Jan 02 2007

BuildOnline UK position worsened

Prior to BuildOnline’s merger with Citadon to form CTSpace, its financial performance in the UK was getting even worse.

As previously discussed (see BuildOnline and Koral on 14 November 2006 and BIW’s growth continues – but what about the others? on 8 November 2006), BO’s latest Companies House accounts show its UK business was already struggling in early 2005. A year later, its position had worsened: turnover in the year up to 31 March 2006 was 2.2% down at £2.793m (2005: £2.856m), while its pre-tax losses were 74.8% up to £0.963m (2005: £0.551m).

If CTSpace CEO Howard Koenig is to meet his objective of breaking even by the end of this financial year-end (see post), it will require either a dramatic turnaround of the UK business or, if that is not forthcoming, excellent performances from the rest of CTSpace’s operations to compensate for the under-performing UK division.

Permanent link to this article: https://extranetevolution.com/2007/01/buildonline_uk_/

Jan 02 2007

Open source v On-demand

While Mark Suster is no longer involved in the day-to-day running of a construction collaboration business, he is still a strong believer in Software-as-a-Service (SaaS). Having taken up a non-executive role with CTSpace (see BuildOnline + Citadon = CTSpace) in order to devote his time to running Koral (which has apparently raised $4m funding), Mark’s latest post to the Koral blog is an interesting comparison of the merits of on-demand and open source approaches. His argument boils down to ‘horses for courses’:

Open Source is a perfect model for companies that want to bring IT in-house and control it. It works incredibly well in a development environment where you want to have control of the code, tightly integrate it with your product and potentially even OEM the software as part of your stack. …. Open Source also works well in corporate enterprises with business applications provided that the company taking on the software has a predilection to control the software, to tinker with it, to change the code – to “own it” in a way. …

… SaaS is perfectly suited for businesses that want the power of business applications without the hassle or expense of buying hardware, provisioning a hosting environment, worrying about when the next patch is going to be released, managing both the application and the infrastructure that runs on top of it. In short, SaaS is perfect for the vast majority of small-and-mid-sized businesses globally and for departments of companies that have a business need for software and don’t have the time or inclination to wait until they are able to get internal IT resources allocated to help with their projects.

Permanent link to this article: https://extranetevolution.com/2007/01/open_source_v_o/

Dec 28 2006

CAD file viewers

I’d almost forgetten Whip!

Most vendors of construction collaboration technologies (sometimes called ‘extranets’) will recommend third-party applications to use with their collaboration solutions in order to view, mark-up and comment upon CAD files. Among the pure collaboration vendors, only my employer, BIW Technologies, offers its own integrated file viewing technology, but I sometimes forget about the solutions available from vendors who also develop CAD software, notably Bentley and Autodesk.

A post on Scott Sheppard’s Beyond the Paper Autodesk blog reminds us just how many CAD viewer products there have been. Apparently every subscriber to Autodesk’s Buzzsaw collaboration package is entitled to a free copy of Autodesk Design Review, and one of Scott’s colleagues tells users to “uninstall Autodesk DWF Viewer, Autodesk WHIP!, Autodesk Express Viewer, Autodesk DWF Composer, Volo View, Volo View Express, or anything else you have that looks like an Autodesk viewer”. And these are just the ones from Autodesk.

I don’t think the recent announcement regarding Microsoft Vista compatability for DWF will make a lot of difference in the near future, so may well see yet more new viewers and viewer upgrades over the months and years ahead.

Permanent link to this article: https://extranetevolution.com/2006/12/cad_file_viewer/

Dec 22 2006

BIM market – major merger

Germany-based building information modelling software giant Nemetschek has announced that it is to acquire a majority shareholding in Hungary-based Graphisoft (reports Cadalyst), bringing together the two major European powers in CAD and BIM in the AEC market.

