Mads Bording Rasmussen, COO and member of the Executive Board of RIB Software SE, recently sat down to talk about the company’s strategies and how they are empowering the construction industry’s digital transformation.
Q: If someone’s interested in being an investor in RIB Software SE, why should it be right now?
A: We’re applying an industrialized way of thinking on how the construction industry can transform. We’re doing that based on a lot of leading indicators that we’ve seen from other industries such as automotive and advanced manufacturing, giving our customers the ability to build virtually before they execute physically, which we believe has a disruptive nature and has the ability to industrialize the construction industry. We are doing that by deploying our licenses and a subscription-based way, or license-based way, but also in a joint venture where we try to disrupt the supply chain as well. The investor’s profile that we’re looking for is long-term investors because construction is a slow industry. When this industry does transform and industrialize, RIB will have a significant part in that journey of the industry.
Q: When you talk to the large companies, it might take a year, two years to implement the technology, especially when they don’t go for the cloud option, how much of that do you handle yourself today? And is there a plan where that becomes more a kind of partner-based relationship?
A: We are great at making technology, we are fantastic in making technology and we should focus on that so I have zero intension of becoming a consultancy company. It’s not a product that you just take off the shelf then use it. So we had to deploy or train the methodology in implementing our products so that we empower and enable the customers to set an organization that can support the product. Going forward and especially as we’ve grown in a global footprint, we focus on creating a great product that solves some real productivity issues in the industry, and for us of course that’s a very compelling position to be in.
Q: In terms of the partnerships, is that as priority at all on the minds of your board?
A: It’s definitely something which is on the agenda. Currently we have certain specific topics, the top priority, one is our mobilization product as subscription-based product partnership with Microsoft, another one is our partnership with Flex, where we are disrupting the supply chain, and getting more customers and more value on that platform so that we have an active market space that can scale in a very efficient way. And then of course we have our key account market.
Q: You mentioned YTWO, which is your partnership with Flex, you are trying to change the way people procure building materials, and do more just-in-time concept. To what extent are you getting involved in that market and what is your role in the JV? What is Flex’s role?
A: Our technology being an integrated technology can create a very clear visibility on what building material is needed in a project at a certain point in time, and on a certain location. That’s the core of iTWO product. And in the context of YTWO we can now do that across the project portfolio that the customers have. So that information about what building material will be needed in the future, we call that Demand Visibility, that’s something that can be transferred from the joint venture to the OEM supplier, manufacturers of building material.
That means instead of them being a very classical manufacturer where they build on a network of wholesale retailors, they can align their production against the actual demand in the market. So it’s a much more lean way which fits into lower costs and direct transactions, sort of like Uber where supply-demand is connected and we sit as the middleman. Flex is very knowledgeable in building up this supply chain networks and managing the logistics. So in that sense, with our technology being used in executing these projects, we also have real-time feedback on the need for material that Flex can utilize to do just-in-time deliverables instead of the construction companies as they do today – keep inventory on site, which is not a very good place to keep your materials.
Q: About your partnership with MTWO, I understand that that’s your way to go to market in a different way, without the requirement of infrastructure. How you go about the market and address that opportunity?
A: There’s enterprise cloud that would cater for some of the large corporations that don’t want to have any infrastructure, large corporations that do not have internal IT capabilities in terms of their capital structure are very adverse against capital expenses and investments. So from our point of view coming from enterprise software then stepping down to the mass market but bigger, addressable market by having this subscription-based pricing model, it means that we’ll still be talking to large corporations, companies that have revenue over 1 billion USD and taking a rather significant number of users migrating initiative. But in parallel what we are doing is that we are transforming the user experience. Let’s say, one of these bigger general contractors, they actually want the sub-contractors to use the platform as well, they can invite them over the platform, then the sub-contractor could buy just a few number of licenses but take part in creating that eco-system.
Q: Can you talk a little more about the partnership with Microsoft? What do you bring to the table, what he brings to the table? And what’s the expectation going forward?
A: We’ve been fortunate enough to be able to make a strategic partnership out of Redmond so it’s backed by the top management of Microsoft. Microsoft is of course in a rally to win the cloud. In the construction industry we have very good fit there. So in order to do that in a collective way we obviously will have to pay Microsoft for service render. In addition to that we do monthly Hackathons, we have core development teams from Microsoft working with our development trying to solve some really user cases and real productivity issue by combining our technology. We will be doing joint presentations, we are getting the Microsoft team co-sales ready so if you are in Europe, step into an experience center, there are people that are capable to present our technology. Then on a more long-term horizon we are collectively investing in artificial intelligence, our technology has a big data model, that’s part of the offering already today, we do smart analytics, but based on all that compound of data that we can get in this cloud, we can actually drive real artificial intelligence around supervise learning but also deep learning, for us it’s about offering services for having virtual engineers that support, trying to break out of this low productivity environment.
Q: Whose solution is going to win? The design, or the workflow, you say you are neither. What do you have that they don’t have?
A: I think we need to differentiate a little bit, because we are not trying to be a design software company, but in order for us to come together and create an asset we need to bring those designs together, we need to federate that to make sure that it actually fits. So we are not trying to win the race against the design software, we are actually trying to amplify a process where great designs can be planned and build in a more effective way by integrating all stakeholders, and executed in a more sustainable and cost efficient way.
Going forward, you will see that more industrialized approaches are being used in the manufacturing assets, leading to precast factories being controlled by robots etc., but all of that fits into having an internet software connecting everything that happens between the design, and the financial input and output being managed by the ERP systems, and that’s based on where we try to position. So, who will win? Very good question, I think that the industry as a whole will win. It’s 14% of the world GDP, it’s currently completely under investment, meaning that the industry as a whole invest 1% of their revenue in technology. So for me it’s too immature to talk about who will win, it’s about who can create more value and open innovation, and partnerships to drive real productivity gains in the industry. And that’s my agenda, that’s the only agenda I have.