Aconex acquires Worksite

Acquiring a SaaS project cost management platform gives Aconex a potential leadership position when customers want both cloud collaboration and project cost control.

Aconex logo 2014Melbourne, Australia-based SaaS collaboration technology provider Aconex has announced an agreement to acquire Worksite, provider of a SaaS project cost management solution, for approximately Au$6.5m, (c £3.1m or US$4.8m) from ARES Project Management LLC.

ARES and Worksite

Worksite logoCalifornia-based ARES is well-known in the US project management world as a provider of on-premise cost management, field management and estimating software. It began developing a complementary application, Worksite, in 2012, and this cloud-based integrated project cost controls platform was finally launched in November 2014. The Worksite business is led by CEO Mike Jackson, President of ARES from 2009 to 2013, after which he focused full-time on developing this cloud offering.

Integrating Worksite into Aconex

Under the terms of the acquisition agreement, Aconex will purchase the intellectual property and assets of Worksite for an initial cash payment of A$3.0 million at close, and up to A$3.5 million in cash and Aconex shares in FY17, subject to certain performance conditions for the business.

Worksite screengrabsAconex says it plans to integrate Worksite’s solution with its project-wide collaboration platform to offer customers unified cost management across the project lifecycle, including earned value management, budgeting, cost performance, and forecasting. The acquisition supports the company’s strategy of expanding its product functionality and global presence, while accelerating its entry into the collaborative cost management market.

The integration of cost management with project-wide collaboration enables participants both within and across organisations to collaborate around a secure, centralised view of project budget and costs.  Asset owners, contractors, programme managers and project teams can tightly coordinate cost management to reduce risk and improve efficiency in payments, change management, claims, audit compliance, performance reporting, and other core processes.

Aconex plans to increase research and development costs for the integration of Worksite and the build-out of its integrated cost management solution. As a result, the acquisition is expected to be moderately dilutive to earnings and profit for the next 24 months, but Aconex does not expect this to impact its current public forecast of FY15 and CY15 financial results (see Aconex boosts investor hopes).

Aconex CEO Leigh Jasper said:

Leigh Jasper“Connecting cost management to the Aconex platform will bridge internal cost systems and external collaboration, providing a single source of truth for better financial visibility and control. Participants project-wide will be able to track budgets, contracts, claims and payments, and cost and schedule changes – both actual and potential. All of this information will be connected to collaborative processes managed on Aconex, offering new insights into the current and forecasted status of the project. Project cost information can now flow seamlessly from the collaboration platform into internal enterprise resource planning (ERP) systems. The acquisition of Worksite will further increase the value that we deliver to our customers, broadening the Aconex product portfolio and accelerating the growth of our global user network.”

My view

The Worksite deal is only Aconex’s second acquisition, following the June 2012 deal to buy the Adelaide, Australia-based Grazer smart manuals business in June 2012. It is also Aconex’s first international acquisition and the first since its December 2014 IPO; since then, its shares have prospered, despite the weak Australian dollar, trading at over Au$3.40 earlier this month (post); a week later (9 July) they peaked at Au£3.76. Today, at market close, they were valued at Au$3.28.

Two competitors in particular will be nervous about this latest Aconex move.

First, Anglo/German SaaS infrastructure lifecycle management provider Conject was for a long time able to differentiate itself from competitors by offering project cost control functionality developed out of a close working relationship with UK-based Bovis LendLease during the early 2000s. Only yesterday, the Woking-based business announced the release of new commercial management capabilities strengthening its EVM capabilities.

Second, US-based Viewpoint has long been a player in the construction ERP market, and it became an active competitor to Aconex following its acquisition of UK-based SaaS construction collaboration vendor 4Projects in February 2013. Two months ago, in May 2015, its UK user conference heard about the group’s plans to add financial capabilities to its SaaS applications. The expected timescale for this integration of capabilities is also similar to that envisaged for Aconex’s assimilation of Worksite

Of course, both the above collaboration businesses – Conject and 4Projects – are predominantly UK-based with strong regional operations across Europe. Aconex has been investing heavily in its US operation, and I would expect its first efforts will be to incorporate the Worksite functionality into its core platform for use by its US customers and end-users. After that, it will presumably look to internationalise the solution so that it can be applied in other economies. If this sequence is correct, US vendor e-Builder, which also offers financial tools including EVM (post), may also soon feel some competitive pressure.

