Gordon Ritter, founder and general partner of Emergence Capital Partners, recently published an article in TechCrunch, titled “How to Tell if You’re in a Cloud-Friendly Industry”. In it, Ritter ranks industries that are more or less conducive to Software-as-a-Service (SaaS) strategies and factors that make them so.
In the top tier of ‘cloud-friendliness’, Ritter places healthcare and education. He indicates that SaaS solutions help healthcare companies stay current in a strongly regulated industry, while educational institutions require applications that are designed for non-desk workers and leverage big data.
In the second tier, Ritter ranks retail, utilities, transportation, real estate, construction, and insurance, citing a mobile workforce, visual elements and big data as key drivers of SaaS adoption.
Banking and government are relegated to the third tier, due principally to privacy concerns and the high cost of migrating applications from heavily invested legacy systems.
Ritter’s eight factors that determine cloud-friendliness are intuitively logical:
- Dynamic regulatory environment – SaaS platforms enable rapid and ‘auditable’ deployment of new features and functionality to comply with regulatory changes.
- Dissatisfaction with incumbents – vertically specialized solutions in the cloud reveal the low flexibility and value of horizontal software and systems on premise.
- High industry concentration – SaaS solutions for industries in which fewer than 50 companies represent more than 80% of total revenue allow higher efficiency in sales and marketing and lower customer acquisition costs.
- Mobile workforce – industry-specific, mobile cloud applications available on smartphones and tablets are particularly appealing to vertical segments with high percentages of non-desk workers.
- Value in data – certain industries require access to and analysis of huge volumes of data – big data – and SaaS architectures are especially effective in managing large data sets and capturing new data streams for end-user behavior and other revenue-enhancing intelligence.
- SaaS platform alignment – the ability to leverage existing commercial cloud platforms speeds time to market and enables companies to focus on industry-specific applications rather than underlying infrastructure.
- Industries with little to no cyclicality – many SaaS businesses generate recurring revenue and companies migrating their solutions to the cloud may require an initial IT investment, both of which are potentially problematic in cyclical environments. A key virtue of SaaS is speed and simplicity in delivering application updates and revisions to users.
- Visually dependent – industries that rely heavily on visual representations have found that cloud platforms are best suited to the integration of visual images and can leverage the power of high-quality cameras on mobile devices for capturing and distributing images.
Architecture, Engineering and Construction
The AEC industry meets most, if not all, of the above criteria for cloud-friendliness. While Ritter’s article cites Textura and PlanGrid as examples of SaaS for construction technology, Aconex – founded as a cloud company in 2000 – fits the model as well as or better than any other vendor.
How? Let’s run down the list:
- With its user-defined, automated workflows and complete project audit trail, the Aconex Online Collaboration Platform enables project teams to meet compliance and reporting requirements proactively rather than after the fact. The same principle applies to Aconex Field for field inspections and issues management and Aconex Smart Manuals for the delivery and management of operation and maintenance (O&M) manuals after project completion. New features and functionality are deployed for all solutions at least twice a year, and the company maintains active programs for soliciting and processing user input.
- The majority of Aconex clients adopted its industry-specific SaaS platform after struggling to manage multi-company construction projects with generic enterprise content management (ECM) software, project data protected by corporate firewalls, and diverse, uncoordinated processes often in conflict with each other. On Aconex, they find their projects up and running in weeks rather than months, and there is no software to install and upgrade, no hardware to operate and maintain, and no support staff to fund and manage.
- Serving thousands of clients worldwide, Aconex has improved its sales efficiency and lowered its cost of sales through sophisticated demand generation programs and a ‘funnel approach’ to opportunity qualification and conversion. Sales development teams process leads generated by online marketing programs and schedule meetings for outside sales resources, while inside sales teams pursue and close opportunities for both platform and point solutions. Since launching its platform in 2001, the company has built a global network of more than 430,000 users representing over 42,000 different organizations. Users who initially aren’t paying clients often buy Aconex solutions after learning and using them on successful projects.
- AEC professionals are frequently on site and elsewhere away from their offices. They need to be able to create, capture, review, update, and approve project information at any time, from anywhere. Aconex Mobile construction apps on iOS and Android smartphones and tablets – downloadable at no additional charge for Aconex clients – provide anytime/anywhere access to the Aconex platform. Aconex Field enables inspectors on site to verbally and visually capture defects and safety issues for resolution by subcontractors. Mobility improves project team efficiency and productivity while reducing risk and keeps projects moving around barriers of time and distance toward successful delivery.
- Big data is driving big changes throughout the AEC industry. Projects are generating terabytes of data, with multi-dimensional Building Information Modeling (BIM) files, tens of thousands of documents and drawings in multiple versions, and hundreds of thousands of correspondence items – plus photos and videos. The Aconex platform and point solutions are designed to scale with projects such that any number of files, of any size, can be shared, distributed and revised among diverse project teams whose members may be scattered across different geographies. Also, with a complete audit trail and analytical tools, owners, developers, contractors, and project managers can benchmark the performance of their projects for continuous improvements in efficiency, accountability and risk management.
- Unlike many SaaS companies, Aconex uses dedicated infrastructure rather than relying on commercial cloud platforms such as Amazon Web Services or Salesforce. This infrastructure and the Aconex operations that support service delivery are certified for compliance with ISO 27001, the global standard for information security management. Aconex spreads the cost of its infrastructure across thousands of clients and projects, so it can invest more than individual clients can in ensuring security, reliability and responsiveness. Instances are co-located in third-party data centers around the world to address performance, data sovereignty and redundancy requirements, and the company maintains disaster recovery sites in all regions. Read more about the Aconex service delivery infrastructure here.
- As we’ve seen over the last decade, AEC is a cyclical industry which is still recovering from the effects of the global financial crisis (GFC). However, it’s projected to grow 70% to $15 trillion by 2025. AEC isn’t a recurring revenue business because new projects are required to generate new revenue. Still, once AEC firms move from legacy systems on premise to SaaS solutions, they seldom if ever turn back. Aconex has seen this throughout its global network, as clients that once used ECM tools and FTP sites for project information management adopt Aconex solutions for a succession of individual projects. Increasing numbers of clients are standardizing on Aconex as a neutral collaboration platform for all of their multi-company projects.
- AEC is as visually dependent as any industry – projects begin with two-dimensional shop drawings and multi-dimensional BIM models. These files flow and evolve through the entire project lifecycle and into the handover of O&M manuals for asset management. Aconex solutions are designed specifically to support this process and ensure that files of any size can be shared, distributed and revised in real time, on a neutral SaaS platform that is independent of any project participant. In one $800-million project, the Aconex platform was proven to accelerate design reviews by 68%. More than 50% of the projects now live on the platform include at least one BIM model – totaling over 600,000 models with an average size of 54 megabytes. Aconex Mobile and Aconex Field utilize the photo and video capabilities of mobile devices, adding mark-up functionality to address issues.
Move to the Cloud
The cloud’s time has come in the AEC industry. If you’re still futzing around with ECM software, FTP sites, Excel spreadsheets, and email, make the move to an industry-specific SaaS platform…like Aconex.
From an investor’s perspective, Gordon Ritter said it best: “Gone are the days when industry verticals could be dismissed as niche plays. Today, they are the future of the cloud.”
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