In design and construction firms that have a high level of maturity in their BIM processes, we sense a growing frustration at the pace of proprietary AEC software development and anger at how disadvantageous subscription business models are spreading. For many design IT directors, AEC software has become a trap.
“Welcome to The Village, customer No.6. A place of architectural beauty, a utopian world built by software developers for their customers, isolated from the mainland by mountains and sea, making ‘happiness’ literally inescapable.
By digitising your design process, you joined the inhabitants, ensuring permanent residency in The Village.
As long as you are cooperative and keep providing information in our approved proprietary formats, you won’t need to worry; we have a saying that ‘a still tongue makes a happy life’.
Those that are unfamiliar with the cult 1960s TV series ‘The Prisoner’ may be a tad lost at this point. ‘The Village’ is a mysterious place, where people of interest (spies) are incarcerated and subjected to interrogation for information. Meanwhile, on the surface, the village functions as if it’s a thriving and cordial community.
The series plays on the individual, their freedom, versus an Orwellian collective and its authority. If an inmate does transgress and tries to escape, a large white balloon called Rover appears, chases them down and smothers them to death!
With almost two decades of experience in this generation of BIM tools, most AEC firms recognise that their in-house expertise, defined workflows, legacy data and historic investment locks them to a particular software developer’s solution. This investment makes customers vulnerable to shifting software business models, licence changes, and any price hikes which their vendor of choice enacts.
As the architectural and construction market has slowly migrated to BIM processes and matured, the business models of our software suppliers have evolved far quicker.
Getting the elephant in the room out of the way early on, we have a market dominating firm in the guise of Autodesk, moving from the desktop and investing in cloud / software as a service (SaaS) technologies.
Over the last five to seven years, the majority of Autodesk’s development work has been in creating a cloud stack of capabilities and services. Its AEC-relevant desktop applications (AutoCAD, Revit, 3ds Max, Civil 3D etc.), on which its users rely, have seen much less in the way of development and improvements.
The company has also followed business innovations which impact its route-to-market, such as subscription, championed by Adobe. As Autodesk converted its user base from perpetual to subscription licences, it has seen its share price triple over the last five years and is generating the kind of profits that other AEC developers could only dream about. While this is undoubtedly good for Autodesk’s business, why are so many of its customers still complaining to us?
For Autodesk, the process of moving firms from its old model to subscription took a long time. It involved ratcheting up the pricing of perpetual and maintenance over three years, until eventually the lowest cost of ownership for new seats was subscription.
The company accelerated its plans to subscription by completely pulling sales of perpetual licences, with the final offer being an eight-year discount for trading-in perpetual licences.
I call this ‘upgrades through acts of regular coercion’. This rapid evolution through licence models has made the lives of BIM managers extremely painful, especially when having to deal with multi-licence types, multi-site and multi-geos. Even Autodesk CEO, Andrew Anagnost, admitted it is ‘licence hybrid hell’ for customers.
In a previous article, I reported on how surprised Anagnost was to hear of broad discontent from customers in 2019, eight months before the Open Letter to Autodesk from dozens of AEC firms was posted.
Without wasting precious column centimetres re-telling the story, Autodesk ended up reinvigorating development in Revit. But the discontent continues with the same issues: depth of development, escalating costs, licensing, openness and audits.
The Autodesk ‘Village’ is popular, but many customers still complain to me that they feel they have little control, that they feel like sheep being herded through gates. When talking about software development, especially with advanced signature architecture firms, I invariably get the response of ‘they are not listening to us’. But the company is clearly doing something right if you look at the share price.
Follow the leader
If something is proven to be very successful, others are going to copy it. It’s a fact of life. Autodesk and Adobe, and their financial results, are a beacon to software firms which want to drive growth and improve shareholder value.
The trailblazers of the software subscription service are now influencing other industry players, competitors in the market. Many of these software firms are also publicly listed and have undoubtedly come under pressure from investors to change to a ‘subscription model.’
The net result of this has been a steady flow of software firms rocking up at existing AEC customers, looking to eliminate perpetual licences, remove flexible network licences and mandate named-user licences or cloud-based accounts.
