The Revit Open Letter Through the Lens of QWERTY-Nomics

MOST OF THE WESTERN WORLD TODAY types on what is known as the QWERTY keyboard. Studies show it is up to 15 percent less efficient than other layouts. Yet, the QWERTY keyboard layout won over rival keyboard layouts. It turns out that the efficiency of typing itself was subjugated in the market process by another type of efficiency—finding trained typists. 

As we will learn in this article, there are many industry and market efficiency points. When typewriters were born, the new innovation was filled with competitors. The innovations and comparative advantages between machines bore out a full range of attributes (including price), not just the keyboard layout. But in the final analysis, the Sholes-Remington QWERTY-based typewriters set the course for how we type today because of a factor external to the typewriter—typists and their training. 

As economist Paul A. David explains in his landmark 1985 paper Clio and the Economics of QWERTY, despite being freed from the mechanical necessities of up-stroke typebar collisions, QWERTY as the de-facto keyboard layout we live with today became “locked in” due to “technical interrelatedness, economies of scale, and quasi-irreversibility of investment”—the same factors at play in the BIM software market. 

BIM and Basic QWERTY-Nomics

As David states, the typewriter and keyboard were the “hardware” of that moment, while the compatible “software” of that moment were typists with their embodied knowledge. It meant “that the expected present value of a typewriter as an instrument of production was dependent upon the availability of compatible software created by typists’ decisions as to the kind of keyboard they should learn.”

That type of interrelatedness is directly reflected in a comment by Jens Kaarsholm, Director of Design Technologies at Copenhagen-headquartered BIG, a signer of the new Nordic Open Letter to Autodesk. (see: AEC Magazine, “Nordic architectural associations demand better value from Autodesk,” 12 Sep 22).  When asked why not just switch to another competitive BIM solution, Kaarsholm says one key issue (among several) is recruitment. “It was tricky to find people that came in with Archicad skills,” he notes. “There are just many more people in the market with Revit knowledge.” 

This factor is wholly external to what Revit can and cannot do, yet critical in the continued debate inherent in the Letter. Externalities, both positive and negative surrounding BIM solutions cast a shadow across the more explicit disappointments communicated clearly in the latest Nordic Open Letter. The merits of Revit in both positive and negative directions extend far beyond the product. 

To help illustrate this point, a quote from David: “To understand what had happened in the fateful interval of the 1890s, the economist must attend to the fact that typewriters were beginning to take their place as an element of a larger, rather complex system of production that was technically interrelated.” 

 

 

 

 

A BIM tool is one key component in an evolving and complex technical landscape. Insofar as David’s famous essay, his concepts helped set the course for understanding consumer behavior in technology markets with increasing returns due to externalities or what is also known as “network effects.” Famous competitive battles involving network effects include VHS versus Betamax and Mac versus Windows PC. However, they also affect most AEC technology decisions and those involving technology standards for data portability. 

Technical interrelatedness, economies of scale, and quasi-irreversibility of investment are the three legs upon which QWERTY-Nomics stand. No matter where the AEC industry goes, both Autodesk and its chief competitors, and whether its customers will follow its path toward Forma, continue with Revit, or move elsewhere, these three factors are decisional and bear out economically across the industry. Within this framework, we can evaluate the industry’s present state or peer into a specific technology adoption situation. 

Open Letter—Understandings

The issues of the “Nordic Open Letter” are the same as the first Open Letter. However, this one’s different in one essential regard. This time four professional bodies are behind the Nordic Open Letter, which suggests the Letter’s impact in the market will be deeper this time. 

The Open Letters put forth the essential issue—a lack of development attention and progress (development velocity) in Autodesk Revit, simultaneous to rising software licensing costs and unacceptable license management practices. Firms behind the Revit Open Letter feel they are receiving little to no benefit from continued licensing dollar investments. “We have been waiting for nearly two years for things to change, and we haven’t really seen anything substantial that has come around,” says Morten M. Ræder, Senior Architect, BIM Coordinator, and QA Manager at Nordic Office of Architecture, a Letter signatory firm. 

