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(Source enr.com - Date 3/23/03)

By Judy Schriener

Citadon Inc. has gutted most of its sales force and is looking to fill its open CEO slot with a heavy hitter from one of its major customers.

The San Francisco-based dot-com let about 75 people go yesterday in the U.S., the U.K. and Hong Kong, nearly all from its sales force, plus a few from customer service and administrative support. Citadon has decided to limit its sales outreach in an effort to concentrate on existing customers and the work they've already committed to for the year, which amounts to $10 to $15 million, says Ian Howell, senior vice president, operations. Citadon's major enterprise customers—which are also investors—are Bechtel, Fluor and GE Power Systems.

Citadon's staff now numbers about 100. The firm offers online communication, collaboration and process management systems to the construction industry. It has been one of the leaders among Internet firms for the last couple of years.

The new CEO will be announced in a few days, pending finalization of the paperwork, says Howell. The previous CEO, Doug Sabella, resigned about a month ago and joined Tumbleweed Communications Corp. in Redwood City, CA, as president and COO. In preparation for the CEO change, Citadon has begun reorganizing away from a marketing-driven company into a customer-focused firm. "We are focused on our enterprise customers and what they need going forward," says Howell. "It's not so much about sales and marketing; it's not about visibility." Therefore, Howell, who had been senior vice president for strategy and business development, now is in charge of operations. Shone Malliet, who had been in charge of sales, now is senior vice president of field operations for the Americas as well as the U.K. and Hong Kong.

Citadon had hoped to end up with revenues of about $25 million this year but has decided to back off from that goal and the accompanying financing risk it would require. The goal of reaching break-even won out. In keeping with the 80/20 rule, 80% of Citadon's business will come from 20% of its clients, and the new rule at Citadon is "Let's focus on the top 20%," Howell says. "Focus, focus, focus."

What it means to the industry: Citadon is in good company these days, unfortunately. With major old-line companies (like Proctor & Gamble) and the computer- and Internet-dependent companies (like Oracle) alike announcing layoffs in the thousands every day, the knives are cutting quite close to the bone. The dot-coms in our industry, including McGraw-Hill's partners BuildPoint and e-Builder, have done the same thing this year on a smaller scale in an effort to become profitable, or at least to stop the hemorrhaging. All fat must go. "Fat" includes marketing and sales, as companies struggle to convince the very same investors that drove them to spend gazillions of dollars the last couple of years on hype and vaporware that they suddenly overnight became great business managers and, therefore, still deserve their investments. Accountability now is the name of the game, as everyone's titles across dot-comland change from VP of marketing to VP of sales or VP of sales to VP of operations.

Few companies have stuck to making a good product that works, providing acceptable customer service (let alone exceptional customer service), and developing the best technical solution they can with enough bandwidth to handle their customers' hearty participation, but those that do are likely to still be around next year. Citadon will have to prove that it is one of them. Remember that it was Bidcom, which merged with Cephren to form Citadon, that started the whole hype machine in the construction industry's dot-com arena. They didn't do anyone any favors with that. But it's mostly a whole new management team that will take on the challenge of turning the preferences of three large investors that are also their major customers into a standard for the industry. Others have tried and now litter the dot-com cemetery. Twenty Pounds, OnBedrock, AECVenture, AECDirect, RedLadder, to name a handful, pounded their chests to declare that they would be THE place, the answer, the standard. Try to find them now or get some functionality from them even if they haven't officially been pronounced dead.

Ironically, the construction industry is starting to adopt the Internet mentality and become aware of the potential benefits that they can realize by collaborating, bidding, managing and estimating online (purchasing has a ways to go in terms of receptivity), and anything associated with entering data once instead of having to do it 50 times in ways that cannot travel across the construction process. The industry will keep on moving in this direction, regardless of what the NASDAQ is doing. The question is, which companies will be left and what services and products will end up to be the industry standard. The answer will be awhile in coming. But those in the construction industry that wait for the dust to settle will find themselves turning to dust themselves as more savvy competitors differentiate themselves by becoming proactive in offering owners cost savings through working with the Web, ASPs, online collaboration, XML, online project management, online bidding and (eventually) procurement. Any reputable dot-com can take existing data from another system and somehow figure out how to preserve it. The risk is higher in not plunging in.

Isn't it funny that a year ago, if any company advertised, they got lost among the other dot-com hype. Now, when the construction industry is more receptive than ever to receiving the message and learning what differentiates which dot-com from which, the Internet companies are abandoning their advertising and marketing efforts. If the old-line, traditional software companies that kept quiet(er) last year while they were developing their services and products win out, it will be in no small part due to their keeping their name and message out in front of the industry they helped build.

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