This is now a village-wide pandemic, and simply staying at home is not going to protect your firm from it. The new business models of software companies will mean increasing the cost of ownership of running today’s AEC tech stacks and getting the ire of BIM Managers and anyone that has to justify the design software budget. The more you use, the more you rely on, the depth of the integration, the more complex the proprietary format, the more limited the API, the less control customers have on their data and their costs.
We were led to believe that subscription would mean lower cost of ownership, more flexible licensing, and better consumer focus.
It’s true that professional software in our industry no longer costs $2,000 to $6,000 for a club membership fee. Start-ups benefit hugely here from low turnkey access. But in the long term, it invariably increases cost of ownership, tends to reduce development velocity and makes customers question value for money with greater frequency.
The innovation in subscription seems to be more in product bundling and upselling, than developing design authoring tools. Specifically in the BIM market, where a new generation is long overdue, business model evolution is just not cutting it.
The problem comes when software firms start asking for subscription to products that are old, that lack development velocity, or any depth to new functionality
There is only so much budget that firms will allocate for design tools. Many of the software firms which are jumping on the subscription bandwagon also have applications which are mature, having seen little development in the past five years.
To suddenly change the model, jack up the cost of ownership and promise yearly updates is going to be met with looks of incredulity. A case in point here being Trimble, which has revamped its SketchUp business. By volume, SketchUp is simply ‘bloody huge’, it’s a staple of many architecture firms.
The new business model for SketchUp impacts big firms which have lots of users. Trimble has removed the floating network capability and gone for a named user licence model. Several AEC firms we spoke with estimated the additional cost of all the extra seats they would need, would result in an increase of between 100-600%. Some have said they would stick with old perpetual versions instead of paying the increase. Some were told that would not be possible…
We are entering a period where our industry’s software developers feel their applications are worthy of higher value, usually under the guise of instigating a cloud business model, together with the promise of increasing the rate of development. This is built on the assumption that cloud-based everything is good and the concept that customers need more capabilities in their product.
Many AEC firms are already struggling with low margins and price hikes, so vendors mandating named-user licences is the last thing the industry needs. Design IT directors are trying to cut the cloth to fit their budget. This means prioritising software by value to the business and being less flexible when looking to take on new solutions. Budget compromises will mean not always having the best tool for the job. This presents barriers to start-ups getting a foothold.
Out of all of this, the death of the network licence is the most problematic. Historically CAD systems cost a lot of money and firms would have dedicated users, eight hours plus per day ‘drawing’. Once that market was highly penetrated and saturated, the next sales opportunity was the occasional user, someone who didn’t need a full licence but needed to open files and carry out some basic CAD functions.
The birth of the network licence meant more revenue from big customers bypassing that horrible question of who really needs to have a full copy of this expensive professional tool.
The reality is the network licence served a really good purpose enabling company-wide access on demand for a reasonable cost. When a software firm is seeking growth, the easiest place to look for is in its current customer base. Eradicating network licences and forcing one copy per user might be good business, but it’s a quick way to make your customers resent you and start to consider that the relationship is in trouble.
Escaping the village
When the world was flat, Autodesk’s market dominating DWG file format, ruled the drawing world. All the competitors had to support both DWG and DXF as they were the lingua franca of the design world.
It took years of work but the ODA (Open Drawing Alliance), a body which was collectively sponsored by Autodesk’s competitors, eventually reversed engineered DWG, providing a common toolset for the industry. We actually got to a point where design files could easily be shared among project teams and DWG became the ubiquitous .DOC of design.
On moving to BIM and 3D, the industry took a massive retrograde step and returned to proprietary formats, and the veritable Tower of Babel. Interoperability between BIM systems has never been a straightforward affair. Not only were they proprietary, but they were also intended to hold vast amounts of project information — not just schematics like drawings. A proprietary file to hold everything in a project seems like a great lock into a vendor and also a silly idea, given how big that file would get.
For most of its life, IFC (Industry Foundation Class) was a lowest common denominator format and left a lot to be desired. While it was sold as an interchange format, it really was only good for geometry referencing, given the dumbing down of the representations it could support.
Creating a proprietary BIM model required it to be sliced up like a sausage to share. It also didn’t help that there were so many poor interpretations of the standard. Revit even had trouble importing the IFCs it generated! In the early days, IFC presented a false sense of data portability. Thankfully the industry didn’t give up working on it.
