Q&A with CEO Erik de Keyser: On the acquisition of Bricsys by Hexagon

Issue #997

 

Transcribed by Ralph Grabowski The bombshell announcement at last month’s Bricsys 2018 London conference was that Bricsys had sold itself to Hexagon of Sweden, and is now part of the Hexagon PPM division. (Hexagon Power Plant  Marine was formerly known as Intergraph, and at 50 years old the oldest CAD firm still in existence.) Hexagon is primarily a known as a CMM [coordinate measuring machines] vendor and like Trimble (which is primarily a surveying instrument vendor) has been acquiring software companies to expand its reach.   Bricsys is popular enough in Europe and parts of Asia, primarily India and Japan, but had been frustrated by its inability to break into the American market in a significant manner. For more than a year it had looked for financial assistance to make that breakthrough, and now has found it through Huntsville, Alabama-based Hexagon PPM. To compare companies by revenues, Hexagon is about as big as Dassault Systemes and Siemens PLM Software at roughly $4 billion. That makes Autodesk a distant 4th ($2.5 billion). The comparison with Autodesk is apt, as BricsCAD is an AutoCAD workalike; unlike IntelliCAD-based software, BricsCAD goes beyond what AutoCAD is capable of. The purchase price was not announced, but given Bricsys revenues of 13 million Euros a year, we can assume a purchase price estimated roughly at US$45 million, given the typical 3x valuation metric. At the London conference, CAD journalists had the opportunity to quiz Bricsys ceo Erik de Keyser and his new boss, Hexagon executive vp Rick Allen, who is also president of CADWorx & Analysis Solutions. Left to right: Rick Allen and Erik de Keyser at the press conference - - - Q: For Bricsys, why sell now? For Hexagon, what is the big play: attack Autodesk and the BIM market? Erik de Keyser, Bricsys: To be successful in selling and marketing [on our own], we would had to take huge, huge steps. We might have had to reduce our R&D [research and development] from 46% to 20% to fund the marketing. Or else we explore working with a big company, one that has 50 years of experience in marketing and sales. We [at Bricsys] are excellent in software development and designing new technology. We sold now, because there was momentum from both sides. We talked about it for 1.5 years [with Hexagon PPM].  Rick Allen: We’re not going after anyone’s throats. We are giving customers a choice.  [I began looking at BricsCAD as a platform for CADWorx because] I was afraid for our CADWorx users, with Autodesk’s pricing changes, subscription-only, and rumors of Web-only. So we boarded with Bricsys. Yes, their API[application programming interface] was missing some things, but their response was not months but hours. Over eight million lines of [CADworx]code were ported in nine months. And it was stable. When we look at Revit’s market penetration, we saw it wasn’t very deep. There was a lot of user dissatisfaction. They should be a little bit nervous [about the BIM capabilities in BricsCAD]. Q: Will sales [of BricsCAD in the USA] be direct or through resellers? Allen: Both. Direct sales for huge projects and customers; resellers for smaller ones. Q: What caused Autodesk to cut you off from ADN? Allen: We bought Coade [plant design software], which is platform-independent. That was eight years ago. [Coade subsequently became CADWorx.] I was the second-oldest ADN [Autodesk Developer Network] member. After Autodesk canceled our ADN agreement with no reason, I got nervous about the future of CADWorx. Now Autodesk should be nervous, because I find that Revit penetration is not very deep, and that users are dissatisfied. de Keyser: We estimate that BIM penetration is only 16% [of all potential BIM seats], split between Revit, Vectorworks, Graphisoft, and others. This gives Bricsys and Hexagon PPM a big chance. I hope to reach 20-25% market share in a few years time. Our big sales pitch is that you don't need to leave DWG or translate to/from DWG. The workflow stays in one format as you move from application to application -- at a fraction of the price. We will win one customer at a time. Q: Is Hexagon head office behind you when you attack Autodesk’s market in CAD and BIM? Allen: And Inventor. The president of Hexagon has his name on the press release [announcing the acquisition of Bricsys]. de Keyser: Once everyone is on IFC 4 [industry foundation classes, the BIM exchange standard], nobody can hide. You have the [BIM] model, no matter who produced it. Q: Will the Bricsys organization change? Allen: We really like how Brcisys works, and it has some similarity to how we work. We’ll get some ideas from them. Q: What can I expect to see in the next one or two years of the BricsCAD product. de Keyser: We have a tremendous drive to get products finished. After this conference, we already know 30-40% of what will be in BricsCAD V20, because they did not make them in V19 [released in late 2018]. Within two years, I can imagine [a feature set] that is so ambitious that it cannot make it into V20, but it will be in time in V21.  Allen: My focus as always been on integration between applications, and we have lot of analysis software.  