Mar 11 2008

E-Box and Rock

The construction collaboration business formerly known as Citadon has featured on this blog a few times recently (mainly in my excursions into the early history of CTSpace – here). I recently talked to someone who used to re-sell Citadon’s ProjectNet solution while at west London-based Rock Consulting subsidiary E-Box and he told me that there had been a number of changes, so I’ve been following up on that.

From Rock to E-Box

As I’ve never really talked about E-Box or Rock in this blog before, perhaps it’s worth going over a bit of history. E-Box Ltd was essentially an e-commerce off-shoot of Rock Consulting, a construction consultancy whose expertise included process management for UK private finance initiative (PFI) projects. E-Box was previously (April 2002 to February 2004) known as PFI Net Ltd (reflecting its offering of internet-based services to support PFI schemes). In October 2002, Rock was appointed by Citadon as a reseller of its ProjectNet application, and set about delivering two services based on the same solution: collaboration support for conventional construction projects via ProjectNet, and collaboration support for PFI schemes – branded as PFInet.

Given Rock’s existing expertise in facilitating PFI procurement projects it was able to create a persuasive niche proposition of PFI-related services around the PFInet software solution. PFINet was used, for example, by teams involved in Building Schools for the Future (BSF) and National Health Service LIFT schemes.

However, Rock was less successful at convincing buyers to choose ProjectNet for standard collaboration projects. There was much more competition from other vendors in this field; many experienced industry clients, contractors and consultants had already identified alternative vendors (4Projects, BIW, Business Collaborator, etc); and these other systems were proving more sophisticated than ProjectNet. This is hardly surprising. ProjectNet, after all, was already becoming dated; it was originally launched by BluelineOnline in 1998; it had already been superceded within Citadon’s product portfolio by Citadon CW, an enterprise-class solution launched in January 2002; and it was further challenged in October 2004 when Citadon released a new, lower-cost version of ProjectNet for small teams (ProjectNet STE) which it positioned as an introduction to online collaboration and allowed users to migrate eventually to Citadon CW (not ProjectNet) (see September 2005 post ProjectNet: old technology?).

Acquisition

The main recent change saw Rock Consulting acquired by Willmott Dixon Public Private Investments on 2 March 2007 and renamed three months later Rock Project Investments Ltd (registered at Willmott Dixon’s head office in Letchworth), leaving E-Box Ltd as a stand-alone operation run by former Rock stalwart and majority shareholder Nicholas Hughes.

Old technology, old website

However, you wouldn’t detect this change from the E-Box website. It still retains references to Rock Consulting (whose website also hasn’t been updated – or redirected to Willmott Dixon – in months) and to Citadon, despite the latter merging with BuildOnline to form CTSpace almost 15 months ago.

Permanent link to this article: https://extranetevolution.com/2008/03/e-box-and-rock/

Mar 11 2008

Yet another AEC take on SharePoint

Courtesy of AECcafe.com, I see another US firm has launched a document sharing system based on Microsoft SharePoint. Wennsoft is the latest to enter the fray.

Related post: More SharePoint for AEC

Permanent link to this article: https://extranetevolution.com/2008/03/yet-another-aec/

Mar 09 2008

Investing in a dot.com/SaaS business: a history

In the late 1990s and into the first year or so of the 21st century, the dot.com boom say billions invested in new online ventures across great swathes of industry and commerce. The global architectural, engineering and construction (AEC) industry was no different. Millions were pumped into new start-ups by venture capitalists, business angels and other investors hopeful that their funding would yield huge profits as the start-ups became successful online businesses delivering services and products to the AEC industry. Of course, as we now know, the ‘dot.com bubble’ burst, thousands of ventures crashed and burned, and numerous mergers and acquisitions took place as entrepreneurs and investors attempted to keep their companies afloat.

In the AEC sector, various would-be trading hubs and information portals flopped, but a hard core of construction collaboration providers proved more viable. Some required more investment than others and even successfully raised several rounds of further funding. I sometimes wonder if success in initial fund-raising exercises inflated investor expectations about their ventures’ potential, leading them (and other, later investors) to continue to pump money into what turned out to be loss-making businesses in the hope that they might, one day, get a return on their investment.

For example, I think the history of BuildOnline/Citadon/CTSpace shows that the survival of the business up to its acquisition by Sword Soft was fuelled by the continued willingness of investors to pump money into BuildOnline and the various companies that, through numerous mergers and acquisitions, were absorbed into the business. Building on my earlier post, I thought it might be interesting to tot up the figures, and look at some of the investors.