Beyond traditional software developers, several key architectural practices are in deep discussion on ways to work together and pool resources
Now, 20 years into BIM, the liberation of data is now seen as fundamentally important amongst mature users, because with portability comes choice of applications, workflows and exchange.
Over the years, IFC has improved. The ODA’s IFC toolkit now looks set to make it an industry standard with even the most unlikely of events occurring, Autodesk joining the ODA and adopting its IFC as a foundation. This was an organisation that Autodesk had previously sued for reverse engineering the DWG format.
The ODA is now also deep into reversing the Revit file format (RVT). Other advances in openness are underway — Nvidia is promoting Pixar’s USD (Universal Scene Description) for geometry collaboration through Nvidia Omniverse; Speckle is an open source collaboration tool which can stream objects between platforms; McNeel has Rhino Inside which acts as a magical geometry data bus (to and from Revit to just about everything); and there are more.
Indeed, in the last two years, there have never been so many third-party tools with which to collaborate, data wrangle and bypass the limitations of proprietary file formats.
Beyond traditional software developers, several key architectural practices are in deep discussion on ways to work together and pool resources. They may well be competitors in the field of architectural design, but they recognise they face the same technological problems as an industry.
The main focus is on developing tools to liberate their data out of the old software silos and legacy systems, to derive their own solutions to get productivity enhancements which they are not seeing from traditional BIM software developers. While this is all still formative, the increased costs, lack of control and feeling of being trapped is focussing their minds to act.
One obvious target here is to attempt to better automate the 2D drawing process, an original promise of BIM software that never really delivered. This could lead to breaking up processes, which are done today in monolithic software applications to discrete components, lessening the need for expensive BIM seats. Imagine a world where you could design in any number of platforms and the data just flows, like swapping web browsers and using the Internet.
Other architectural firms are setting up working groups to engage with the wider developer community to try and ensure, at an early stage, that new products actually do something they need. If the current BIM software developers insist on merely evolving what is already available, this is not going to meet the needs of AEC design in the next ten years. IT directors need to see longer term visions and are wondering where this is all going.
A lot of what is driving this, so I’ve been told by software developers, is the ultimate end goal of having everything in the cloud. And you can’t have a cloud business model without a subscription model because its transactional and a service.
There are undoubtedly obvious benefits to having a cloud-based workflow. Construction and design are iterative and collaborative. Having the data in a central repository, which is easily accessible and always updated, makes perfect sense. But the question we should be asking early on here, is why should the data be held by one software vendor?
Sure, it makes it easier, but it also ensures reliance, and we know that inertia and ‘proprietariness’ can lead to losing control of the cost. If all your data is uploaded to one company’s server, stored in its formats, how accessible is that to people outside of that vendor’s cloud ecosystem, and how deep does competitor access to that API layer go?
Think of the Facebook model. We commoditised ourselves by putting our information on its servers. Facebook profits from this by being able to sell access to us, based on granular knowledge of our unprivate lives.
By standardising on a single cloud system, you pay the company to alter your design, you pay them to store the design, your partners pay them to access your data and, again, pay the company to use the tools to edit/add to the project.
Most AEC firms recognise that their in-house expertise, defined workflows, legacy data and historic investment locks them to a particular software developer’s solution
We are leaving the software business world of selling applications and entering into one where they own your business platform, your supply chain. It’s vastly more profitable, and easier to sell to a supply chain hooked on a proprietary format, than selling individual authoring tools.
Don’t get me wrong, there will be advantages and benefits for being in this gilded cage. However, given what has happened before, I only see being repeated down the line. The Village hotel, ‘The Eagle’, is very proud of its motto, you can check-out any time you like, but you can never leave.
Subscription is inevitable. It’s taking over the whole software industry. Even King Canute would not put a wager on turning back that tide. While brand-new services and cloud applications start out with a subscription model, at least these have relatively quick development cycle times. Being young applications, customers will appreciate high velocity development, hopefully answering their needs for the fee charged.
The problem comes when software firms start asking for subscription to products that are old, that lack development velocity, or any depth to new functionality. Unfortunately, the greatest potential for subscription revenue for the software developer is in the mature products, which have the biggest installed base.