Permanent link to this article: https://extranetevolution.com/2006/12/bim_market_majo/

Dec 22 2006

CTSpace raises $5.3m

According to its latest press release, CTSpace has raised $5.3m (about £2.7m) funding in a financing round led by previous investors Insight Venture Partners and GRP Partners. The funding will apparently be used by this “leading independent collaboration on-demand company”* to “extend its leadership position” by expanding “key areas of its business including sales, marketing and international operations” (no mention of funding the redundancies!).

As I have previously observed (see CTSpace dissected), the two partners of the business, BuildOnline and Citadon, have already absorbed around £53m in investment. And this figure excludes the substantial investments eaten up by previous merger partners such as Bidcom ($63m), Cephren ($60m) and MyBau (€30m). Add these to the total invested so far and the figure climbs over £100 million!

* I imagine ‘independent’ is used to differentiate CTSpace from the Autodesk owned Buzzsaw/Constructware operation.

Permanent link to this article: https://extranetevolution.com/2006/12/ctspace_raises_/

Dec 18 2006

CTSpace: initial redundancies

 

According to a Growth Business article by Marc Barber, the merger of BuildOnline and Citadon to create CTSpace (see previous posts from here), will result in some redundancies.

CEO Howard Koenig apparently “expects high-growth opportunities given the company now has a presence in Europe, North America and Asia-Pacific”, and “acknowledges initial ‘redundant costs’ will hit as the company, which has 130 employees, seeks to reduce duplication in areas like customer service and technology.” The article continues:

He explains: ‘BuildOnline was trying to create a sales organisation in the US. It no longer has to do that. We were trying to create a sales organisation in Europe and we don’t have to do that because they have one.’

The deal was completed after nearly eight months of negotiations. Koenig notes that combined revenue for Year-End June 2006 was approximately £8 million. CTSpace has offices in Austria, Dubai, France, Germany, the UK and US.

Once the duplication between the two businesses has been removed, Koenig believes the organisations will ‘balance out very nicely’. He expects that CTSpace will mutually break even for Year-End 2007 and start generating profit thereafter. ‘We’re actually hiring at the moment,’ he observes.

Permanent link to this article: https://extranetevolution.com/2006/12/ctspace_initial/

Dec 15 2006

CTSpace dissected further

Following on from yesterday’s post (CTSpace dissected), the Citadon/BuildOnline merger to form CTSpace has continued to occupy my thoughts. In today’s post, I point out that the merger marks yet another consolidation of the extranet space since the start of the 21st century, have a quick look at what the combined business is offering post-merger, discuss the likely impact on the UK collaboration market, and offer a few thoughts on CTSpace’s branding.

Collaboration consolidation continues

Back in late 1999/early 2000, Joel Orr‘s influential Extranet News carried details of over 200 vendors in the AEC collaboration space, and industry watchers were advising that consolidation in the extranet market was inevitable. Sure enough, when the dot.com bubble burst in mid-2000, numerous vendors disappeared and take-overs and mergers were happening all over the place. The initial surge eventually petered out (the most significant development since then was Autodesk’s $46m acquisition of Constructware in February 2006), but the formation of CTSpace can be viewed as a continuation of that process, bringing together, if my arithmetic is correct, eleven previous brands: BluelineOnline, eBricks, Bidcom, Cubus, Cephren and Bidcom; i-Scraper (mainland Europe), MyBau and Congate(merged with MyBau in January 2001); and now Citadon and BuildOnline.

(Incidentally, I would be interested to know if anyone from, say, BluelineOnline has survived all the mergers to date!)

The CTSpace offering

With the exception of Autodesk’s acquisition of Constructware, all these moves were mergers or takeovers generally undertaken to combine the resources of businesses which might otherwise have stuggled to survive on their own. OK, the press statements may talk about synergies, about better geographic reach, about combining or optimising research and development activities, about offering a wider range of products and services, and so on, but the reality is usually financial. Mergers allow firms to rationalise duplicate resources, keeping the best and discarding the rest. Usually some staff posts will be made redundant, offices may be closed and some products or services may be discontinued. When I wrote about the future of construction collaboration technologies in my book, I anticipated possible mergers between players in the on-demand market.

