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

By Judy Schriener

Kaul and Aalami

It's not BuildPoint.com anymore; it's just BuildPoint. Ordering the removal of the out-of-fashion "dot-com" from its logo was the first sign that new CEO Mike Kaul would be driving BuildPoint into new territory. "The [old] BuildPoint story was about transaction revenue," he says. "Now we'll sort of become the ERP vendor or CRM vendor for the construction industry." Spoken like a true software developer.

In other words, BuildPoint is not trying to be a destination Web site anymore, where contractors can go to do procurement online and give BuildPoint a chunk of the transaction as it occurs. BuildPoint now seeks to be the power behind what other companies want to do, more like a private-label technology company to whom big companies pay big licensing fees to use BuildPoint's software to do whatever e-business or customer relations transactions they want to do.

BuildPoint is now going to focus on integrating fewer offerings. The firm has decided to dump its financial marketplace and community section and keep the bid manager, which automates the bid process; the subqual module (formerly prequal), which prequalifies subcontractors in the prebid process; and e-catalog and directory services. "All the fuzzy stuff is gone," says Florian Aalami, founder and chief technology officer of BuildPoint.

The firm's approach will be to map out the workflow and business processes and then try to see what "pressure points" BuildPoint can alleviate. In focusing on integrating fewer applications, "the big deal is to make these things work well...and give them to people in small, easily digested parts," says Kaul. "We're going to hold off on the 'elegant' -- developing software is like art. You get all wrapped up doing the 'elegant,' like art."

The big changeover starts with one of BuildPoint's most significant partners and investors, the McGraw-Hill Construction Information Group, parent of construction.com. One of the challenges of the partnership, which was forged last year, was overlapping offerings. BuildPoint and McGraw-Hill's construction.com both wanted to be destination sites for BuildPoint's applications; visitors could get news and weather on both sites, though not the same news and weather.

Now BuildPoint and McGraw-Hill have agreed that they will each do what they do best and leave the rest to their partners, says Kaul. "Why not sell our applications and their information through one site--construction.com," Kaul says they concluded in talks this week. "We provide the applications and McGraw-Hill provides the users and the content. That makes much more sense."

BuildPoint and McGraw-Hill have a two-pronged relationship, says Norbert Young, president of the McGraw-Hill Construction Information Group. McGraw-Hill's two roles are that of a minority investor in the firm and also as a business development partner. "The evolution of their company [in the new direction] is building the business development relationship and sustaining the investor relationship," says Young. "We've always been interested in their applications, and the further integration of applications and content is right in line with our whole vision" of supplying content, applicatons and services through construction.com, he adds.

BuildPoint already provides the technology for two of McGraw-Hill's e-business applications. BuildPoint powers Dodge Bid Manager, an online application that automates the management of subcontractors and solicitations of subcontracts on dodge.construction.com and construction.com. BuildPoint also built the technology that automates the purchasing of construction materials from initiation of RFQs, solicitations and purchase orders through purchasing on sweets.com and construction.com. BuildPoint supplies similar technologies for other firms as well. Announcements of additional "powered by" applications for McGraw-Hill will be made soon, says Kaul, presumably at the upcoming A/E/C SYSTEMS show in Chicago, beginning June 18.

Kaul's first day at the Redwood City, Calif.-based e-business company was May 21. He came from HotDispatch, where he was CEO. HotDispatch is a company that is "almost identical" to BuildPoint in that it allows parties to exchange information with others for a fee, in this case software developers exchanging technical information with each other. "The model was to license the exchange to the enterprise," Kaul explains.

Kaul wants to expand the idea of taking BuildPoint's technology to other enterprise-oriented companies, companies that have "big chunks of users," more processes, more margin to worry about and more willingness to pay for applications that allow its whole company to get involved, he says. "You've got to get benefit into t he big users' hands first through the applications...then the transactions flow" after that, he says.

Since the idea is brand new to BuildPoint, the company is just beginning to target companies for its sales pitch. "In the applications environment, we should market it to general contractors first. We're talking to them as of tomorrow," says Kaul.

BuildPoint also will be looking to partner with others to integrate with applications that already exist, rather than building them themselves. For example, collaboration services and document management systems already exist, and BuildPoint will seek "best of breed" partners with whom to integrate. If there are two or three, so be it. "We have to serve our customers properly," meaning linking with those services and applications that their customers prefer, says Aalami. If need be, "we will partner with all three."

Kaul can't project a date on which BuildPoint will be profitable, but says that if the firm can do what it has set out to do, "I think we'll be on track to break even in the next 18 months." BuildPoint currently has 40,000 users online, says Kaul. Using BuildPoint services "is not free anymore," he says. About 170 general contractors have agreed to pay a few hundred dollars a month for the service. It's just the beginning. "For all the stones we've hurled in the past, let's examine what went well," says Kaul. "The solutions that were built make a good first version of a bid application end to end. We've also nudged the industry along for using the Internet."

Photo by Judy Schriener

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