Here the developer has the lowest maintenance cost for the code but the highest income. The incentive to redevelop from scratch for a new generation is simply not there if the product is not particularly threatened by the competition, and if you are actively pursuing so many other new markets.
With this lack of development, one does wonder what would happen should BIM software marketing deliver on the promise? Less rework, more coordination, less people needed to keep up with change orders… This all means the revenue equations of the software companies would be massively disrupted, as less seats would be needed.
More capable solutions with narrow AI reducing the quantity of design decisions needed to deliver a constructable design, means less people and less licences. A cynic might assume that it is not in the best interests of the software companies to improve the status quo.
As to the cloud, right now, the incumbent software companies are betting on the cloud, but that’s like saying I’m betting on electricity. The cloud is not a place, or a single collaborative tool. It is a marketing definition for storing information on the internet and running swarms of computers remotely, to increase computational capabilities. It also helps software companies control use and increase control of who uses their solutions. At the moment, the benefit equation is heavily weighted in favour of the software supplier. The cloud only adds value to the user once it increases productivity while lowering expenses. This marketed benefit has not been delivered, and it is hard to see how that might happen soon.
While traditional ‘Lego’ BIM tools will always have their place in bread-and-butter work, the top 20% of mature AEC firms are actively investigating alternative workflows. It’s easier when your conceptual approach is more concerned about geometry, using products like Rhino and Grasshopper.
While ‘Lego BIM’ may well be involved, it’s probably as a downstream process for the production of drawings from a model, rather than being used as an actual design system.
That said, firms are looking for alternatives to enable more automated 2D drawings. Producing drawings should not cost so much money or take so much time. Part of this will be driven by embracing digital fabrication-capable tools and workflows, as well as developing tools to lift their data out of the silos which the current generation of authoring tools have created. While there is a practical benefit to liberating their data, it’s not without recognition that there are many firms that don’t really ever want to be in a place where a single vendor owns their workflow and can dictate terms.
There are a number of initiatives bubbling underground to facilitate this. I’d highly recommend you come to London on 9 November for AEC Magazine’s NXT BLD event to hear about them. This includes an unmissable presentation from Greg Schleusner, principal / director of design technology, that will expose the reality of the state of technology in AEC that we must confront.
But, I digress…
Fundamentally, and I hate to admit it, it is still as quick to use a pencil, ruler and set square to communicate a large proportion of the design intent currently used to construct buildings.
In firms where architecture starts with the geometry definition, using tools like Rhino and Grasshopper, BIM is mainly used as a documentation tool. If there were no CAD or BIM, simply increasing the price of a ‘pencil’ to support investors of the pencil company would not be a sustainable business model. Especially if the pencils do not get better.
As we look at the architectural offices of hundreds of BIM operators, cranking out error-prone drawings from 3D models, it looks a lot like that typing pool of word processors we had at the end of the last century. Those jobs no longer exist. Now we all do our own typing, and the companies that sold us those typewriters are nearly all gone.
Until we move past the current crop of software that still have the fundamental aim of replicating pencils of the last century, we may see these software providers become the next ‘Typewriter’ suppliers. Immensely capable of providing the best possible way of creating drawings, but now so expensive that they will topple quickly following the next technology shift.
As an addendum. The bad news is that No.6 never really did manage to escape The Village. The last episode upset so many viewers, hoping to find out who No.1 in the village was, that Patrick McGoohan had to leave the country, as people ransacked his home.
Be seeing you (as they say in The Village).
The Prisoner and Portmeirion
The Prisoner’s creator and star, Patrick McGoohan used Portmeirion in North Wales as his set. It’s an Italianate village, or folly built by Sir Clough Williams-Ellis from 1925 onwards.
While many of the buildings were designed by Williams-Ellis, a number were rescued or donated instead of being demolished. The net result is an eclectic mix of styles, made all the more interesting, as most are at 2/3rds scale.
The architect also used trompe-l’œil techniques in building decoration to hide some more functional aspects of house design within the village. The Prisoner can be seen on Britbox or bought on Amazon. Portmeirion, situated on a shallow estuary is certainly worth visiting, it has a unique microclimate, extensive planting and evokes a sense of wonderment, in addition to the TV series mythology.