After the first Open Letter in 2020, Autodesk did become more public in its Revit roadmap, but Letter firms will state that what is on the public Revit roadmap and the center of their concern are vastly different in scope. Letter firms we spoke to say the Revit roadmap is filled with low-hanging fruit and is absent the more serious technical requests that often center around Revit making better utilization of modern-day hardware as well as leading (not following) the industry in interoperability standards. 

 

 

 

 

The new Nordic Letter reads, “Almost two years on from the first Open Letter, we see no substantial progress or development of Autodesk’s core products. The updates that have been delivered have not been deep or consequential.” And then there is the lack of communication about the next-generation solution that will take architects beyond Revit. That part, at least, has been partially addressed at Autodesk University 2022 in New Orleans in late September. Now Autodesk customers, especially Open Letter firms, know some hard new facts about Revit and its future. 

Finally, the Revit licensing and subscription transition has been criticized intensely. Even Autodesk’s BIM rivals have seized on the bitterness in subtle and not-so-subtle ways in their marketing messaging. And the issue is not just the direct cost changes but also the cost of transitioning to a new licensing model. Kaarsholm of BIG suggests that the transition was “rushed into the market without being tested at the user level.” 

Despite transitions to subscription licensing being a broad software industry trend, the cost factors of licensing switches need to calculate for disruption and lost capacities in addition to license fees—costs that all Open Letter firms we spoke to say have dramatically risen over the past few years. For some practices, the tension between increased costs and development non-alignment is a vital issue. 

Nils Fischer, Director at Zaha Hadid Architects (ZHA), told Architosh the firm had seen a 2.5x effective seat cost increase since the licensing changes. “I don’t have a problem with them not developing the product [Revit] anymore (referring to Autodesk’s future directions with Forma) if it is reflected back in the price, so it frees up the resources to buy the tools elsewhere.” 

Fischer’s comment directly touches upon the quasi-irreversibility of investment, one of the three pillars of QWERTY-Nomics, recognizing a fundamental principle in how markets self-optimize when finite resources (and they are always finite) are redeployed toward other market providers. ZHA’s Fischer recognizes that investment is not truly irreversible and that to solve deeper problems ZHA is facing, it must be able to fund new types of solutions. With Forma’s announcement, in relation to Revit, Autodesk ought to reduce Revit licensing so firms can redeploy resources; otherwise, Fischer fears “they [Autodesk] are kind of taking their audience hostage.” 

Autodesk CEO, Andrew Anagnost, will contend that Autodesk has gone through such cycles of customer despair before during similar transformations, especially with Inventor customers leaving the Autodesk fold only to eventually return to Autodesk Fusion 360, the company’s modern, data-centric design and manufacturing (D&M) platform. “I do want to keep customers,” says Anagnost, “but I’m a pragmatist too, and I remember when we made all the changes in the manufacturing applications, and we actually lost some customers in that journey.” 

Autodesk Forma

Anagnost feels confident that, in the end, Autodesk’s new cloud future for AEC, Autodesk Forma, will please the very Open Letter customers that may opt to leave the Revit platform. As he said in an exclusive feature on Architosh introducing Forma, “if you want a faster horse, you might not want to work with us because we will not make a faster horse. But we can be that partner and tool provider that supports professionals into the new era of architecture.”

While AU22’s announcement of industry clouds and Autodesk Forma for AEC did provide some clarity to the Open Letter firms, there remains a lack of detail about how soon Forma may address some of the issues addressed by the Open Letter firms. What is known is that initial Forma capabilities will be available in select regions in the first half of next year. 

 

 

 

 

Based on technology generated by the Nordic Spacemaker team, Autodesk Forma will eventually take over detail design, not just schematic-level design. To some architects, the excitement about a future where AI-over-the-shoulder takes care of the grunt work of detail design is both exciting and confronting. In a casual conversation with Spacemaker co-founder Carl Christiansen at Autodesk University, he was enthusiastic about what machine learning and AI can eventually do for architects, including at the detail design stage. Still, he admits that this paradigm shift, as it has been called, is five-plus years in the making. 