Ralph Grabowski: Now that you model HVAC systems in BricsCAD V19, how do you know what size to make them?  de Keyser: Companies are making HVAC [heating, ventilation, air conditioning] calculation software, but not good modeling software. So we feed them data [for determining the sizing of HVAC units]. Q: Dassault is pressuring ACIS [solid modeling kernel] customers to switch to CGM [Dassasult’s homegrown kernel]. What are you going to do [as BricsCAD uses ACIS]? de Keyser: Be sure we are talking to the others. We hope Dassault will let us stay on ACIS. Parasolid is not multi-threaded, and BricsCAD uses multi-threading big-time.  Q: Do you want to buy ACIS? Allen: That’s another discussion. Q: Any ideas on how to convince all those unhappy users [in USA] you keep talking about to switch? de Keyser: We have been around 16 years, it is a hard battle. What we are missing is people knowing that we exist. If you look at the footprint of Hexagon in USA, it is quite large, so that gives us a boost in the US. Once we get 10 or 100 times more customers, the awareness grows. it is hard to predict when this will happen. Allen: We will lead the horse to the water, and we think it will drink. www.coade.com/   Why Hexagon Acquired Bricsys Opinion by Owen Wengerd The following opinions and observations are strictly my own and do not represent the views of any other entity. As a developer working for Bricsys and with Hexagon PPM, I have a unique perspective on the recent marriage between the two. I am familiar with the unique culture at Bricsys, its goals, and the motivations of its principals. As well, I got a glimpse inside Hexagon PPM while working with them as the technical liaison on a long-term internal project. I am a bit biased, no doubt, but I hope my years as a staunch and sometimes outspoken end-user and developer-advocate in the AutoCAD world gives me credibility as an independent voice.  While the new parent of Bricsys is Hexagon PPM, PPM is only one division within the Hexagon AB conglomerate, which has 24 brands, such as Leica Geosystems (surveying), MSC Software (simulation software), and Intergraph (design software). The raw disparity in size (200:1) between Hexagon AB (parent of Hexagon PPM) and Bricsys is a deceptive metric for describing the acquisition. Nevertheless, Bricsys is a company known for punching above its weight due to its accelerating development trajectory and its 44% R&D investment that bring more value to the table than its modest annual revenues suggest.  I think the acquisition may be viewed accurately as a genuine strategic partnership between two companies with complementary needs. One has the more formidable balance sheet than the other; both contribute significantly to the partnership. What Bricsys Contributes. Bricsys is a company with few managers and no bosses. I have found that it is a libertarian laboratory of controlled chaos, where everyone at all levels is enabled to experiment, take risks, and even fail sometimes (gasp!). The result is a small, highly motivated, and very skilled workforce with virtually zero overhead that churns out innovations efficiently and makes advancements at a remarkable pace.  What Bricsys Needs. This kind of flat organization may be a fantastic place at which to work, but it doesn't scale quickly, and so it isn't well equipped to mount aggressive marketing campaigns or fight expensive legal battles. What Hexagon Contributes. Hexagon AB has twice the revenues of Autodesk. Hexagon is always looking for investment opportunities, and now it sees the opportunity in Autodesk's failure to capture the BIM market and then capitalize it, as it did with DWG. This may well have Hexagon PPM mangers licking their chops at the prospect of taking a bite out of their old nemesis, Autodesk. What Hexagon Needs. Hexagon PPM's software runs on Autodesk's DWG platform. This is an uncomfortable reality for a company that tried (and failed) to unseat AutoCAD with a CAD platform its own from the Intergraph days of yore. Add to this Autodesk's decision divorce its undesirables, those customers who have refused to jump into black hole of the continuous revenue stream (a.k.a. subscriptions). Adding subscription-only on top of the slowed innovation of the base AutoCAD platform creates a remarkable window of vulnerability into Autodesk's market dominance. If only there were an alternative to Autodesk's DWG platform...  Enter BricsCAD. Bricsys and Hexagon Together. Understanding the dynamics at play makes the partnership between Bricsys and Hexagon obvious. Neither Hexagon nor Bricsys individually are able to capitalize on the opportunity Autodesk presents them. (You can bet that Autodesk has made the same calculation.) By joining forces, however, Hexagon inoculates Bricsys against Autodesk's marketing and legal might, while Bricsys frees Hexagon from Autodesk's leverage in DWG and CAD platforms.  What does the future hold for the loyal and growing BricsCAD user base? Hexagon needs an alternative to Autodesk's DWG platform to achieve its market objectives. We can infer from this that BricsCAD will remain open to third-party development, continue to be competitively priced, still offer perpetual licenses, and so on.    Erik de Keyser, the CEO of Bricsys, has assured everyone publicly and in private that he will continue to operate Bricsys as before. I believe it is his intention to keep running the company with minimal changes.  There will be some change, but I think there is room for optimism. The same team of people who brought you BricsCAD V19 is already working on the next two releases, and I do not expect this to change.  