Acquiring a SaaS project cost management platform gives Aconex a potential leadership position when customers want both cloud collaboration and project cost control.
Melbourne, 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
California-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.
Aconex 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:
“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.”
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.