The same might also be true of Bentley Systems who acquired EADOC in March 2015 to complement its ProjectWise application and to add some project cost management capabilities to its product portfolio. When I talked to Eric Law about that deal in April, he said he was surprised that EADOC was “still unique in being the only US product to combine document collaboration and project cost control functionality”. That distinction is clearly about to disappear.

Update (15 July 2015: 22.30pm) – The deal has also attracted interest from other tech bloggers; for example, US-based PLM specialist Monica Schnitger has written about the acquisition.

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    • Nick Sansome on 16 July 2015 at 11:15 am

    Not nervous at all Paul. Quite the opposite as the next big area of adoption in the SaaS space is around Cost Management as companies realize the better they manage project costs the better the bottom line becomes, in what is a very competitive Main Contractor market. As Aconex market this capability, organisations will look at the available market options, and we are very confident in our offering to compete in this space.

    • Kam on 18 July 2015 at 2:04 am

    Great post – thanks Paul!

    It looks like Aconex is becoming more and more dominant player in the collaboration software arena.
    Is that a fair assumption? Or is it being threatened by quickly adapting competition?

    1. Certainly not dominant, just perhaps prominent. It is ahead of most of its pure SaaS competitors in terms of turnover but not out-of-sight; there are some strong European-based players, for example, with deeper local traction, perhaps matching Aconex’s dominance in the Australasian market. In other markets, eg: the US, UK, Germany, Scandinavia, there are some strong local players, and Aconex lags well behind in most of these.

      Also, I am not sure that it’s competitors adapting to emulate Aconex…. It might be more accurate to describe Aconex as the one adapting so that it can better compete with vendors that previously differentiated themselves in areas such as O&M documentation, BIM and project financial control.

        • Kam on 22 July 2015 at 4:15 am

        Thanks Paul – that’s really helpful!

        • anon on 22 July 2015 at 2:08 pm

        I’m researching Aconex as an investment and I am not asking you for any investment advice, but Im interested in your blog and your opinion. Who do you think matches Aconex’s dominance in Australia in the UK and the US? I can find Conject in Germany but how much of their turnover do you think is really their other products instead of their construction collaboration software? The Aconex prospectus says that the global market is only 4% penetrated so I suppose nobody could be called globally dominant yet. I can’t find any results of big project successes by anyone except Aconex in many big markets around the world such as China and Japan and several others. I can’t find results of anyone except Aconex being selected so many really big projects in so many different places either. When you say “just perhaps prominent” about Aconex is this because the other strong players keep a low profile are not as good at publicising their project successes, so I can’t find them on the net?

        1. Hi
          1. Well, if you’re looking at Germany, you might also look at Think Project!. They have a more SaaS-focused product portfolio and a strong customer base in Germany, Austria and Switzerland.
          2. The Aconex prospectus was on the mark: the collaboration sector is still at an early stage in terms of penetration. But it won’t just be targeted by the SaaS collaboration ‘pure plays’. Depending on the level of product sophistication required, or the customer attitude to hosting, AEC customers might also look at generic cloud-based storage solutions or at on-premise solutions provided from businesses such as Bentley.
          3. Shouting about big project successes can have two effects. It can convince some watchers that the provider is winning big projects, and it can show competitors that the customer is in the market for collaboration. If we look briefly at each of these…. First, you need to wonder what the vendor is charging for the big project (it is not unknown for vendors to price a bid low in order to win a headline, and undercut competitors often know that the service may not be delivered in an economic way). Second, winning a single project may give some short-term kudos, but winning a long-term enterprise agreement is much more valuable – consequently, I know from my days at BIW (now Conject), we did not shout about individual project wins; instead, we waited until the customer made a long-term commitment.
          4. You also need to consider whether the customer will let the vendor exploit the project for PR/marketing purposes. Many will have confidentiality clauses or other constraints on what suppliers can say about a deal. For example, the vendors supplying SaaS collaboration services for various phases of the London 2012 Olympic Park developments were all prevented from shouting about their wins, but it was well known within the industry (and later became more widely known) that, for example, 4Projects supported the main Olympic stadium while Conject was deployed on the Athletes Village.