“The cloud has changed everything,” says Anagnost, noting that Revit’s paradigm was based on desktop computing way before the cloud emerged, “it has enabled us to deliver power in certain ways and on multiple platforms that we were not able to do before.” 

Some Open Letter firms, however, are not likely to take the new cloud direction with the same level of enthusiasm and confidence. Nils Fischer of ZHA says that his firm, a marquee design firm doing extraordinary work that is often very different than the average architect, wishes to construct its tech stack on a per-project basis, “fit for purpose for a project that is different in every case,” he adds. 

On the suggestion that Forma may solve the interoperability issues that are necessarily critical for constructing tech stacks fit for purpose per project, he says, “Autodesk’s roadmap seems to suggest that we can have interoperability if we allow them to take ownership of our data. That is very different from what we have seen in other industries and not really acceptable [to us] in the long run as a strategy.”

Anagnost contends that Forma may not work for everybody. “If you look at what we are doing, we are connecting everything end-to-end,” he adds, “but we recognize we will not satisfy every single niche need, nor should we. But we will go from conceptual design to construction and probably to hand-over and operations.” Anagnost’s vision for Forma is large and all-encompassing and to say they wish to disrupt themselves says something about the company’s sheer market power in the AEC/O industry. That, too, is an issue in the Nordic Open Letter. 

next page: A Natural Monopoly—The Question

A Natural Monopoly—The Question

There is no question Autodesk has significant market share concentration in many markets of the global AEC industry. The Nordic Open Letter addresses this on the fringe in its opening paragraph, which reads:

“In February 2020, the European Construction Industry Federation (FIEC) released a position paper on the lack of competition in the software industry, with customers facing rising costs, [and] limited licensing options from a small number of competing developers.”

Natural monopolies tend to serve utility functions whereby duplicating costs to replicate identical systems does not yield any economic benefit to the end customer. In the early days of the telephone, it was common to see multiple physical phones on bank desks as each was connected to unique networks competing in a free and open market. The inefficiency was obvious—duplicate phones, lines, and interface hardware at the point of service on the street. Eventually, phone services and natural monopolies would sort their way out. Today customers have options and, most importantly, price pressure in the system. 

 

 

 

 

Data duplication in AEC is one area of waste and inefficiency but is solving that inefficiency through industry concentration correct and economically optimal? One way to evaluate that is to note that the development velocity changes when companies get too large or control too much of the market. We saw this with Microsoft and web browsers and operating systems decades ago. When companies get too large, leadership can only attend to so many items simultaneously, and intra-divisional coordination becomes more complex. And then, there is the public shareholder demand for growth. 

These items have likely conspired to form the conditions underlying the Revit Open Letter groups’ frustrations. The first Open Letter delivered the first prima fascia evidence of this fact. The company, in its apology, noted that the company’s AEC division attention was diverted away from the design side so it could accomplish and acquire construction sector software companies. It pointed out that the true potential of BIM could not be met if construction sector professionals were sitting outside Autodesk BIM solutions—a justification that carries some weight. 

A direct example of development velocity issues comes from BIG. Jens Kaarsholm told Architosh that they have been asking Autodesk to provide essential site design tools in Revit for a decade. Frustrated with Revit’s lack of basic landscape design features, Kaarsholm states, “the whole field of landscape architecture has been forgotten in BIM; there is no tool for them.” When I mentioned Vectorworks Landmark, he said he meant within the Autodesk ecosystem. 

“If you look at the Autodesk ecosystem, they say why not use Civil3D or Infraworks,” he says. But he could not believe the suggestion that he needed an infrastructure tool for his architects to simply do some grades and put in some grass alongside a building. More specifically, he noted that Revit could not create a cave for a parking garage and that when you cut a section in Revit, you end up with just cross-hatching. 

