Aconex CIMIC deal absorbs SaaS rival

Melbourne, Australia-based SaaS construction collaboration technology vendor Aconex last week announced a strategic partnership with CIMIC Group. which will also see it absorb a rival Australian AEC SaaS technology provider.

CIMIC (not to be confused with US construction software provider CMiC, or a Shanghai porcelain and stone business) was formerly the Australian contracting giant Leighton Holdings Limited, and changed its name to CIMIC to distance itself from historic corruption allegations (reported the Sydney Morning Herald in March 2015); CIMIC apparently stands for Construction, Infrastructure, Mining and Concessions. The name change follows the acquisition and subsequent restructure of Leighton by Spanish construction group ACS in 2014. ACS was Leighton’s majority shareholder through its ownership of Hochtief.

More pertinent to the AEC collaboration market, Leighton Group also had its own collaboration technology vendor: Incite Keystone, which mainly provided its platform to group companies including Leighton Contractors, Leighton Asia, India and Offshore, Thiess, and John Holland (announced as an Aconex partner in July). Aconex’s agreement with CIMIC will see it:

• Provide cloud collaboration services for existing and new CIMIC infrastructure and construction projects in eight countries. Aconex says the partnership will generate a minimum of Au$16.5m of committed revenue for the base management of existing and new projects over the next four years.
• Acquire the intellectual property, assets and certain customer relationships of INCITE Keystone, a global project collaboration platform owned and operated by CIMIC. Aconex will pay CIMIC approximately Au$6.4m in cash for the acquisition of INCITE Keystone intellectual property and assets.
• Add INCITE Keystone product development and support staff to its workforce.
• Integrate INCITE Keystone process functionality for infrastructure projects on the Aconex collaboration platform over the next 12 months.
• Operate the INCITE Keystone platform until all projects currently on it are either completed or transitioned to the Aconex platform.

Incite Keystone

Long-time Extranet Evolution readers may recall my enthusiastic reaction to my first sight of the Keystone platform in 2010 (post). But the innovations the then Incite team were developing and the ambitious plans they had to expand the market beyond Leighton Group and potentially into Europe all evaporated on 14 February 2011. The leadership team were sacked (see St Valentine’s Day massacre leaves Incite almost out-of-sight) and the software development process was reined back – critically damaging, in my view, the potential of Keystone to challenge the indigenous market domination of Aconex.

In July 2012, the Incite implosion appeared to be continuing, with platform users complaining of unreliability, rumours Leighton might switch to a rival AEC software platform – possibly Aconex – and talk of disposal of the business as a non-core operation. At the time, I bemoaned the lost opportunity: “if it had persevered with the Keystone innovations … [and] … grown an external … market for these tools, then today we might have been talking about a lucrative spin-off … rather than a fire sale”. Leighton initially killed off the Keystone brand, then later (2013) resurrected it as part of its Nexus Point Solutions business, but the opportunity had by this time been lost.

Instead, Aconex has been able to pick up the pieces for a modest sum, strengthen its regional position by removing a potential rival platform from the Australasian market, and deepen a relationship with the former Leighton group from whom it had already started to win business (see: Aconex wins Leighton EPC project). And just as it recently announced in relation to its US acquisition of Worksite, Aconex plans to increase research and development costs – albeit “moderately” – for the integration of Keystone process functionality on the Aconex platform, believing this additional functionality will benefit all of its customers and users worldwide.

Aconex CEO Leigh Jasper said:

“Our global position as an industry leader is significantly strengthened by this partnership with CIMIC. We’re enhancing the Aconex platform with infrastructure process technology and functionality from INCITE Keystone and adding an experienced team that has successfully served hundreds of large, complex infrastructure projects around the world. We’re also gaining a long-term enterprise commitment from one of the largest contractor groups in Australia and Asia, with projects spanning the globe, and a leader in regional infrastructure development.”

All in all, this looks like a good bit of patient business by Aconex, but also a missed opportunity by some now long-gone Leighton Holdings executives. If they had persevered with the vision set out by Sean Kaye, Scott Crane, Mike Baker, they might now have had a business that was competing with Aconex rather than being consumed by it.