Citadon backers

Let’s look at the US operation first. Founded in 1997, BluelineOnline secured $10m third round funding in August 1999. E-bricks.com was founded in November 1998 and the following July secured $3m funding, before merging with BluelineOnline six months later to form Cephren, which secured a chunky $41.5m injection of funds. Parallel to this, Bidcom, established in 1998, raised $63m in three rounds up to January 2000, and then in June that year, acquired Cubus Corporation, a business which had raised a more modest $3m in 1999. In late 2000, Cephren and Bidcom merged to form Citadon, raising $14m then (and laying off around 100 people), another $19m infusion in October 2001, and $15m more in September 2003. Overall the sums invested in the US businesses total over $168.5 million (c. £84m, or €120m).

Google searches for shareholders in Citadon suggested the following:

  • Bechtel
  • Fluor Daniel
  • GE Capital
  • Hines
  • Internet Capital Group
  • Insight Venture Partners, New York
  • Oracle Venture Fund
  • Partech International
  • Warburg Pincus

Cephren backers in January 2000’s mezzanine funding round were led by GE Equity Investments, GE Power Systems, Goldman Sachs and Grupo Picking Pack (GPP), and included original investors including Telos Venture Partners, Bay Partners, Montreux Equity Partners, RWI Group, and Donald L. Lucas.

Prior to its merger with Cephren to form Citadon, Bidcom shareholders included UK AEC businesses Carillion, Wates Group, and EC Harris and the management services group KPMG Consulting.

BuildOnline backers

The figures invested in the European operations are equally impressive (or depressing, depending on your point of view). Founded in Ireland in 1998, BuildOnline says, in a May 2002 news release, that it raised £34 million (€55m) from seven investors, with £17 million of these funds were raised between 2001 and 2002. In April 2001 it picked up the pieces of iScraper Germany, an Israel-based business which went bankrupt despite raising €40m in two rounds of funding (my employer BIW Technologies took on iScraper’s UK interests). Meanwhile, Bilfinger Berger and Strabag had invested heavily in Congate AG, while Nemetschek had founded MyBau AG; the two ventures merged in January 2001, having been backed, I believe, to the tune of around €30m. In May 2002, BuildOnline announced it would combine its German operations with MyBau, in a deal which also saw Bilfinger Berger and Strabag invest £2.2m (€3.6m) in cash to become minority shareholders in BuildOnline. If we discount half of the iScraper money, the combined UK and European operation still absorbed investments totalling over €108.6m (c. £76m, or $152m).

Up to 31 December 2005, BuildOnline (Holdings) Ltd had accumulated – through half a dozen rounds of fund-raising – a shareholder list that included well-known financial institutions, venture capitalists and a few construction businesses:

  • Balfour Beatty plc, London
  • BancBoston Investments, Boston, USA
  • Bilfinger Berger AG
  • Bridge Street Special Opportunities Fund 2000, London
  • Delta Nominees, Dublin
  • Donaldson Lufkin & Jenrette Securities Corporation
  • ETF Investments, Amsterdam
  • European Venture Partners, Jersey
  • Goldman Sachs Group Inc, New York (as noted, a previous Cephren investor)
  • Global Retail Partners Funding Inc, Los Angeles (plus five other GRP funds in Los Angeles and New York)
  • GS Private Equity Partners (plus two other funds), London
  • Paul Hanley of Co Roscommon, Ireland
  • Brian Moran, of Dublin
  • Nemetschek AG
  • David Palmer, of Dublin
  • Sal Oppenheim Jr
  • SocGen Nominees (UK) Ltd, London
  • Stone Street, London (two funds)
  • Strabag AG

CTSPace funding takes total over £160m

On 13 December 2006, Citadon and BuildOnline announced they were merging to form a business trading as CTSpace, but this was not the end of the investments: a week later CTSpace announced that it had raised another $5.3m (c. £2.65m, or €3.8m), in an investment round led by GRP and Insight Venture Partners.

Add this to the figures associated with the previous two arms of the business, and – excluding any investments in the past 14 months – CTSpace, in its various guises, burned its way through a colossal sum somewhere in excess of £162m (c. $325m or €232m).

The scale of the losses sustained by investors is not difficult to imagine. Assuming my $13m figure is accurate, it appears Sword acquired a business for less than 4% of the total sums previously invested in it, so I suspect only a small handful of investors ever got even a token return on their investments.