It is important to note another aspect of this story. After two or three meetings that included firm heavyweights like Grimshaw and Herzog & de Meuron, Kaarsholm successfully got the Autodesk Revit development team to at least prioritize a future set of capabilities that have existed for years, even more than half a decade in a rival BIM solution. The problem is that the industry lacks compatibility standards that increase the net benefit of all industry customers. Therefore, utilization of an alternative system for these particular needs is possible yet non-trivial. 

Why can a much smaller BIM rival have the features in their BIM solution Kaarsholm was seeking in Revit? How is it possible that smaller rivals out-point larger ones in technical capacities? Some will say smaller companies are more agile and nimble and faster moving. 

The more significant answer might be this: Companies are like all economic creatures and operate based on incentives. When your market share is large enough to create a vast third-party ecosystem and has extensive positive externalities, a considerable part of the expected present value of the system is placed in such externalities. In short, the core product’s value is not equivalent to the sum of its price tag but rather something less once you deduct the economic values gained by all the positive externalities that come with the core product. 

 

 

 

 

A smaller BIM competitor cannot offer the market equivalent economic value in positive externalities; therefore, it must compensate with either lower prices, better core features, or both. Thus, you can find the features Jens Kaasholm is seeking in Revit in rival BIM solutions, but equally, you cannot find the same benefit value in positive externalities. 

Autodesk Revit is not technically a monopoly; a significant industry concentration exists around it, but there is a critical difference. There are plenty of viable market options for BIM in AEC. Iain Godwin, former director at Foster + Partners, notes that the AJ100 firms in the UK typically have many Bentley Microstation licenses and licenses with other BIM systems. 

Quasi-Irreversibility of Investment

Still, despite the presence of alternatives, there has been an overwhelming sense by larger firms that standardizing on Autodesk Revit is the commercial decision that made the most sense. Why is it referred to as a “commercial decision” versus another type of decision? 

Dave Moyes, Information Manager Partner at SimpsonHaugh in Manchester, explains, “To be honest, the reason why we moved to Revit was commercially driven. It was not because it was the best product on the market. We still have a lot of Microstation seats here. We would be excluded from contracts if we could not deliver an RVT file.” 

Nick Dunn, ICT Director, PRP out of London, a large multi-office AE firm, adds: “Commercial for us means we needed to take this route to be more integrated with consultants.” Dunn spoke about Autodesk’s marketing machine and its ability to conflate Revit with BIM during the early BIM transition years. But marketing is not the only reason why engineers began to grab hold of Revit. Autodesk offered what is commonly called “closed BIM,”—meaning architects and engineers could work together within the same software system and file format. 

This is where the factor of economies of scale comes in—another pillar of QWERTY-Nomics. Working within the same system is what economist Paul A. David refers to it as “a decreasing cost condition.” In general, the more people join a particular technical system, the more the expected present value of that system rises in relation to falling costs for that system. One such considerable cost of any BIM or complex software system is that of training, an important aspect discussed below.

 

 

 

 

When BIG left Revit for Archicad more than six years ago and returned to Revit, Jens Kaarsholm explained that recruiting staff with experience with Archicad was an issue but far from the only issue. “The grass is not greener in Archicad, nor in Allplan, AECOsim, Microstation, Blender, Vectorworks, or any other BIM solution as it stands right now. But surely, recruitment makes it harder to switch to any of those.” When the firm was migrating contentiously back to Revit and had overlap, Kaarsholm noted that staff flexibility was an issue. “Staffing flexibility was challenging because skills across the two BIM solutions were unequal.” Another issue was that of maintaining two sets of templates and standards across two BIM solutions, reminiscent of the early days of telephones with banks replicating two or more sets of wires, junction boxes, outlets, and physical telephones. 