“… consider what might happen if two ASP-based construction collaboration technology businesses were to merge. On the face of it, one business would potentially be acquiring a whole new mass of customers and end-users, and the combined figures would probably be very impressive (assuming, of course, that the new management team was able to keep ‘churn’ to an acceptable level). However, the managers of the newly merged businesses would face some difficult choices. Do they continue to invest human and technological resources to market, implement and support two different products on two different hosting environments? Do they seek to migrate the users of one system to the other (risking a backlash from users who preferred the discontinued product, and potentially affecting the scalability, speed and reliability of their hosting environment for users of the retained system)? If the discontinued system was cheaper, will the new alternative be offered at the same original (but unviable) rate, or will the management accept that customers may decide to seek an alternative supplier?”

When I first looked at CTSpace’s website, my gut reaction was to note its similarity with BuildOnline’s old website, both in terms of look and feel (if anything, it is even more marketing-oriented than the old BO site) and content. I had hoped to get a clear idea of how the Citadon and BO products complemented each other, but the solutions section is strongly reminiscent of the corresponding BO page, talking about document management and collaboration, tendering, defects management, and programme management ‘heatmaps’. The main contribution from the Citadon stable appeared to be business process management – described in much the same words used for Citadon’s enterprise workflow customisation tool, ‘Velocity’.

22 December 2006 update: A message to customers on BuildOnline’s login page says:

“CTSpace is steadfastly committed to further developing and enhancing our ability to meet your business and technical requirements.

  • All of the current BuildOnline and Citadon solutions will continue to be sold, supported, and enhanced as planned.
  • No products will be discontinued as a result of the merger.
  • Future releases will benefit from leveraging resources and technology from both companies.

UK market impact

While the merger may buy the two partners a little more time, I doubt that the merger will prompt a dramatic surge in new business for CTSpace in the UK. More likely, most people will simply see it as a re-branding of BuildOnline (or Citadon in a small minority of cases) and continue as before, but perhaps with a few questions about the firm’s financial health and its responsiveness now that it’s based in California.

In an email exchange with the MD of one of CTSpace’s (and BIW’s) competitors, I said my initial feeling was that we will see little UK change – in a still-fragmented marketplace, this was simply two pieces of a big jigsaw being merged into one. His response was a blunt: “Citadon must be doing as poorly as BuildOnline”!

CTSpace brand

Why ‘CTSpace’? Branding is always difficult, but to me CTSpace tells me nothing about what the business actually does. Citadon was just as vague, I suppose – but at least BuildOnline indicated both the industry it was active in, and its internet basis (I also really liked Constructware – an elegant combination of ‘construction’ and ‘software’).

(Mind you, I can hardly claim the moral high ground working for a company today known simply as BIW Technologies – but BIW was an abbreviation of ‘Building Information Warehouse’ which was/is kind of descriptive. As most customers, users and staff had abbreviated this to BIW, we adopted this when the company rebranded in June 2001, though I still get asked occasionally: “what is BIW short for?”)

Looking at the CTSpace website, the logo has ‘CT‘ in bold type, with ‘Space’ in a normal typeface (perhaps an allusion to ‘workspace’? – a not uncommon term for applications offering online working) and a yellow blob. Underneath ‘CTSpace’ is a subheading: “collaboration | teamwork | success”, but the branding isn’t CTS, so it can’t really be an abbreviation of those words, unless the final word is actually ‘pace’ (suggesting speed, or ‘Velocity’, maybe).

I Googled ‘CTSpace’ yesterday. Top of the search rankings then was a game for mobile telephones from C&T Software (“Defend the earth from attacking aliens while earning money to upgrade your ship”). Not far behind was UK Plumbing and a ceiling tile spacer kit on sale for £47.90 + VAT. Today, though, CTSpace’s website tops the Google rankings.

22 December 2006 update: The message to customers on BuildOnline’s login page offers some enlightenment:

The merged company will now operate under the name of CTSpaceTM – derived from Collaboration Technology WorkSpace.

