In an echo of an earlier US/UK acquisition in the construction IT space, ERP vendor Deltek has acquired UK project management software vendor Union Square.
Mostly, ExtranetEvolution focuses on Software-as-a-Service solutions and related applications in the architecture, engineering and construction sector. However, I do keep an eye on vendors whose software solutions occasionally either compete with or complement cloud solutions. Nottingham, UK-based Union Square is a good example.
The Union Square back story
In the early 2000s, when other construction collaboration vendors were establishing themselves as SaaS providers, Union Square remained focused on its niche: construction-oriented but locally-hosted practice management systems or intranets. Its core market was small to medium-sized design firms, and Union Square Workspace became a strong platform to manage a host of internal collaboration requirements, from drawing management to timesheets, while also enabling authorised users outside a company to share information.
It added project accounting to its portfolio in early 2010, and later that year acquired its principal rival, Glasgow-based Archetype Software (post). By 2013, its revenues had reached £5m, and it was also beginning to expand into Australasia and to develop mobile tools. In March 2014 (revenues then up to £6.1m), I attended a Union Square user group conference in London where customers learned about a contract administration module, an Android mobile app and externally-hosted ‘extranet’ functionality – partly driven by demand from Union Square’s contractor customers. At that time, BIM was rarely being considered by their largely SME customer base, but demand for this functionality has grown and I saw some BIM functionality described at a London seminar earlier this year.
Founded in 1983, Virginia, US-based Deltek has largely concentrated on project-focused ERP, with Costpoint becoming its flagship product in the 1990s. At different times, it has been publicly listed and privately held, and has also been acquisitive – in 2006, I noted its purchase of US-based Welcom, a leader in earned value management and project portfolio management software (Open Plan being its most well-known product), and the following year it acquired an Australia-based EVM vendor, WST Pacific. In 2014, it acquired Portland, Oregon-based ERP vendor Axium (on the doorstep of its similarly acquisitive US rival, Viewpoint Software).
In parallel with its M&A activity, Deltek has gradually expanded in the UK and Europe. Ten years ago (May 2006), it began to exhibit at UK construction events, and it has also been able to grow its footprint by capitalising upon US-based customers (eg: HOK) expanding in the UK and elsewhere. But it has faced strong competition from well-established UK-based rivals such as COINS, Redsky IT, Causeway and Eque2.
Deltek’s product portfolio covers solutions for professional service firms and applications for government contractors. Today’s acquisition of Union Square (no value given) therefore strengthens its reach into AEC professional services, while also growing its footprint, particularly in the UK and Australia (it has some 450 customers in 15 countries). It says the acquisition:
“broadens and deepens Deltek’s portfolio of solutions for the AEC industry by enabling companies to organise and leverage a complete set of information around each project – ensuring that project teams can better collaborate on critical project data to successfully manage projects for clients.”
In some respects – US ERP vendor with Australian operation buys UK-based project management solution provider – the deal is similar to Viewpoint’s February 2013 acquisition of 4Projects, but the main difference is the software architecture. Union Square’s user base remains predominantly on-premise, while 4Projects was a pure Software-as-a-Service vendor, and it is some years ahead of Union Square in developing BIM ‘Common Data Environment’ (CDE) capabilities (showcased at the May 2016 Viewpoint 2016 UK customer summit). On the other hand, Deltek has also been pushing its cloud ERP offering, so it may well accelerate a transition for some Union Square customers towards SaaS-based systems, and increase competition in the cloud collaboration sector.
It also marks yet another rationalisation in the construction IT space – overdue consolidation in this sector being something that Viewpoint CEO Manolis Kotzabasakis talked about when I interviewed him in May. It also potentially forms another player able to combine collaboration and financial management in the cloud – Aconex has been growing its financial functions (as well as the Viewpoint/4Projects deal, in 2015 Aconex acquired Worksite and the more recent Conject deal added to its capabilities).
Meanwhile, Richard Vincent, managing director at Union Square Software says:
“Our organisation is thrilled to become a part of Deltek. Together, we have nearly 50 years of experience working hand in hand with AEC firms to make their businesses run better. Our two companies share a common focus, a common culture, and a deep knowledge of what it takes for AEC firms to be successful. That’s the foundation for a bright future as we come together. Our combined forces will deliver an even more powerful solution to the fast-growing AEC industry. We look forward to working closely with Deltek in the days ahead.”
Mike Corkery, president and CEO of Deltek says:
“Deltek continually looks for ways to deliver more value to our customers through product innovation and acquisition, and that’s why we have acquired Union Square. Managing data and collaborating on information to make smart decisions is critical for successful companies, especially in the AEC industry. We acquired Union Square to meet the acute needs of Architecture, Engineering and Construction firms to organise the many emails, documents, drawings and other artifacts that are produced in the course of successfully delivering a project. In Union Square, we have found a company that shares our passion and dedication to helping AEC firms run better and deliver on-time and on-budget projects to their customers. On behalf of our global team, I’d like to welcome Union Square to the Deltek family. Together, we will continue to set the pace within the AEC industry.”