Citadon Calm in Calamitous Economy
construction.com - July 24, 2002
Interview by Judy Schriener
Bernard Fried, Citadon's CEO for a year
now, was ostensibly on vacation in New York City but he dropped
by long enough to have lunch with construction.com Editor-in-Chief
Judy Schriener at a relatively upscale midtown restaurant
on one of the steamy dog days of summer. They discussed a
wide range of subjects, including the restaurant's service
missteps, which made Fried, a chivalrous Eastern European
immigrant (with barely an accent) who grew up in the restaurant
business, more uncomfortable than the probing questions.
A little history: Citadon started out
in 1997 (eons ago in Internet years) as Blueline Online, which
turned into Cephren, which acquired eBricks, and all merged
a year and a half ago with Bidcom (also formed in 1997) to
become Citadon. It is a provider of online collaboration software
and services.
Bidcom's CEO in the late '90s, Daryl
Magana, nearly singlehandedly started the wild dot-com megahype
in the construction industry, with the help of shocking amounts
of money from venture capital firms and a very aggressive
public relations firm. That ultimately brought megamillions
into the industry in the form of VC money for the dot-coms
as well as hundreds of competitors in all varieties. Most
of them now are gone or have merged or morphed into firms
that offer less ambitious, more practical solutions to the
industry, more in line with the pace that the industry can
deal with them.
Since the Cephren-Bidcom merger in March
2001, Citadon has undergone two management shake-ups and other
changes, including a shift in basic strategy. Fried has brought
big-company management skills and a worldly perspective to
Citadon from his years at Bechtel Group Inc. and ABB Group.
He is low-key, conservative and cautious. He runs counter
to the more typical software maker/dot-com approach of promising
the world long before it's available. Since Fried took over,
Citadon
has been Q-U-I-E-T, and that's apparently not likely to change.
So a lunchtime sit-down with Fried was especially welcome
(and fun). Citadon is very much alive and well and headed
for profitability at last, Fried says.
Among the topics of discussion in the
edited excerpts from the conversation: integration of the
Cephren and Bidcom platforms, new versus existing products,
the reopening of the firm's European operations and the effects
of competition and the economy.
construction.com:
So, are you ready yet to throw in the
towel?
Fried: (Looks at her
like she has three heads.) Oh, noooooo. Quite the contrary.
c.com:
You've been so quiet. People have been
wondering what Citadon is up to these days. Many of your competitors
say they never see you anymore and that you've left the AEC
industry.
Fried: The funny thing
is, we don't see them anymore either. And it's not quite true
that we've left AEC. I've tried to guide the company up the
food chain. My predecessors left me with some good blue-chip
clients but we have been changing our focus more to the owners
and operators who have multiple projects. We've gotten some
good contracts in the second quarter. Our primary clients
are GE Power Systems, Bechtel, Alcoa and Shell Opus, on the
pipeline side of Shell, which I admit I hope will give us
entree to the larger corporation.
c.com:
What kinds of agreements do you have
with those clients? How many projects, how much do you anticipate
they will spend?
Fried: I can't talk about
specifics with most of them. But we have three-to-five year
agreements with Bechtel and GE. Currently we have about 20-25
projects with Bechtel, and we expect that to rise to the low
three digits. With GE, the volume will be higher. They already
have more than 1,000 projects on the existing product.
c.com:
Are your clients mandating use of Citadon
on every project?
Fried: In most cases, no.
Bechtel's too decentralized. Whenever a firm mandates it across
the whole company, the volume does incredible things to how
it's used. I can sell the ROI much more easily when it's mandated.
c.com: What's
the difference between the existing product and your new one,
Citadon CW?
Fried: I can't talk in
technical terms but Citadon CW (for "collaboration workspaces")
is the integration and enhancement of the Cephren and Bidcom
platforms. Cephren was good at managing documents, RFIs and
other forms, that sort of thing. Bidcom was good at processes
and workflow. All of that is now integrated into Citadon CW,
plus it's customizable for the client by us. It's extremely
modular, so things can easily be pulled in and out. In the
next year, it'll be customizable at the client's desktop.
It's also got open architecture. It's what I call "templatable"
so clients can put in their own logos and information where
they want it. It's also available in enterprise or browser-based
versions. Most companies take both.
c.com:
Is it just one product right now? Or will there be more for
different industry segments?
Fried: With the templatable
format, we can eventually make solutions for several segments:
CitadonOG (for oil and gas), CitadonPWR (for power), CitadonAEC,
Citadon Infrastructure....
c.com:
Is your old, er, existing product, ProjectNet, still being
used?
Fried: Oh, yes! We put
out 12 releases last year and got it to the point that it's
phenomenal. CW does it in an open architecture. We have thousands
of projects and probably a couple of hundred clients on ProjectNet;
a few dozen of those we would consider robust users on multiple
projects.
c.com:
I haven't seen any announcements about
your new clients or about your new products.
Fried: I've got an engineer's
mentality. I don't like to talk about things before they're
in and finished and completed.
c.com:
The various Citadon entities over the
years have received close to $200 million from investors.
Who will get any kind of return on their investment?
Fried: I think that's a
little high. Other than what I've brought in (roughly estimated
by construction.com at $40-$45 million), that's pretty
well gone. Everything that came in with the dot-com boom went
out with the dot-com bust. It's the latest investors who have
a chance at a decent ROI. (Investors are Warburg Pincus,
Bechtel Enterprises, GE Capital Corp. Fluor Corp. , once touted
as a major client, is a minor shareholder but not an investor.)
c.com:
Can you talk about specific revenue
numbers?
Fried: It depends on how
revenue is recognized (according to accounting principles).
Our revenue was around $6 million last year and will be (pauses)
between $6 and $12 million this year.
c.com:
Are you losing jobs to any particular
competitor or competitors?
Fried: We're not losing
so much to competitors. Where we're losing is to the economy.
Projects delayed or expenditures lowered, that kind of thing.
c.com:
Are you focusing primarily on the U.S.?
Fried: We now have two
data centers, in California and the U.K., and another one
we built in Hong Kong. So we can provide local support and
local language support. We have a licensee in Hong Kong. We
built the data center there and they bought it from us. We
also just took back our operations in the U.K. (which Citadon
had sold prior to Fried's arrival), That was a challenging
negotiation. Now they service and support our products and
that's it. We kept the old name, Bidcom Ltd. (In response
to raised eyebrows and rolled eyes from Schriener....)
That name still has name recognition and value there so we
kept it. U.K. sales are doing pretty well. We may be able
to make that part of our business break-even this year.
Photo courtesy of Citadon
© 2002 The
McGraw-Hill Companies - All Rights Reserved
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