Permanent link to this article: https://extranetevolution.com/2006/12/ctspace_dissect_2/

Dec 14 2006

CTSpace dissected

Yesterday’s announcement of a merger of BuildOnline and Citadon to form CTSpace (see earlier post) presents a positive view of the past history of the two firms, so it is worth analysing some of the background. Let’s start with BuildOnline.

BuildOnline backstory

BuildOnline was actually originally founded in Ireland and set out to become an e-marketplace for construction, quickly relocating to the UK and focusing on collaboration when the dot.com bust showed there was no market appetite for e-commerce platforms (Arrideo, AECventure and Mercadium were among other doomed construction dot.com ventures). During 2000, it raised a lot of money and spent some on an effusive public relations campaign (“without even having a product” recently admitted CEO Mark Suster – see post), but the appetite for ‘project extranet’ solutions kept it alive. While there was little market rationalisation in the UK collaboration sector following the dot.com bust, BuildOnline took over the European operations of collapsed vendor i-Scraper in Spring 2001 (my employer BIW Technologies claimed i-Scraper’s UK business), and acquired Germany-based MyBau in May 2002.

Despite BuildOnline claims in November 2002 to be the first UK extranet business to reach profitability, annual reports for BuildOnline (UK) Ltd (see BIW’s growth continues – but what about the others?) show that it has continued to make losses in its home market (presumably its UK operation was shored up by revenues from its more successful European ventures?). BuildOnline was also rather coy about how many users it had; the only recent figure I’ve seen said BO had 43,000 users (30 October post: BuildOnline statistics) – which put it some way behind BIW’s 68,000 at the same date – and some way off the CTSpace claim that BO held ‘the market leadership position in Europe’.

Keeping UK and European costs down, BuildOnline’s software development has also been off-shored to Bangalore, India since 2004. The India operation, by the way, was headed, coincidentally, by Azhar Khan, one-time head of engineering at Citadon (and before that Bidcom and before that Cubus, and, before Cubus’s formation in 1997, Autodesk) – Khan has since left BuildOnline to co-found another e-business, Riya.com.

Citadon backstory

While the CTSpace news release says Citadon was formed in 2001, its origins go back at least four years earlier. As the final sentence in the previous paragraph suggests, Citadon was the latest brand applied to a US-based business developed through a series of mergers: BluelineOnline and e-Bricks merged in January 2000 to form Cephren; Bidcom absorbed Cubus in June 2000; then Cephren and Bidcom merged in March 2001 to become Citadon.

While Cephren and Bidcom both had collaboration products (including Bidcom’s venerable ProjectNet – see 30 September 2005 post: ProjectNet: old technology?), the merged business developed a new product, Citadon CW (Collaboration Workspace) targeting the enterprise collaboration market (including oil and gas companies, owner/operators of process plants, power companies, and transportation organizations) rather than being project-oriented (like Constructware and Autodesk in the US, and BuildOnline, BIW and others in the UK). Citadon CW is not widely used in Europe – it’s last UK announcement concerned a deal with EC Harris in October 2005 (EC Harris stays with Citadon), but it does have significant traction in north America (22 December 2006 update: the Insight Venture Partners website says Citadon has “more than 60,000 subscribers in over 60 countries”). However, and as with BuildOnline, I am sure other vendors would contest its ‘market leadership position in the US’ – not least the formidable combined Autodesk/Constructware business. At the time of that merger back in February, the combined total was over 150,000 users; in September Autodesk claimed 185,000 users).

The merger rationale

The geographic fit between the two businesses is good, with only limited overlap in Europe and north America where, respectively, Citadon and BuildOnline each had small footprints. But whether the combined operation is “truly global” is debatable – being pedantic, I would say there are several markets which are, as yet, untapped. I am not aware, for example, of major inroads being made in South America, and there are a few projects using collaboration in Africa. And CTSpace hasn’t declared any presence in Australasia – whereas Australian vendor Aconex has borrowed heavily to establish a string of offices there, across the Asia Pacific Rim, through the Middle East and into Europe, with the US said to be next target.