Who’s to blame? Well, one must look to the people given executive responsibility for running the various businesses. In the case of Citadon and its predecessors, the list of CEOs includes Jas Dhillon (BluelineOnline and Cephren CEO), Daryl Magana (one-time Bidcom CEO), Doug Sabella (Citadon CEO 2000- Feb 2001), Rob Majteles (2001 interim), Bernard Fried (Feb 2001- November 2003), Tom Dengenis (CEO Bidcom UK 2000-2002) and Howard Koenig. In the case of BuildOnline, the list is much, much shorter: it mainly concerns Mark Suster.

Suster entered the BuildOnline story in November 1999, having been recruited as CEO by BuildOnline founder Brian Moran from Andersen Consulting/Accenture (see FT stories here and here). However, having burned through millions of pounds of funding, by 2006, he was already working on his exit strategy, leaving BuildOnline in November that year, having established another collaboration software business, Koral (see post) – now part of Salesforce.com – before leaving and becoming a partner at GRP (erstwhile backer of BuildOnline) in the summer of 2007.

Not all dot.com doom

As a final note, I should point out that other AEC dot.com ventures rose to market leadership positions without commanding such huge investments (and losses). BIW, formed soon after BuildOnline, raised just £9m, soon overtook BuildOnline in the UK and is today a fast-growing and increasingly profitable leader in the international AEC collaboration space. An honourable mention also to another UK competitor, 4Projects, which grew organically up to the point it achieved a private equity-backed MBO last summer.

Permanent link to this article: https://extranetevolution.com/2008/03/investing-in-a/

Mar 07 2008

New CTSpace product “soon”

The US version of CTSpace‘s website had brief details of a user group conference it was holding, 6-7 March 2008, in Las Vegas, Nevada. The event was programmed to include a preview of a new CTSpace product, an opportunity to meet Sword executives, and the results of a US user survey.

I understand from CTSpace that the product will be publicly announced “soon!” (it is scheduled for release in Q2 of 2008 in both the US and Europe), but there was no response on whether it is an entirely new product, or an upgrade to one of the existing products. Meanwhile, I was told: “there are no plans to drop support of any products that are in current use” (ie: ProjectsOnline, TenderOnline, SupplychainOnline, Citadon CW).

A press release about the US user survey is being prepared, and a similar exercise is going to be conducted on this side of the Atlantic, along with an associated user group conference. A new Sword group website and new CTSpace web site (see post) are scheduled to be available by the end of March.

Permanent link to this article: https://extranetevolution.com/2008/03/new-ctspace-pro/

Mar 07 2008

CTSpace sold for just £6.5m

Further to Tuesday’s post about the former BuildOnline construction collaboration technology business, I have been piecing together more of the corporate changes leading up to Sword Group‘s acquisition of CTSpace. In the process, I have found a reference to the amount paid by Sword to acquire CTSpace in December 2007 – which, in view of the investments burned to keep its predecessors afloat, make it seem a bargain for a Software-as-a-Service (SaaS) business.

The Sword transaction

It’s been a pretty simple investigation. According to the latest information held at Companies House, an annual return for the period ending 8 July 2007, received for filing at Companies House on 30 October 2007, all shares in BuildOnline Global Ltd were held by Collaboration Technology Inc – a company I learned was incorporated on 15 December 2006 in Delaware – registered at CTSpace’s head office address in Stevenson Street, San Francisco, California.

I did a quick search on the company name, and discovered that Sword Soft Ltd, a UK subsidiary – formed in March 2007 – of the Sword Group, paid US$13 million [ie: approx. £6.5m] for the acquisition by way of merger of Collaboration Technology Inc, a deal finalised on 21 December 2007 (Sword Soft was represented by Raphael S. Grunfeld, a partner in New York law firm Carter Ledyard & Milburn LLP).

When asked to confirm this figure, a CTSpace spokesman told me “no comment”. He said that “CTSpace is 100% owned by the Sword Group which has two divisions – Sword Soft and Sword Solutions. The former focused on software products and the latter on services. CTSpace is a part of Sword Soft.”

Assuming this figure is accurate, it is tiny compared to the mind-boggling sums invested in and eaten up by the various companies that, through numerous mergers and acquisitions, have been absorbed into the business since the late 1990s, much of it in the dot.com boom years around the turn of the century. Investors included some well known institutions and construction businesses (I will be blogging about this soon).

