Asite CEO Nathan Doughty talks to Extranet Evolution about COVID-19, industry mergers and future prospects for the UK-based SaaS technology business.
2020 started on a tragic note at Asite. On 2 January, the independent London-based Software-as-a-Service construction collaboration technology vendor announced that Tony Ryan, Asite CEO, had died suddenly, aged 48. Chief operating officer, Nathan Doughty, was immediately appointed Ryan’s successor. Extranet Evolution talked to Doughty about his new role and about the prospects for the business he joined in 2002.
Doughty had previously worked with Tom Dengenis (until 2018, CEO of Synchro – acquired by Bentley in June 2018 – and Ryan’s predecessor as CEO of Asite) at the UK arm of Bidcom. He then joined Asite to lead its technology initiatives. He was also involved with BSI, the International Alliance for Interoperability / BuildingSMART, and the Network of Construction Collaboration Technology Providers, championing open BIM.
Taking over from Tony Ryan
Doughty reflected on taking offices in such tragic circumstances.
“Losing Tony [right] was a major personal blow. He was a close friend to me and to many people in the business, and we worked together for many years. It was also very unexpected, of course, so the Asite team has had a period of introspection and mourning, and we’ve all pulled together. We were very fortunate that Tony left the business in a very healthy position.”
What will be different?
“That’s difficult to say. I am a different type of leader to Tony, but we shared the same vision and goals for the business. My role has always been as a product or technology-led individual, while Tony had a strong sales-led approach. Going forward, I think Asite will be more open, both in communications – both internally with colleagues, and externally with customers, analysts and journalists – and in terms of our technology. I have always been a strong believer in openness at a platform level.”
Asite has long been one of the most transparent vendors when it comes to its financial and operational performance. This culture of openness started in the early 2000s when Asite was an AIM-listed company, and continued even after Asite delisted in April 2009. Revenue topped £2m in 2010, when the business also declared its first profit. There was a plateau following the Global Financial Crisis but Asite has since enjoyed consistent double-digit revenue growth, up 10% in 2013, for example, 18% in 2017 and, most recently, 20% in 2019.
Turnover in the year to 30 June 2019 was £9.638m (c. US$12.6m or €11.43m), while operating profits were up 83% to £2.484m (c. US$3.25m or €2.95m), and Doughty was bullish about 200-strong Asite strengthening its global footprint. While still heavily reliant on the UK market, which generates nearly three quarters of Asite’s revenues, the company saw some sharp growth in its APAC and North American regions – despite healthy competition from indigenous competitors.
“We are competing product-wise with Oracle Aconex, Autodesk [BIM 360] and Bentley [ProjectWise], but we don’t have their marketing clout,” reflects Doughty. “However, we have some strong customer relationships at the top end of the market – particularly among owner-operators, large government clients particularly in infrastructure (the Environment Agency, Transport for London), and EPCs such as Laing O’Rourke. And we have some significant relationships in the United States (Goldman Sachs, Berkshire Hathaway Energy and New York City MTA [news]) and are developing similar ones in Australia and Hong Kong.”
Doughty has reorganised the business to give it a stronger regional focus (news), Doughty says. The Asite product is managed via a global shared services organisation, serving four regions: North America, India/MENA, APAC, and the UK and Europe. “We are the market leader in the UK; the European Union is a key target, and we’ve started to grow in Belgium and Holland.” In May 2020, for example, Asite announced a deal with Lantis to support its work on Belgian transport infrastructure.
The COVID-19 pandemic has, of course, created some uncertainty about future prospects for the global construction industry. And the sector’s technology providers may suffer a knock-on effect. Doughty says:
“We were understandably concerned about the potential impact of the UK lockdown. But, so far, our customers are continuing to build – albeit with some slowdowns – so Asite has been sheltered from it. Internationally, our key customers tend to be active in infrastructure and long-term government work. We expect these sectors to remain active as governments emerge from lockdown.”
“There is bound to be an ongoing impact on how we operate sites, health and safety, and social distancing while maintaining the health of our contracting sector (which still operates on thin margins). Going forward, government infrastructure spending will continue and grow. Health will be a major focus. We also support transportation industries which will need to operate differently post-COVID, so demand may grow as we figure whether and how extensively or frequently we travel to work.”
The earlier mentions of Autodesk, Oracle Aconex, and Bentley lead to a discussion of the industry appetite for mergers and acquisitions, particularly topical given Bentley’s March 2020 acquisition of another UK SaaS collaboration vendor, GroupBC. Doughty believes:
“The GroupBC acquisition is a good buy for Bentley. The rationale makes sense. Bentley needs a stronger SaaS / cloud presence, as fundamentally their business is about older-school on-premise software. Equally, they are strong in design, and less so in construction and asset life cycle, so GroupBC will help them there and especially in the UK market.”
[Doughty was speaking to EE prior to the recent expansion of Bentley’s ProjectWise365 offering – read May 2020’s Coping with COVID-19 using Bentley ProjectWise 365.] He continued:
“We are in an interesting situation regarding serial acquisitions. As well as Bentley’s move, Oracle acquired Aconex, Trimble moved on eBuilder and then Viewpoint, InEight took out TeamBinder, and Autodesk bought Plangrid. They are all focused on a similar space to Asite, but all of these deals have created a lot of opportunity for us. We are talking to customers who find such large-scale organisations are less able to react, less responsive. Where customers want flexibility, I think we have lots of room to grow, particularly in APAC and the US.”
Has Asite been approached about possible deals? Doughty says:
“We’ve regularly talked to everyone. We’ve had many approaches and spoken to most of the players in the space, and some talks got quite advanced. My view and that of Robert [chairman and majority shareholder Robert Tchenguiz,] is that we can build this business and compete with those guys. Our chosen strategy is to go to the capital markets to fund a sales and marketing-led growth strategy. We see a lot more future value in the business. Our focus is on organic growth, but we also want to build through mergers or acquisition. We are looking at buying businesses to help Asite grow into regions and build its market share.”
Having spent some time growing Asite’s business in North America, Doughty also talked about US-based Procore (which launched into Australasia in 2017 and is now active in the UK market).
“It’s an interesting, newer business, and has been very successful with mid-market regional builders and contractors. However, its product has less depth, little BIM, and little penetration at the top of the market or outside the US. It’s following a very different model to us in its fund-raising strategy and its recent IPO announcement. Our model has been based on slower sustainable growth and delivering profits which are reinvested in product, focused on more secure clients with longer-term infrastructure interests.”
Asite product strategy
Asite has been among the AEC SaaS pioneers embracing building information modelling (BIM). Doughty’s work at Asite on BIM dates back to around 2006 (Asite BIM, March 2007), and it has benefitted from the UK’s world-leading position in this field, but he sees the future as about digital engineering and building new capabilities in areas such as offsite construction. “With MMC [Modern Methods of Construction], we are very fortunate to have Laing O’Rourke as a customer at the forefront of offsite construction. We’ve been exposed to it, and are taking the manufacturing approach and bringing it into our approach. I am also seeing similar strategies in the Middle East too.”
Where will he be investing in the Asite product set?
“To me, it’s about openness and interoperability. When I was the Asite CTO, our idea was for Asite to be the ‘service bus’ for the industry. We talked about developing open connectors for BIM, for electronic data interchange, for real-time data from asset sensors. Today, our strategy is about digital engineering; about providing a common data environment during project delivery, and then being able to connect to operating environments for asset management to help the world build better.”