So far as the main products are concerned, the fit is also logical. As already mentioned, the main Citadon product, Citadon CW is aimed at large enterprises engaged in long-term programmes of major, complex projects, whereas the vast majority of BuildOnline relationships are with more project-oriented customers. I suspect Citadon’s ProjectNet will probably be replaced by the BuildOnline system for the latter target market, while Citadon CW salesman will probably be sizing up some of BuildOnline’s infrastructure, utilities and transportation users as potential enterprise customers.

Track record and experience count for a lot in the AEC market, so, like the Autodesk/Constructware deal, this merger immediately gives a boost in terms of the numbers of customers and end-users that the combined business can claim. Of course, “size isn’t everything”. Potential customers of the extended business should ask about the take-up of the application in their specific market and for their type of use.

Basing the company in the US also provides a minor benefit so far as BuildOnline’s former UK operation is concerned: depending on its company structure, it may no longer have to publish its accounts to Companies House, making its financial performance public. As a privately-held US company, its financial health may no longer be as easy for us to ascertain.

Issues

The release says: “The merged company will continue to support customers using current versions of products from both Citadon and BuildOnline”, but it says nothing about the long-term future of these products (and of the staff developing, supporting and selling them). However, there is a possible clue in a later sentence:

“By combining their significant research and development investment, CTSpace will offer clients a standardized software platform that is zero-risk and can be rapidly deployed on a global scale.”

From this it would appear that CTSpace plans to combine its R&D functions to offer a single platform. Customers would be well advised to establish f
rom CTSpace what exactly the long term roadmap is for its products and how the business intends to migrate its customes to this “single standardized software platform”.

Coming back to the financial issues, I have not seen any details of the terms of the merger or of the impact on investors backing the two parties.

  • BuildOnline had substantial equity funding, raising £34 million from at least seven major institutions (Goldman Sachs, Vivendi, Sal Oppenheim, Bank Boston, GRP Partners, ETF and Delta Partners); the MyBau deal brought in German construction firms Bilfinger Berger and Strabag, plus software provider Nemetschek AG, as minority shareholders.
  • Citadon raised £11 million funding soon after its formation in 2001, and announced a $15 million (£8m) funding infusion in September 2003 from an investment group led by Insight Venture Partners.

So, the two businesses raised a combined total of over £50 million (and this ignores any funding raised by earlier merger partners – for instance, Bidcom alone raised $63 million in venture capital before its merger with Cephren to form Citadon). The new CTSpace website only lists four investors: Insight Venture Partners, Bank of America and two of the original seven BO group: GRP Partners and Sal Oppenheim.

Permanent link to this article: https://extranetevolution.com/2006/12/ctspace_dissect/

Dec 14 2006

BuildOnline + Citadon = CTSpace

UK collaboration vendor BuildOnline is to merge with US-based vendor Citadon (see news release). The new business will trade as CTSpace.

The move was confirmed late yesterday after several weeks of UK industry rumours (see 14 November BuildOnline and Koral, for example), and a succession of BO management changes over the past year or so, culminating in the departure of one-time North Europe MD Bob Godfrey in September.

The new company’s management team comprises representatives from both BuildOnline and Citadon. Howard Koenig, formerly of Citadon, will be CEO and Mark Suster, formerly BO CEO will be a board director (presumably non-executive due to his full-time role at Koral – see Who’s running BuildOnline UK?). Conveniently for him, the combined company will be based in San Francisco, California with offices in the UK, Germany, France, Austria, India and Dubai.

The release says:

The merged company will continue to support customers using current versions of products from both Citadon and BuildOnline.

“The synergies across our software platform and customer portfolio put the new organisation in a unique position to deliver solutions and services to clients on a global basis, which no other player in this market can do,” said Howard Koenig, CEO of CTSpace. “The current market landscape consists of either small niche players with no global reach to meet client demands, or larger organisations trying to jump on the SaaS bandwagon with complex, feature heavy solutions that are difficult and costly to implement.”

