Continued from page 1
Interview Part 3
So, the size of your company now is more extensive than I imagined. Yet, in the United States, it seems that your chief competitor, Autodesk Revit, dominates the market.
I can share with you that the United States is one of our fastest-growing markets and we are fully committed to supporting the Architectural Design business there.
How do you see yourself competing with Revit in the United States?
Autodesk is a strong business, and especially in the United States. But we are very excited at the fast growth and accelerating success we are seeing there now. It seems that many architects appreciate our continued improvement in our products, the way our products really do align with how designers want to work, the focus we have on serving our customers well and adding value, and maybe even our business style.
This is an excellent moment to note that the EU is larger than the United States by over one hundred million people, but the US is still the larger market for CAD tools.
Right, and in many parts of the world and much of Europe, we are number one in BIM.
We have contacted many firms who have recognized that there are more choices in the market than just one – and many of them find Graphisoft to better suit their needs.
In general, in these markets as well as in Asia, Latin America, and Africa, we are in leading positions and continuing to see strong Archicad growth and happy customers. We are still owning and growing those markets.
Are you also capturing ex-Autocad users in the EU markets? I ask because I know that some EU countries are farther back in the BIM transformation.
Yes. Another quote I love is from William Gibbons: The future is already here—it’s just not evenly distributed.
That is true of BIM. It’s been true of BIM for a decade. And it will be true for another decade.
So, a good part of the industry is still stuck at 2D CAD and predominantly in Autocad in many European markets.
Many architects in many markets have been fundamentally not technologically oriented, but we see that changing as the benefits of, and demand for, digitalization become more widespread.
Or we can characterize it as not “tech-forward” or some other way of saying nicely that digital technologies don’t play such a significant role in their firms.
Yes. It sounds hard to say this, especially with gray hair, but it’s generational. As this next generation or the younger people in those firms take over the business, they challenge the idea of having a drawing phase, in essence saying “I’ve already done the thinking in 3D, why do I have to do that?”, it doesn’t make any sense to them because they weren’t grounded in an analog process. They go straight to BIM. They come out of school and want to go directly to Archicad.
And those firms with tools and workflows oriented toward a drawing-centric process have the biggest change ahead of them – with both challenges and huge opportunities.
So besides generational 2D AutoCAD practices, there is also the issue of the Open Letter firms and movement—as an opportunity for Graphisoft.
We have contacted many firms who have recognized that there are more choices in the market than just one – and many of them find Graphisoft to better suit their needs. We are committed to serving this market and ensuring that our present and future customers are listened to and that our strategy, roadmap, and business practices align with their needs.
In the pre-BIM days, the common refrain in the US market directed at a non-Autodesk using firm was, “why aren’t you using Autocad, the industry standard?” Such notions drive markets toward natural monopolies without substantive data (other than market share) to prove their economic efficiencies.
We all know firms thrive in all ways, including economically, using various BIM and CAD systems. So, for me, it boils down to the value of the “network effects” attached to the dominant firm versus the core innovations in the rival platform itself.
Ultimately, we are talking about deciding on your technology based on a generalized perception of following the crowd versus thinking about what you want to do and what technology best delivers on those objectives. Our approach is to make sure that we provide value and advantages to users of our software – regardless of what type of broader ecosystem they are working in. We would say that the important network effects for firms come from the quality of their work and how well their ideas are shared and empowered. And our customers, old and new, appreciate this.
Part 3 Commentary
The discussion of network effects—a phenomenon whereby a product or service gains added value to the consumer when more people use it—is apt because no one product or platform can serve the industry’s total needs. Thus, market leaders’ tools become richer by having better connections and integrations with other tools and systems. In the next section, we touch on this vis-a-vis the Nemetschek Group.
However, it is important that the market’s leaders with their larger bases of connections, integrations, and add-ons—key aspects of network effects—don’t lose sight of the importance of core app innovation which always plays a significant role in performative workflow economics and the value creatives in architecture firms generate for their clients. Roberts’ final note above is driving at that last point.
Interview Part 4
As you grow and the Nemetschek Group companies grow, your Group ecosystem becomes more valuable, generating Group-based network effects and benefits. Can you tell me about any Nemetschek Group announcements coming in July?
We will share an update about what the Group is doing at the July event. We already recognize that there are layers of synergies in the Group. Today, Graphisoft does many things that add value with connections and integrations with Solibri, Bluebeam, SCIA, RISA, FRILO, dRofus, and Maxon. And there will be more.