This set of issues is part of the “decreasing cost condition” of unifying on a dominant de facto standard system. But there is no doubt in this author’s mind that the most significant positive externality associated with such extensive standards is one of falling costs with respect to a large pool of trained people. But how does an industry avoid the various market failure conditions expressed in the Open Letters if a pernicious, self-reinforcing de facto standard fails to not just meet the needs of a small but influential segment of customers but more broadly demonstrates general development velocity concerns relative to its market competitors?

As economist Paul A. David noted in his paper, Clio and the Economics of QWERTY, “A particular system could triumph over rivals merely because the purchasers of the software (and/or the hardware) expected that it would do so.” David continues, “Although the initial lead acquired by QWERTY through its association with the Remington was quantitatively very slender when magnified by expectations, it may well have been quite significant to guarantee that the industry eventually would lock into a de facto QWERTY standard.”

This expectation factor appears to have a real cultural force in the AEC industry as well, and this force does play itself out not just between firms but also critically in academia. 

University and Cycles

This is where universities come into play. There is considerable debate about whether architecture schools should teach software systems or merely provide the resources for such learning. A more significant issue is that graduates need to be prepared for the industry, where universities inadvertently contribute to what architect Nick Dunn calls “the snowball effect.” 

Schools and instructors get in the business of encouraging students to learn the software systems that most firms (often their firms) use. Then the firms using alternative BIM systems struggle to find new staff with prior knowledge of competitive alternatives. This “snowballs”—to use architect Nick Dunn’s phrase—to switch to the software system that most people already know. The cycle is pernicious and self-reinforcing.

 

 

 

 

Moreover, the universities face a conflict of interest. One interest is serving the overall welfare of the industry for which they are training the next generation. That interest should focus on industry optimization and training the next generation with the skills to manifest that optimization. However, such training would likely cut against the grain of simply training for future employment. 

Universities may teach software but do not teach it how it should be taught. Iain Godwin, formerly a senior partner at Foster + Partners and Owner and MD of GodwinConsulting.Net, explains. “Graduates need real-world experience in technologies; they have very little experience or proficiency with technologies in a collaborative space like practice on the scale of projects people do as a norm.” They simply use the dominant tools used in practice on school projects working in isolation in most cases. 

They are also not taught how to think critically about technologies and base technology adoption decision-making on a critical applied economic framework. In general, architectural students are not instructed in business or economic skills, leaving them sheepish with respect to technology and practice culture. At the same time, they are simultaneously taught to think of themselves as visionary and forward-thinking in all matters related to design.  

next page: Superman Syndrome and IBM

Superman Syndrome and IBM

One may say then that many architects are set up exhibit Superman Syndrome. When it comes to the world of design, they are encouraged to be Superman; when it comes to the world of technology and business, they revert to Clark Kent, Superman’s incredibly conservative and cautious alter ego. 

Clark Kent is the type of man who, if tasked with the selection of acquiring new technology to run the newspaper business where he worked, would surely call up IBM. In a fascinating article from Forbes titled “Nobody Gets Fired for Buying IBM.’ But They Should,” author Duena Blomstrom, author of “Emotional Banking” and co-founder and CEO of PeopleNotTech, opines, “why didn’t they?”

The article explores the rationale of why people did not get fired for buying IBM in the 20th century. Blomstrom writes, “According to them, it was the only safe bet—when employees in various organizations were mandated to find the best piece of software or consultancy for a certain project, should they have bought it from IBM, this was to shield them for repercussions if anything had gone wrong as they presumably had the strongest of reputations for not allowing that to happen.” 

In the mid-late 20th century, IBM was known for only taking on projects they believed could deliver on what was expected. Blomstrom writes, “It’s a fascinating lesson in branding.” As hereto mentioned, Autodesk’s brand reputation in AEC has similar gravitas, but one built around a security mindset of avoiding the negative externalities that Autodesk AEC rivals cannot yet ensure their customers may experience. 

A Way Forward

Open Letter firms are not trapped; they have options. The first thing they ought to set straight is to figure out if their organizations are what Blomstrom calls “IBM-buyers,” meaning IBM-buyers don’t feel entitled or mandated to take what appears to be risky decision-making on behalf of the company. 

