The Aconex ‘Secret Sauce’ - The power of neutrality and unlimited use
In the next three posts I will discuss the distinctive qualities that I believe made Aconex successful. Everything I have written about so far, from decision-making and cash management to building a board contributes to success. But there are aspects that are so unique to a company, the secret sauce in the business model, that take you beyond where good management alone will.
At Aconex, we recognized some elements of our secret sauce from day one, while others evolved over the years. As the company grew, we developed a unique business model, created a company-wide obsession with the customer, and were purposeful about reinforcing our strong culture.
I’ll look at each of these in turn, starting in this post with the important role of the business model we adopted.
Unique business model - The power of neutrality and unlimited use
The construction and engineering industry is extremely fragmented but also highly connected, requiring significant collaboration on a project between the owner / developer, the consultant team (architects, engineers, etc), the contractor and the supply chains (subcontractors and material suppliers). From day one Aconex set out to streamline the industry by providing a neutral software-as-a-service platform to allow all organisations on a project to collaborate around information, processes and decisions.
The business model was built on five elements that, together, delivered for the customer in a unique way:
A collaboration platform independent of any one project participant
No limits on user numbers, data storage or anything that would inhibit adoption
Multi-tenanted SaaS architecture for ease of deployment and rapid scaling
A commercial model developed with the construction industry in mind
Service levels that prioritised customer success over short term cost control
Neutral collaboration network
To maximise collaboration, project participants need to trust that their data on the platform is accessible only to the companies they have shared it with. We embedded a neutral collaboration model in our platform architecture from the outset. That meant that all project participants, from the head contractor (who might be footing the bill for the entire project to use Aconex) to the smallest subcontractor, had equal data rights. Participant could access only the data that they had uploaded or that had been sent to or shared with them.
That neutrality ensured that all participants were treated fairly, building trust and higher usage across the project community. As more processes and data were captured, every participant benefited.
Unlimited approach to drive adoption
Construction collaboration platforms have inherent network effects, where the value to each user and organisation increases as more join. This made Aconex a network business, with winner takes all (or takes most) characteristics, and significant barriers to entry. We designed the unlimited business model to reinforce these network effects and drive adoption.
For customers, the unlimited model provided price certainty, irrespective of use. It also brought the benefits of standardising on one platform across their business, improving process visibility, consistency and repeatability.
This behaviour created a virtuous cycle, with more adoption leading to a bigger network, leading to better-run projects, a better customer experience, revenue growth, and increased investment in product and promotion, which drove further adoption, and so on.
Multi-tenanted Software-as-a-Service architecture
Aconex was delivered on a multi-tenanted software-as-a-service architecture with all customers serviced from the same shared infrastructure. The platform became highly configurable as it grew, and we built features in response to market needs, with the functionality available to all users. Having ‘one Aconex’ allowed us to focus on optimising and integrating end-to-end construction processes, while all users logged into and shared information on a single common platform.
The benefits of SaaS delivery for customers included:
Lower total cost of ownership than other options, as we could scale the platform while the cost-per-customer to host, support and develop the software steadily dropped
Ongoing access to upgrades and enhancements, with every user benefiting as the product developed
Fast and easy deployment as there was no requirement for dedicated hardware, consulting or software customisation
A construction industry focused commercial model
We developed a pricing model that was aligned to the project nature of construction and intended to drive adoption:
Customers had the choice of three engagement models – unlimited subscription for a specific construction project, unlimited enterprise subscription for all of their projects, or user-based pricing for the minority of customers that preferred that model
We used a modular approach (the core platform and additional, optional modules), which allowed customers to purchase a solution aligned to their current tool set and technological readiness
Contrary to how the market had operated before, we worked on the basis that one organisation would pay the cost of using Aconex across the entire project, while we supported all of the organisations – paying and non-paying - in the project ecosystem.
This commercial model played a crucial role in accelerating adoption in the industry:
‘Per project’ pricing reduced the initial commitment and allowed trial outside the corporate IT environment (with its long sales cycle)
There was a clear path from initial project engagement to a full enterprise subscription
The model accommodated differences in the maturity of different organisations, working as well for low-margin contractors in the developing world as for sophisticated EPCs in North America
Finally, even the requirement that one company pick up the full tab on a project made sense, as long as that company had budgeted for use of the platform in their bid.
A customer-success mindset
Early on we supported projects with high-touch customer service - not just for the paying client but for the entire project community including non-paying users. This gave us a high cost of service compared to most B2B SaaS peers, but the goal was to ensure successful project delivery and we knew that required high user- and process-adoption. Over time the cost customer support reduced as a percentage of revenue through automating and digitising many of the support activities.
We developed a company-wide customer-centred mindset by focusing on the end-to-end customer experience rather than on individual functions. We also embedded programs to capture feedback and input throughout the customer life-cycle, including NPS surveys, an externally-oriented UX team and ‘customer councils’.
The investment in customer focus was significant, but it underpinned our ‘unlimited use’ philosophy: we would do what it took to make your project successful. It delivered a product and service that clients valued and became willing to pay a premium for. Over the years it was a key driver of adoption, bringing us more projects and users, stronger retention and higher share of wallet.
The five core elements that made up the Aconex business model would probably not come together in the same way for another business – each business will have distinctive ingredients that make up its own secret sauce. But the principle holds: whether you are starting or scaling, look to your market and your unique capabilities to identify opportunities to break the status quo, define yourself, and pull ahead of the pack.
Next time, I’ll look in more detail at what that top-to-bottom, company-wide customer focus looked like in real terms.