The price of a distressed business not a SaaS business

In the meantime, the value suggests that Sword has acquired a SaaS business at a good price. I discussed valuations of SaaS businesses after the private equity-backed management buy-out of 4Projects in July 2007, and suggested – based on 7x multipliers applied to other SaaS businesses – that a figure around £20m would be a distinct possibility for a business turning over around £3.2m. It would seem that the figure paid for CTSpace was much more in line with the 1.5x to 2x multipliers paid for conventional software companies – perhaps reflecting the distressed nature of the business (and maybe some investors’ wishes to get at least something, however small, from their investments and to finally draw a line under the whole saga).

Permanent link to this article: https://extranetevolution.com/2008/03/ctspace-sold-fo/

Mar 04 2008

Microsoft gets SaaS-y(ish)

If you read some of the online computing sites, you will already know that Microsoft – already involved in a project to take-over Yahoo to counter the Google threat and improve its Software-as-a-Service (SaaS) credentials (see post) – is making moves to address the SaaS market opportunity. SME offerings of SaaS services got a lukewarm response from the blogosphere but its data-center projects will, if nothing else, be welcomed by the construction industry.

Computerworld and InternetNews.com, for example, reports Microsoft has opened up its hosted versions of SharePoint and Exchange to medium-sized and small companies, as it tries to take advantage of the demand for software as a service. And today I read, in ComputerWeekly, that Microsoft is planning to offer a ‘cloud computing service’ to allow businesses to buy computing power on demand over the internet.

On the former, SaaS bloggers’ reactions have not all been positive; Phil Wainewright, for example, writes: Microsoft disappoints on SaaS. Didn’t you see it coming? while TechCrunch’s Michael Arrington moans: I Really Hope Microsoft Has More Than This.

On the latter, Nicholas Carr picked up the rumour yesterday – read his Rumor: Microsoft set for vast data-center push – where he initially focuses on the “totally over the top” boost this will give to the construction industry (hurray!): construction of about two dozen data centres, each covering about 500,000 square feet or more. Wow! Let’s hope they use SaaS-based collaboration technologies to deliver them!

Technorati tags: Microsoft, Yahoo, Google, Software-as-a-Service, SaaS, SharePoint, Exchange, cloud computing, on-demand

Permanent link to this article: https://extranetevolution.com/2008/03/microsoft-gets/

Mar 04 2008

BuildOnline revisited

In the absence of any updates regarding Sword Group and its recently-acquired construction collaboration technology business still branded as CTSpace (formerly known as BuildOnline and Citadon, formerly known as Cephren (formerly known as BlueLineOnline and E-bricks) and Bidcom, which also incorporated Cubus – and that’s just the short version!) or even a new website (see post), I have been looking back at the final months of BuildOnline (Why not look at CTSpace? Well, there is no company called CTSpace: CTSpace’s website terms and conditions says “CTSpace, Citadon and BuildOnline are the trading names of BuildOnline (UK) Limited, BuildOnline (Germany) GmbH and BuildOnline (France) Sarl”).

One of the last times I wrote about BuildOnline (May 2007), I relied on an Irish Sunday Business Post report about losses sustained by shareholders in the one-time ultimate parent company, Dublin-based BuildOnline (Holdings) Ltd, in the year ending 31 March 2005. This company then had eight subsidiaries: operations in the UK, Ireland, France, Germany, Italy, the US, India and Austria. According to accounts lodged with the Irish Companies Registration Office (CRO), that year BuildOnline (Holdings) Ltd turned over almost €6.2 million [£4.2m] and made a pre-tax loss of €1.67million [£1.1m].

However, just over four months later, on 4 August 2005, the shares in all BuildOnline (Holdings) Ltd’s subsidiaries were transferred to a new UK-based company, BuildOnline Global Ltd, incorporated less than four weeks earlier on 8 July 2005, in return for its own ordinary shares. No further financial reports were returned to the CRO by BuildOnline (Holdings) Ltd and that company was eventually dissolved on 4 May 2007.

Meanwhile, the year up to 31 March 2006 was (as previously posted) also not a good one for the group’s UK business, BuildOnline (UK) Ltd. It made a pre-tax loss of £962k on a slightly reduced turnover of just under £2.8m. The company’s annual report and accounts also describe the whole BuildOnline group’s financial performance, showing that total group turnover was €6.695m [£4.7m], up 8% on the 2005 figure (in other words, the non-UK arms of BO had a combined turnover in the year to March 2006 of around £1.9m).