Not wanting to condemn IBM, which does make wonderful products, Blomstrom advises: “Organizations that learn how to create and then religiously foster true bravery are incommensurably more successful than those that don’t, and the gap only stands to become more pronounced in the years to come, where the human element of decision making will become the competitive advantage.”

It is a stunning quote for the Open Letter folks to hear, and it has this author contemplating the notion that the human element grows even more critical in the future when over-the-shoulder AI becomes more common. As for bravery, some firms from the Open Letter have stepped up evaluations of alternatives. 

Nils Fischer of ZHA says, “Quite frankly, it is at the point where any viable product is now being investigated.” Dave Moyes of SimpsonHaugh adds, “for my practice, we have started investing in other tools, and we are actively engaged with the usage of Archicad.” While some firms may move slowly in this direction, others on the Open Letter will take a wait-and-see approach, perhaps even more, now that Autodesk has announced its paradigm-shifting direction with Forma. 

Forma for others will have precisely the opposite effect. We opened this article around the story of the QWERTY keyboard path to dominance. QWERTY-Nomics as defined by economists Paul A. David looks at factors like technical interrelatedness, economies of scale, and quasi-irreversibility. All three conspire to direct decision-making that compounds net benefits for the adoption of the system with the most significant adoption. But Forma is starting from ground zero. 

The announcement of Forma sends powerful signals to the market. Eschewing the details, for now, one signal is that further investment in Revit should be likely tempered. Until Autodesk explains how future Revit investment carries long-term value into Forma, the Revit market is expected to be cautious. Another signal is to firms on alternative platforms. Why point the ship towards Revit now if a massive paradigm shift is afoot? The Forma announcement just solidified the user bases of rival BIM systems, who may coincidentally have little interest in a paradigm shift. 

For Open Letter firms, Forma does provide some form of an answer by Autodesk about the Letter’s issues. To discuss their reaction to Forma is deserving of a separate article. 

Closing Thoughts

During the 1940s, the US Navy experimented with the faster and more efficient Dvorak Simplified Keyboard. The Navy’s studies showed that the cost of retraining on a new, more efficient system paid for itself quickly. But a government study and the stochastic decisions of a free market lead to different outcomes. In the case of QWERTY, the free market failed. The less performative system became the de facto standard keyboard layout that is seemingly intractable.

What the Open Letter group should be asking is: does the AEC market truly function best under a de facto standard, or would it perform best without one? Because of network effects and various positive externalities—including those that universities reinforce for selfish and unselfish reasons—some technical markets tend to steer towards de facto standards. 

 

 

 

 

Such standards, like whales in too shallow of water, can run a ground whereby the core benefits of the system diminish against a landscape of extensive positive externalities that ultimately do not fully compensate for the core system’s shortcomings in the final benefits analysis. Friedman will say no exchanges occur unless both parties benefit, but some exchanges are now taking place with one party feeling far less benefit. It thus begs the question, is the AEC software market not genuinely free or simply perceived as such? And does the difference really matter? Either way, the Open Letter firms have options and will make choices. 

In the meantime, David’s QWERTY-Nomics does clarify aspects of the AEC market that seem especially pronounced. The Open Letter groups should invest time in helping the overall AEC industry (including academia) understand how factors such as technical interrelatedness, economies of scale, and quasi-irreversibility of investment have led to where the industry stands today. 

Revit is not a market failure like QWERTY. Revit is a market success that has—along with its key rivals—ushered in the BIM transformation. But this overall transformation—the complete digitization of the AEC/O industry—requires much further optimization and specialization, and the big failure point now appears to be industry concentration itself because it is unable to keep abreast of the industry’s development needs at the pace required. 

In other words, if the AEC industry had true neutral data interoperability standards (industry-wide compatibility), providers’ economic incentives and activities would shift away from focus (or reliance) on network externalities and lock-in and instead be forced into faster-paced competitive races or shift into specialization—both factors that would increase the social welfare of the entire AEC industry.