    • anon on 22 July 2015 at 2:39 pm

    One more question, I would be interested in your opinion, some people are saying the Aconex’s enterprise deal with Bechtel is quite a big deal. Do you think the deal this has much significance in the global scheme of things or is really a bit of ho-hum? What are the biggest enterprise deals you know of that the other strong players in this niche have with other big contractors like Bechtel?

    1. I’m not going to comment on the specifics of the Bechtel deal or on other enterprise deals.
      1. The AEC market remains hugely fragmented, and even adoption of a solution by a global big name will barely cause a ripple on the market as a whole. Also, once major contractor A does such a deal, some rival contractors may consciously opt for a different solution so that they differentiate themselves from major contractor A.
      2. Even within major contractors, many retain huge levels of local or regional autonomy when it comes to selecting a system (hardly surprising when you consider how many firms have grown through merger and acquisition), and local project directors may prefer other, sometimes cheaper systems.
      3. Even if major contractor A adopts a vendor’s system, this may not be first choice for its customers. Many owner-operators also have preferred systems, and will insist that their contractors use this regardless of any enterprise deals they’ve done with other vendors. Enterprise deals with owner-operators are, therefore, potentially more influential than enterprise deals with their EPCs, etc.

    • anon on 23 July 2015 at 2:48 am

    Very helpful commentary thank you very much.

    I can’t find anyone who could be said to be dominant in the UK though? In the US Procore seem to be the biggest and most widely used and make that claim with statistics posted to back it up of a total of 117k projects now using their system which would not be dominant yet but perhaps a long way ahead of anyone else.

    Reading between lines of what you have said there are in fact many other strong vendors operating in the main big markets all around the world who are also winning projects just like Aconex has been but they choose or client confidentiality means they keep it under the radar until they can announce an enterprise deal.

    I have looked at all the main vendors and can’t find any enterprise deals with anyone nearly as big as Bechtel but maybe even some of these are also kept confidential for client reasons. As you say also, Bechtel adopting Aconex may now result in a flurry of sales for the other strong players in the niche to other contractors as Bechtel’s global contracting competitors decide they need a way to differentiate themselves.

    Of all the competitors based on your knowledge including all the industry scuttlebutt of under the radar things going on, who do you think is the second global leader behind Aconex in the scale and extent of their success in different markets around the world? Very hypothetically I know but who would do you think would have been someone like Bechtel’s possible second or third choice for an enterprise solution?

  1. The major players in the UK SaaS market are 4Projects, Conject and Asite. Each of these have strong customer relationships, some of them dating back 10-15 years with both main contractors and owner-operators. 4Projects, for example, is widely deployed by Carillion; Conject is working with Mace and LendLease, and with retailer Sainsbury’s, for example, and Asite’s long relationship with Laing O’Rourke extends to a LO’R shareholding in the vendor.

    However, this won’t necessarily mean that, say, Mace will use Conject exclusively. As previously mentioned, if an industry client insists on a rival system, then the Mace team will use that. Consequently, separate vendor customer lists may often share some of the same names.

    (This problem can be exacerbated if the list covers historic projects rather than currently active or recent – similarly, statistics about user adoption, number of projects, etc, also need to be treated with caution as vendors can inflate the numbers by counting every user, company, project, etc since the product’s inception. And I also treat definitions of “projects” with some caution, as some systems might be used to manage a contractor’s internal projects (office moves or refurbs, for example) or a single project may be divided into phases (design, construction, commissioning). Also, bear in mind that some users and supply chain companies may be working on several projects simultaneously, perhaps using different systems, so they may be included in each vendor’s stats.)

    4Projects has a growing international spread (UK, Europe, Middle East), and its Viewpoint ownership will help it expand in the US. Conject shares a similar EMEA footprint, and Asite is casting its net widely, looking to win work in the US, Australia and South Africa in addition to its EMEA operations. I would struggle to name a rival SaaS pure-play with a similar international spread to Aconex, but – having attended the past two Bentley Year in Infrastructure conferences – Bentley ProjectWise is also widely deployed internationally, often as an enterprise solution.

    • anon on 23 July 2015 at 12:15 pm

    Thanks again, very helpful

    I asked someone in industry today about Bechtel and they laughed at my question and said to me that contractors around the world don’t seek to differentiate themselves from Bechtel, they just try hard as they can to get as close as they can to being as good as Bechtel!

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