By combining their significant research and development investment, CTSpace will offer clients a standardised software platform that is zero-risk and can be rapidly deployed on a global scale. Customers will be offered extended, global 24/7 customer support, professional services and large-scale implementation expertise.

“Our client list already reads like a who’s who in key vertical industries,” said Mark Suster. “Now combined, we are unrivalled in our ability to provide global collaboration expertise. The track record of the two organisations, in improving communication on the world’s largest and most complex programmes and projects to ensure they are delivered on time and to budget, is outstanding. Culturally we have the same vision for collaboration – to bring it to the world’s largest organisations via the SaaS model”.

This is the second major rationalisation of collaboration vendors in 2006, following the Constructware acquisition by Autodesk back in February. But while the Constructware deal mainly concerned north America, this one reaches across both sides of the Atlantic and spreads across Europe, the Middle East, India and out to the Far East. I will certainly be looking at the implications of the merger in more detail in subsequent posts.

Permanent link to this article: https://extranetevolution.com/2006/12/buildonline_cit/

Dec 13 2006

2006 – a strange year for extranets

As a PR professional, I always read Rachael Dalton-Taggart’s observations (on her blog PR, Marketing and the Business of CAD) with interest. While she writes from a US perspective and is mainly focused on the CAD sector, her views sometimes coincide with mine (UK-based, mainly concerned with web-based AEC collaboration tools).

In her latest post, 2006 – a strange year for CAD, for example, Rachael says she is “stricken by the feeling that CAD news is getting, well, simply boring”, adding her fear “that the CAD industry is in danger of being marginalized … [and] commoditized into a ‘check box'”.

‘Simply boring’

I have held a similar view for some months now, but regarding UK PR and marketing of collaboration technologies.

Thinking back four or five years, it seemed that ‘project extranets’ (as they were then popularly named) were rarely out of the trade media and industry seminars and conferences on the topic were always well attended. Today it seems extranets are no longer a novelty; it isn’t a question of ‘Should we use an extranet?’, but ‘which system should we use?’ (I have regularly covered the responses to just such a standard question asked by UK trade paper Contract Journal – see example posts here and here), and vendor news releases regarding new project wins, new corporate deals or new product features rarely rate column inches in the main industry magazines such as Building, Construction News, and CJ.

The leading UK vendors noticed this, of course, and in addition to their own individual efforts (see UK extranet vendor PR update), the NCCTP at least tried to raise their collective profile – most notably by commissioning some independent market research. This achieved significant coverage in both Building (post) and Contract Journal (post), plus QS News and some of the more dedicated UK construction computing publications (for example, I was recently quoted in a feature in the new InSite magazine from the IT Construction Forum). Without this campaign, UK trade media interest in collaboration technologies would have been almost non-existent during 2006.

The answer?

What does Rachael suggest as a solution to such “boredom”? She writes:

“… everyone in the industry – users, press, vendors and the like – have a responsibility for keeping this industry vital and up-to-the-minute. How? By welcoming new innovation, working out how to exploit it, finding ways to keep the industry vibrant and current. Bringing new, maybe risky, technologies on board that attract the ‘MySpace” generation, and then the ‘SecondLife” generation. Let’s move away from the standard ‘product upgrade’ and start looking at how current technologies can make engineering better – and more attractive too.”

Perhaps the same remedies can be applied, individually and/or collectively, by the collaboration vendors? Let’s build awareness of the genuine (as opposed to potential) project benefits of the technologies via strong case studies. We could talk about the different business models (eg: on-demand or Software-as-a-Service provision versus in-house hosting), and draw on customers’ experiences of real business benefits achieved via long-term strategic relationships with vendors. And let’s look forward to address new challenges/opportunities such as building information modelling (BIM), mobile devices, and tools such as wikis.

Permanent link to this article: https://extranetevolution.com/2006/12/2006_a_strange_/

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