This article was written by Daphne Tomlinson, Senior Research Associate at Memoori.
Software is a critical component in the lifecycle of a commercial building, starting from the design, planning and construction phases through to building operations and facility maintenance; followed by refurbishment and renovation before the final demolition phase.
Until recently, the design and construction phase of the building lifecycle was totally separate from building operations and management. The processes between design, construction and building operations have been disjointed for many years, with very little transparency between them. The critical building data that is created during these phases is often overwritten or left behind as one moves through the building lifecycle.
However, we are now seeing the emergence of data sharing and convergence between the various stages, enabled by software and digitization of commercial real estate.
The recently announced offer by Schneider Electric to acquire RIB Software in a deal that values the German business at around €1.4 billion is testament to this trend.
RIB Software offers a software-as-service platform for planning, costing and real-time construction monitoring and is one of the leading players in the broader field of Building Information Modelling (BIM). RIB Software reported revenue of €214 million in 2019 and has more than 500,000 users. Schneider Electric seeks to strengthen its expertise across the building lifecycle, by augmenting its building management business with a platform addressing the Architecture, Engineering and Construction (AEC) sector.
While BIM has been on the radar for well over a decade, it has been mainly focused on design and construction and barely impacted building operations and management processes to date. This is changing with the Digital Twin approach, defined as the creation of a digital replica of a physical entity which continuously learns and updates itself. Many stakeholders view this approach as a fundamental game changer for the built environment and one of the key drivers of convergence in the building lifecycle.
The aim is to streamline project handover and optimize building operations with digital twin solutions by helping owners and project teams collaborate to create data-rich, digital buildings. The results are better information throughout the building lifecycle which helps reduce costs, delays, and miscommunication.
M&A, investments and partnerships by various stakeholders are enabling this convergence. Memoori’s recent report of acquisitions and investments over the last three years has been tracking deals across the landscape of major players and new entrants in the AEC software and smart buildings space. Some examples are described below.
Siemens, a major building automation player competing with Schneider Electric, has partnered with Bentley, an AEC software provider in a strategic alliance since 2016 to accelerate digitalization, including maintaining and managing digital twins across the asset lifecycle. This collaboration spans multiple domains and industries, focusing on process plant and digital factories, but also including integrated solutions for building design and operations. Siemens has also built up a minority stake in Bentley Systems which exceeds 9%.
Nemetschek Group, headquartered in Munich, Germany is a major AEC (Architecture, Engineering & Construction) software provider in Europe and one of the top global AEC software vendors driving the digitalization of the building industry.
With the acquisition of MCS Solutions in August 2018 for €49 million and Axxerion in January 2019 for €75 million, the Nemetschek Group addressed a new customer group in the Manage segment and considerably extended its target markets beyond Design and Construction, where they already has a good market position.
The acquisitions position the company as a player in the European Integrated Workplace Management System (IWMS) market, driving digitalization through the entire building process and realizing an exchange of information pre and post occupancy. The rebranding of the Manage and Operations segment of Nemetschek Group to Spacewell in February 2019 reinforced their ambition to address the smart buildings market.
Umdasch Group Ventures, the innovation hub and developer of future businesses in the construction sector for the Umdasch Group, acquired a 51% stake in Munich-based PropTech company NeoTwin GmbH in November 2019. The Group is consequently expanding its business activities to cover the entire building life cycle, thereby boosting its competence and future viability. NeoTwin is a real estate platform offering end-to-end digitization of the entire building lifecycle - fully BIM-compatible. This enables real time monitoring and controlling through metrics and analysis for all projects and assets of a portfolio.
Ireland-based Kingspan Group, who provide insulation and building envelopes, made a $10 million strategic investment in software company, Invicara, in January 2018. Invicara has developed solutions that integrate with Building Information Modelling (BIM) technology. BIM provides detailed digital representations of buildings, allowing time and cost saving collaboration between partners on construction projects such as architects, engineers, contractors, and owners. Working with Kingspan, Invicara will use its cloud-based platform to build a new solution that uses design and construction data to create new digital workflows.
Software solution providers targeting digital transformation of the built environment are attracting the attention of buyers and investors from both the AEC and building management sectors, as the major players in each domain jockey for position across the building lifecycle.