The pace of acquisitions in the Contech space has reached fever pitch. This is coming from both large publicly-traded companies acquitting mature solutions (think AutoDesk, Trimble, Oracle and Roper) to smaller start-ups and PE investments all buzzing around platforms like BuiltWorlds. There are no signs of this letting up.

So, what is this going to mean to you? Two things, potentially. Many software development companies were smaller, privately-held operations with an eye on product and service before all of these acquisitions. They did not focus as hard on profitability but rather on solving problems and client satisfaction. This drove profitability which often got plowed back into the solution; no external investors were clamoring for 200% ROI in three years. First, Burger Consulting Group has noticed a quickly escalating software cost. Everyone is moving to a SaaS contract which is not bad as long as it is priced correctly, and the terms are balanced. Construction firms must increase their IT budgets to accommodate more staffing, more solutions and more expensive solutions.

Secondly, most publicly traded construction companies do not like services. They have professional services because they have to, not because they want to. Some have outsourced their implementation services to third-party service providers (VARs) who provide training and implementation services. Others maintain a lean pro-services team to handle implementations, but they are just trainers. We have seen a general downward trend in satisfaction with the services and support that contractors are getting from their software vendors. There are plenty of exceptions of course, and privately held companies like HCSS continue to set the bar high in this area.

Many of these acquisitions may have been necessary or have a noble objective. For some older software companies, the management team may have needed an exit strategy and being acquired was one of their options. Typically, the owner would stay on for a year or two to ensure a smooth transition. Sometimes the acquiring company has a product gap they are trying to fill, and it is quicker to buy a solution that fits well and has a customer base on which to draw ideas. Many of Command Alkon’s acquisitions could be said to fit this model. Of course, they are owned by the larger investment firm of Thoma Bravo who has also acquired Foundation software and Deltek, among others. You can look at Trimble’s acquisition of Viewpoint, Meridian and eBuilder as a good example of the outfall of fast-paced acquisitions. Between them, Trimble now has at least four or five project management solutions. While some are targeted in a specific niche, that is still a lot of software focused on a single function or set of functions.

Contractors also need to watch this development carefully as many more solutions flood what is already a fairly saturated market. So you will see more solutions offered for a narrow list of functions in the organization and more overlap between solutions for a time. Consider RFIs and Submittals for example; there are already at least ten PM solutions in the market and many of the solutions overlap with other applications you may already have or want. So how do you decide where you are going to manage RFIs? That is an article for another day, but the point is that having a solution strategy or roadmap for the organization is important. Further, IT has to be involved in the evaluation and selection of these new technologies. There are many important technical considerations (e.g. integration tech, flexibility, licensing, hosting) that IT wants to evaluate, beyond what might be necessary for the users.