Australian SaaS construction collaboration vendor Aconex is restructuring to reduce overheads at its Melbourne head office.
Readers’ comments on previous blog posts, including one about Australian SaaS collaboration vendor Aconex and its 2012 annual results (Aconex growing revenues again), and – more recently – my reflections on the 4Projects acquisition got me looking at recent Aconex activities.* Meanwhile, on Friday, I received text messages and direct messages via Twitter about redundancies at Aconex’s Melbourne office; one of the rumours talked about “40 heads” rolling – but I couldn’t corroborate this.
Certainly, some Aconex employees’ posts are to be discontinued. An Aconex spokesman confirmed the company was restructuring parts of the business “to better align the organization with market trends and growth opportunities”. He continued:
“… the business is healthy. With a robust backlog of orders and a strong pipeline of new sales opportunities across all geographic regions, we are seeing continued solid revenue growth. The restructuring will strengthen our ability to support this growth while managing our levels of investment in different parts of the organization.”
I was told the number suggested for Melbourne was “off by a very wide margin”, but that posts were lost in other locations; “following the action, our current total headcount is around 350” (this does not preclude the total number lost across the company being around 40, of course – three months ago, in November 2012, CEO Leigh Jasper was claiming “35 offices globally with 400 people“). The rationale for the downsizing is economic:
“… the Australian economy has recently come under pressure. Being prudent, we anticipate a softening in the regional market, particularly in the mining segment. The action that we took adjusted our organization accordingly. … The positions represented a number of organizational functions and levels of responsibility.”
So, it’s the economy, stupid
The Australasian market has been strong for some years and the Australian dollar has strengthened accordingly, but this has made Melbourne (and other Australian cities) an expensive place to host a head office. Moreover, Aconex is also under pressure in its domestic market from rival vendors, including the indigenous QA’s Teambinder, plus ProjectCentre (recently acquired by RIB – post), as well as local partners of international competitors – such as ProjectCollaboration (post) who are reselling the 4Projects platform.
There was some investor criticism in 2011 of the board’s strategy of focusing heavily on the north American market at the expense of other markets and/or global customers where Aconex had potentially dominant positions. Up to June 2012, Australasia contributed 50% of all Aconex revenues.
This might not have mattered so much if the global business had returned to the growth levels it achieved before the global financial crisis. However, what one blog comment described as “an aggressive ‘go global anywhere’ sales strategy” appears to have generated lots of quick project wins but relatively few that were converted into long-term enterprise deals. Partly as a result, Aconex has not really kicked on from the Au$40m revenue level (restated) that it reached in 2009, while profits have been non-existent since 2007.
* Why has no vendor yet emerged as the dominant global player? Watch out for a future post on this topic.