Now, Graphisoft merging with DDS has opened up all sorts of opportunities for us over the next few years to help architects and engineers in new ways. And an important thing to state is that adding DDScad doesn’t take away from Archicad’s development centered on what architects want. We are not splitting up resources to focus on MEP, for example. This is all additive—we are integrating the DDScad engineers and growing our core teams.
Years ago, we wrote about a Group-wide CDE (common data environment) based on Bluebeam technology. And yet your own BIMcloud now has its own collaboration. What is your answer to the Procores and BIM 360s in the market?
Where are the opportunities in that space for you? Do you need to build something equivalent to that, or do you leverage Open BIM around integrations with as many other tools as possible?
I believe it is both. We remain fully supportive of users working with all manner of CDEs and have great synergies with Bluebeam, but we also see where we can add great value for our customers.
For whatever reason—maybe because fees are tight, and the liability diminishes risk-taking—the industry has been very conservative about change. And it’s not just technology but change in the way of doing things.
Our BIM cloud Software as a Service product is by far our fastest-growing product. We have had BIMcloud as a client-server for a while, but at the start of the pandemic, we accelerated the launch of our SaaS product when everybody started working from home. And that has grown like crazy!
The pandemic made clear whose solutions were ready for such shock events and which were not.
Yes, and people now realize the continuing benefits post-COVID. Sales of our BIMcloud SaaS far outstrip our LAN-based BIMcloud because the cloud gives you much more power and connectivity.
BIMcloud SaaS is a BIM server, a collaboration server, and even a document file server; plus, it manages markups and publishes to BIMx, and it does all of that really well. But BIMcloud today is aimed at serving the Archicad ecosystem, we are not looking for it to compete as an independent CDE.
One final question about the BIM transformation tied into the AEC industry’s productivity progress—or lack thereof—whereas you likely know real productive hourly gains in AEC are far behind other sectors, including AEC’s sector cousin Manufacturing. BIM alone hasn’t made a massive difference, and we have young (and old) architects protesting about long hours, low pay, and threatening unionization in the United States. [Editor’s note: To learn more about AECO industry economics and industrial data sign-up for our Xpresso newsletter.]
AEC spends very little of its revenues on information technologies—1.5 – 3.5 percent. I sometimes wonder if spending much more is required for a significant productivity change.
I fundamentally believe that is true, yet not because I am from a technology company. Technology is a force multiplier.
I go back to my architecture career. Back in school, the cool invention was pin-bar drafting on mylar. I have watched this industry’s progress through it all. For whatever reason—maybe because fees are tight, and the liability diminishes risk-taking—the industry has been very conservative about change. And it’s not just technology but change in the way of doing things.
Technology—and you can think about Uber, for example—really adds value when it also changes how you do something.
CAD was an electronic pencil. You made lines like you made lines, just on a computer. When 3D modeling came along, it was similar to cutting up cardboard to make models. You worked with surfaces the same way; you made models with the same mindset as a physical model. And then came visualization. So instead of watercolors, it was the digitization of those kinds of images.
You are saying the analog processes are fundamentally still there.
Yes, underneath I think they are. And, of course, all these things have been good—they are advancements. But they don’t fundamentally change the paradigm about how we work. BIM does change the paradigm, but the shift is not complete.
BIM has made a fairly significant impact, yet it hasn’t diffused everywhere. Much of the overall process is still the same. And it’s distributed unevenly, as I noted early in the Gibson quote.
Technology—and you can think about Uber, for example—really adds value when it also changes how you do something. I think if the AEC industry really wants to take advantage of the technology—and likely more of it is needed—it has to reimagine and look at what is the workflow.
Part 4 and Final Commentary
It is imperative to emphasize a few things from the last part of this detailed interview. The Nemetschek Group’s growth is an integral part of extending the value of the Graphisoft ecosystem. That thinking would apply “group-wide,” no doubt. While Archicad does not match the network effect benefits of Autodesk Revit, its growing ecosystem helps to close the gap and find its advantages.
In closing, some things were said off-record that are very exciting and fill in the blanks from this article. Yes, we will soon learn more about chip support (e.g., Apple Silicon). But arguably, the most exciting aspects of the Archicad story are thematically centered on its ecosystem and extensibility via both OpenBIM and its new fast-time cycle collaboration technologies.
Much from my May conversation with Huw Roberts is not in this article—and it comes later. The essential final point is that the DDS and Graphisoft merger will likely mark a key inflection point in the Archicad story.