Any dramatic change to BricsCAD as a platform would work against Hexagon's own interests. Mr de Keyser and Hexagon both want the same thing: DWG as an open platform. As we close out 2018, I think we are seeing a perfect storm developing. [Owen Wengerd is an independent software developer working for Bricsys since 2015.]   ARES KUDO: MODERN DWG EDITING IN THE CLOUD   ARES Kudo is the only online CAD solution offering a full set of 2D features to read, create, modify, and share DWG and DXF drawings. Nothing to install. It runs in your Web browser and your files follow you on any device. ARES Kudo is integrated with cloud storage services like Google Drive, Dropbox, Box, OneDrive, OneDrive for Business -- and industry-specific solutions such as Onshape and Trimble Connect.  Visit www.graebert.com/areskudo to learn more and activate your own free trial at kudo.graebert.com The Rest of the News Some of the most recent posts on my WorldCAD Access blog: BricsCAD V19's Best Three New Functions BricsCAD V19 Best: #1, Nearest Distance Editing BricsCAD V19 Best: #2, Blockify Conversion BricsCAD V19 Best: #3, QuickDraw Development   Bricsys 2018 London: Day 1 Bricsys 2018 London: Day 2 What's Coming in BricsCAD Mechanical V19 & V20   Archive: Future of Simulation with Comet Why IFCs are so bad at BIM translation - - - Vention keeps adding to its MachineBuilder3Donline machine design system: Create logical groups within assemblies that can be moved, rotated, copied and re-used. Leave comments and use pins to resolve issues www.vention.io/ - - - For Google, the horror is realizing that it is missing out on more than just advertising revenues from Chinese search market: Huawei Watch GT  "represents a fresh start for the company that doesn’t include Google." No Google on smart watches, no way to way to syphon user data to sell to averting agencies. Being lackluster at upgrading WatchOS got Google into this situation with Huawei and Samsung. Innovate or die. Or perhaps Google is finding that it isn't getting sufficient useful data from users, and so will allow WatchOS to die, like Picasa. - - - Bricsys offering the max version of BricsCAD -- includes the BIM and Sheet Metal add-ons (but not Communicator?) -- free for a year to students, teachers, faculties, and academic institutions. Register through bricsys.com/en-intl/academic/  - - - For the first time (AFAIK), ARES Mechanical is available as a 30-day demo. Download from Graebert through graebert.com/cad-software/download/ares-mechanical/  - - - Cincinnati is close to launching its new, high-temperature 842°F, batch-run SAAM (Small Area Additive Manufacturing) printer to 3D-print materials for high-temperature aerospace and autoclave medical applications, as well as printing polycarbonates. www.e-ci.com/saam - - - On the road to being Vietnam's first automobile and eScooter brand, VinFast licensed Teamcenter, Tecnomatix, and SIMATIC IT UA from Siemens PLM Software. - - -  For late-breaking CAD news, be sure to follow upFront.eZine on Twitter at @upfrontezine. Letters to the Editor Re: Why Dassault figures Solidworks will become a billion-dollar brand The user base has not quite figured it out yet, but Solidworks CAD is more or less running in place from a development standpoint over the last eight years or so. Dassault is clearly investing their R&D [research and development] elsewhere -- Enovia PLM, and CGM-based apps like Industrial Designer, Mechanical Conceptual, and now XDesign. XDesign will not take off either, since most of the Solidworks user base is not looking for a "bridge to 3DExperience," as Bassi hopes. Dassault is just dying to get out of licensing Parasolid from Siemens. Sooner or later, these failed development projects will come back to bite. As with other software, cloud-based CAD will bring tons of advantages. I'm not going to list them out, as Bassi openly admits this. But there will continue to be tension within Solidworks between legacy and new platform advocates, not to mention keeping the VAR [value-added reseller] base happy. A house divided will not be able to keep up with players like Onshape, Siemens, and maybe other newcomers, who are marching to clearer targets.       - Lou James (via WorldCAD Access) The editor replies: It was fascinating to observe the disconnect of the Solidworks CEO spending most of his keynote speech at Solidworks World 2018 showing off a suite of non-Solidworks programs in front of the 5,000 Solidworks users.    Thank You, Readers! Thank you to readers who donate towards the operation of upFront.eZine: Open Design Alliance (small company donation) Should you wish to support upFront.eZine through PayPal, then the suggested amounts are like these: $25 for individuals > paypal.me/upfrontezine/25 $150 for small companies > paypal.me/upfrontezine/150 $750 for for large companies > paypal.me/upfrontezine/750 Should Paypal.me not operate in your country, then please use www.paypal.com and the account of [email protected]. Or mail a cheque (US$ or CDN$ only, please) to upFront.eZine Publishing, Ltd., 34486 Donlyn Avenue, Abbotsford BC, V2S 4W7, Canada.   Spin Doctor of the Moment "Please note that you will be deemed to have accepted the changes to the Lufthansa terms of use and privacy policy, unless you object in writing by email within two months of receipt of this email. "Should you object to the changes made to the terms of use or privacy policy, we will delete your Lufthansa profile, in accordance with clause 5 of the Lufthansa terms of use."     - Lufthansa email to customers   *8553