphically to physical assets and access their associated information. Kerri demonstrated to me the use of photographs to select buildings on a hospital campus, then used a simple building elevation (right top) to select the appropriate floor before navigating to a particular electricity supply board, and showing information held about that asset; file searches could highlight relevant drawings, documents, photos (centre), scanned images with stamps, etc.
- Aconex Smart Manuals Dynamic extends the capabilities of Aconex Smart Manuals to owners for the update and control of operation and maintenance manuals throughout the lifecycle of the asset. This product is integrated with the Aconex online collaboration platform, enabling users to access and manage asset information in a secure, cloud-based environment. Kerri likened this to enabling an electronic ‘full service history’ for a car, creating a resource that could be used beyond the defects and liabilities period and throughout the life of a building, with perhaps sub-manuals for discreet areas or individual tenants in a building.
- Aconex Digital Manuals is a streamlined version of Aconex Smart Manuals which provides centralized communications and information management, as well as status monitoring for all subcontractor tasks and actions (right, bottom), enabling contractors to deliver professional digital manuals compiled progressively during the project.
Aconex Smart Manuals and Aconex Digital Manuals can be used as stand-alone solutions for projects already in progress or integrated with the Aconex platform from project inception. At a project’s conclusion, assuming owners did not want to maintain the manuals, information could be provided on DVD or USB devices.
Not totally new, but challenging
When Aconex first partnered with Grazer, in 2011 (prior to the latter’s acquisition), I wrote about my sense of deja vu insofar as the tie-up helped Aconex deliver something that has long been available from a competitor. Much of what I saw last week from Aconex was immediately familiar, and while the workflow, progress monitoring and status updating for compliance are useful additions, they are not unique. Conject capabilities have moved forward, for example, with Conject PM PropertyFile running status reports on information stored in that system, and Conject’s Business Intelligence module delivering graphical progress reports on O&M update workflows.
Today’s launch also clearly extends the capability beyond Aconex O&M Manuals’ initial limited availability in Australasia, and will be monitored with interest by rival AEC collaboration vendors who already have O&M or facilities management capabilities as part of the product portfolio. In addition to Conject (launching a SaaS-based FM module this year; post), McLaren Software (who acquired FMx in late 2012; post) will be watching closely. It also poses a conundrum to Aconex. Smart Manuals is a product set that extends client engagement beyond project completion and handover, and – as Kerri admitted – it raises a question of “how deep into FM do we go”.
How much did Aconex pay for Grazer?
How much incremental revenue will ‘Smart Manuals’ earn for them?
According to Aconex’s latest annual report (where the Grazer acquisition is mentioned as a post-year-end event, it took place on 6 July 2012), the Grazer purchase price “is payable through the issuance of ordinary shares in Aconex Limited”. The report goes on to indicate: “in any scenario a maximum purchase price of $15,000,000.” At the time of the report “the fair value of the identifiable assets of Grazer Pty Ltd [were] in the process of being quantified.”
In reply to Mike’s question, it would be likely that Aconex paid little or nothing for Grazer and that there is an extended “earn-out” period for the owner. I’d be very surprised if he gets more than $2-$3 million in the end. Incremental revenue? Hard to guess. The Smart Manuals product isn’t cheap, but the market is used to paying (e.g. Web FM) for O&M manuals. Depends on how well they can sell it; if it’s an incremental sale to an existing user they’re a chance, if it’s to a new prospect I think it may be difficult. If I had to pick a number I’d say maybe 5% additional revenue. And the issue looming for Aconex is that the asset information is increasingly being linked to the 3D model via a secure database that the asset owner owns – and Aconex doesn’t support any of that. My feeling is they’ve missed the market with this by three or four years; right now, the world is going to BIM and Aconex isn’t.
Vince, interesting comment.
Aconex’s published revenue and profit results have been weak since 2008, do you think Aconex has missed the market over the last three or four years on more than just the industry’s move 3D and BIM?
Grazer and Smart Manuals doesnt sound like the solution to their problems, just incremental.
Blaming economic conditions for cost cutting sounds like they might be avoiding the real issues.
Why has Aconex got itself into problems? Can they turn it around and what do they really need to do?
Mike, it’s difficult to say. My opinion would be that the expansion into the US has created serious distortions – in complying with US GAAP financial reporting (they want to list on the NASDAQ) the business has focused only on what it wants, rather than what the client needs. There’s also the issue of under-servicing of clients – too few support staff – and overcharging for the service, sometimes by as much as three times the price of competitors. My feeling is they have lost any feel for the market. Can they turn it around? It’d require a massive u-turn – I doubt the shareholders would allow them to go after market share and spend money on improving their service. And that’s if the industry really wants the product; the big contractors and asset owners now have much greater business intelligence systems and Aconex doesn’t integrate with anything else, so it’s getting left on the sidelines while the competitors learn to complement other products. Put it this way – my money would be elsewhere, on the nimble competitors who intuitively know that being connectable is the key.
The telling factor is that past customers aren’t coming back for more. I am guessing the price and the limitations aren’t delivering value any more.
Just a brief update on this: the Aconex Annual Report for 2014 includes a note (note 20) detailing a shares payment of 875,000 Aconex shares valued at Au$1.134m to the shareholders of Grazer.
Aconex’s product and service is actually very good and there is plenty of demand for it in the market. It is easy to sell to big projects as the best lowest risk solution because Aconex already has so many awesome clients and projects as references. But management has been “screwing the pooch” as they said in the movie The Right Stuff. Even a very successful business with a great product can be dragged right down by arrogant and stupid management who don’t listen and ignore their own sales and support and engineering team and treat their own staff badly. Aconex does need to make a “massive u-turn” and there are many things that could be said about how to do it but is anyone listening. Steve Recht seems to have a clue or two but he’s probably getting very frustrated dealing with “the founders”. I wish them the best of luck.