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

By Judy Schriener

An investment group led by Warburg Pincus & Co. has invested an additional $19 million in Citadon Inc., a leading extranet service firm. The investment group, which has also led previous rounds of funding, also includes GE Power Systems, GE Capital, Internet Capital Group and Bechtel Enterprises. It does not include Fluor Corp., one of Citadon's biggest customers and an investor in earlier rounds, which has undergone major downsizing in the past few months.

The $19-million infusion will be enough to get San Francisco-based Citadon "all the way to a profitable position," claims Bernard Fried, president and CEO of Citadon. "I'm on the record as saying it'll happen in the waning days of 2002. There's no question that I've pushed it out because of the economy."

Fried Photo courtesy of Citadon

Fried doesn't know if economic factors will work for or against Citadon. Customer have told him that projects are on hold or that companies are deferring going onto an extranet due to the economy, but they have also told him that they will be using a collaboration tool to save travel costs. "I'm getting both types of calls right now," says Fried. "We will not be immune from this recession. Everything is dependent upon our clients' clients" and whether or not they "start to get jittery and start to push off projects."

Citadon is getting hit up by "everybody" who wants a piece of the capital, says Fried, but he is being very miserly with money. Employees who had hoped for big rewards in the heyday of dot-coms have been "very understanding" and patient during the roller coaster rides of past months, adds Fried. He came on board to head Citadon in April.

Citadon secured the capital in late August but did not announce it until yesterday. The firm now employs about 90 people and its project collaboration services are used on 1,600 projects that have a construction value of over $110 billion, Fried says.

Major customers other than the investors include Barton Malow, AECOM Corp., Duke Energy and Gensler. Citadon was born out of the merger of Bidcom Inc. and Cephren Inc. in March.

Next generation
A good portion of the new capital will go toward development of Citadon's next version of its ProjectNet collaboration product, which should be released in mid-December, says Fried. It is "a complete consolidation of our two previous products," the process management capabilities from Bidcom and the document management side from Cephren, not just stitched together but built from the ground up. "It's a brand new product on a brand new architecture," he says. It will have one user interface for all of the features from both products, but with "a lot more configurability" that can be set by users, he says.

Last month, Citadon announced that it had chosen MatrixOne, Westford, Mass., and its eMatrix platform for its collaboration offerings. Fried likens the difference between what MatrixOne will provide and Citadon will provide this way: "When I got here, we were building both [something analagous to Microsoft's] Windows and Word." Citadon's strength was not in building the underlying framework (Windows-like), but in building the business application (Word-like). He thought he could speed up the process by partnering with MatrixOne. "We chose them the way we'd choose Oracle for the database portion or Brava for the viewer portion," he says.

Not just a house organ
Former Citadon CEO Rob Majteles said earlier this year that he didn't mind being thought of as an in-house developer of collaboration tools for GE, Bechtel and Fluor, with less of an emphasis on other clients. Fried says that while those customers currently dominate, his intention is to later in the year again build up the sales force to call on other clients.

Having the bulk of the backing come from a handful of major industry firms isn't all bad, Fried says. "Those guys push us to the max. We're an incredible company today because companies like Bechtel, Fluor and GE push us," he says. "Quite a bit of our business is with them, but I get just as much back from them."

One client that is not an investor is McClier, which is part of AECOM. Project manager John Jurewicz, who has made himself an expert on Internet companies in the AEC industry and their capabilities, says McClier has projects on Citadon, Constructware and Primavera's PrimeContract platforms. He thinks that Citadon's ProjectNet is "way out in advance" of the others, in large part because it makes it easy to upload drawings. "Citadon can customize everything," he says. "And then you can clone it" so users don't have to reset the preferences each time.

Fried and Jurewicz both admit that Citadon's ProjectNet is the most complex of the collaboration offerings, when compared to the tools of Constructware, Buzzsaw, e-Builder, PrimeContract, Meridian's ProjectTalk and others. That can be an obstacle when trying to get subcontractors online. Subs are essential for a successful collaboration effort, Jurewicz says.

The issue of features preferred by designers versus those preferred by contractors also is a thorny one. "I see a day when as an architect we use Citadon and when we turn the project over to [the contractor], we upload everything to Constructware," says Jurewicz. "That's what we need, to be able to push data back and forth between the extranets."

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