 

No information was given in its report regarding group profits/losses, but the report for the new holding company BuildOnline Global Ltd for the year ending 30 March 2006 shows losses totalling more than £2.5m across most of BuildOnline’s operations:

Entity

Profit/(loss)

Capital and reserves

Country

BuildOnline (UK) Ltd

(£962,539)

(£17,406,731)

England

BuildOnline.com (France) SARL

(£507,481)

(£1,519,462)

France

BuildOnline (Germany) GmbH

(£524,885)

£580,139

Germany

BuildOnline (Ireland) Ltd

£5,323

£44,583

Ireland

BuildOnline (Italy) S.r.l.

–

(£3,851)

Italy

Infotechno Baudatenbank GmbH*

£113,051

£155,731

Austria

BuildOnline Inc

(£519,450)

(£530,350)

USA

BuildOnline Software Private Ltd

(£146,300)

£76,716

India

all

(£2,542,281)

–

(* “Infotechno Baudatenbank GmbH is 70% owned by BuildOnline (Germany) GmbH, with the remaining 30% held by shareholders external to the group.”)

No more up-to-date financial reports are available from Companies House. Annual reports and accounts for BuildOnline (UK) Ltd and BuildOnline Global Ltd for the year to 31 March 2007 are now overdue. That financial year was, of course, the one in which Mark Suster began to exit the group (see my November 2006 post BuildOnline and Koral), and in which the business merged with Citadon (see BuildOnline + Citadon = CTSpace). However, Howard Koenig’s succession to Mark Suster as sole director of the UK business (and of BuildOnline (Ireland) Ltd) was not finalised until 30 April/1 May 2007.

Permanent link to this article: https://extranetevolution.com/2008/03/buildonline-rev/

Feb 29 2008

FTP security hole

Particularly in the early days of marketing construction collaboration technology solutions, we used to get occasional suggestions that online solutions were unnecessary as “our IT department has set up an FTP site for us to manage all that file-sharing”. Hopefully, those days are long gone, but for any construction businesses that may still be contemplating reliance on File Transfer Protocol, there is a sobering warning in several IT publications this week.

Computer Weekly, for example, reports Hackers resell web server security credentials of thousands of companies (the same story is also covered in ComputerWorld). US web security firm Finjan discovered an illegal database containing more than 8,700 stolen FTP server credentials including usernames, passwords and server addresses belonging to companies from around the world and including some whose websites are among the world’s top 100 domains. It seems anyone can purchase those credentials and use them to launch malicious attacks against the compromised systems.

Interestingly, the stolen details were being marketed at an online auction site for stolen data, using an eBay-like trading interface to value the the stolen accounts in terms of the country where the server is located and the Google page ranking of the compromised server. Finjan’s Yuval Ben-Itzhak described it as an evolution in the application of Software-as-a-Service, with cybercriminals using the SaaS business model to market malware to other underworld figures. (See Malware writers exploring Software as a Service model; Hackers Use SaaS To Auction FTP Passwords, Inject Code)

Permanent link to this article: https://extranetevolution.com/2008/02/ftp-security-ho/

Feb 28 2008

Not a wiki – Google Sites

And so it came to pass…. As rumoured in December (see my post Google to target collaboration), the Google-acquired JotSpot has been relaunched as Google Sites, part of Google Apps (see Cnet post: JotSpot reincarnated as Google Sites, and Rafe Needleman’s Don’t call it a wiki: Google Sites finally launches).

The Google Sites overview doesn’t use the term Wiki, but focuses on the editability of page content – its examples include a company intranet and a team project – stressing that this web application is accessible from any internet-connected computer.

Permanent link to this article: https://extranetevolution.com/2008/02/not-a-wiki-go/

Feb 28 2008

StoreData stagnating in 2007

 

Interim results last September from the retail fit-out specialist contractor Styles & Wood showed that its StoreData division – which competes in the UK construction collaboration technology market – did not have a good first six months in 2007 (see post), but the second six months were a little better. Overall, however, StoreData fell short of its 2006 performance.

According to a London Stock Exchange announcement of its final results today, Styles & Wood group revenues rose 17% and pre-tax profits were up 58% in the year to 31 December 2007. In the support services division, the group’s StorePlanning and StoreCare divisions “made good progress in the year”, but, at £1.506m (2006: £1.594m), StoreData’s revenues were down by 6%, and it recorded falls in both gross profits (£194k, down from £425k in 2006) and gross margins (down from 26.7% to 12.9%) in the year.

For StoreData, then, the second half of 2007 was slightly better than the first half in terms of revenues (£888k, compared to £618k in the six months to 30 June 2007), while gross profit grew too (£120k, compared to £74k).

Permanent link to this article: https://extranetevolution.com/2008/02/storedata-stagn/

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