Enterprise resource planning stalwart Mark Systems will announce tomorrow it has acquired Seattle-based LotVue, a one-year-old start-up that transforms data and dashboards into cloud-based geo-spatial visualizations and collaboration tools.
Together, the companies report combined 2015 revenues of about $7 million. Still, while the numbers in the deal are modest, the implications are anything but.
As consolidation among home builders continues to winnow and re-sculpt the local, regional, and national residential playing field, new combinations among suppliers--ranging from manufacturers, to distribution channels, and now to software as a service vendors--have mirrored the mergers and acquisition trajectory of builders.
In this case, a 35-year-old ERP provider of back-office data management software that ties sales, estimating, purchasing, and production workstreams into a single Integrated Homebuilder Management System and Internet Tool Kit database, and a UI-driven visualization and collaboration product developer with a focus on lot optimization, planning, and management are betting they can scale fast as home builders move slowly through mid-cycle into the recovery's latter stages.
Land cost pressures--laden as they are with the growing deadweight of national and local taxes, fees, assessments, time-delays, and other encumbrances--will continue to exert undue pressure on operating gross margins. The recourse, of course, is operational excellence, efficiency, and velocity--which is profit-yielding speed in process. This is where the role of data--each and every work stream and critical chain of decision-making from far-ahead planning to post-sale warranty management--plays an increasingly starring role in gross margin management.
“We believe this acquisition will accelerate the growth we’ve experienced over the last couple of years and change the way our users look at data,” said Scott Duman, President & CEO of Mark Systems. “Most of the acquisitions in this industry have been about consolidation, where this is about bringing new functionality to the market.”
In the Mark Systems-LotVue combination leverages Mark Systems' legacy strengths in engineering data management systems, marketing, its knowledge and customer bases, its access to capital, and track record of delivering software as a service to a core builder clientele of firms whose volume currently ranges in the 200 to 400 unit-per-year range.
What LotVue brings to the table is a powerful visualization and collaboration product mindset that has resulted in an elegant array of user interface tools that convert unwieldy dashboards and data fields into tangible, mappable, actionable pictures.
"This combination gives us entree, not only into higher volume home builders, but also into adjacent markets [like commercial/multifamily construction, property management, and other related horizontal opportunities]," says long-time Mark Systems principal and board member Don Scattergood. "We've had penetration among the top 200 builders, but it's been tough for us to get visibility and crack the top 20 builders. This acquisition will integrate right into our platforms and give these big companies visualizations they haven't had available up to now."
As part of the terms of the acquisition, Mark Systems will keep on the whole LotVue team, led by founder Rajan Krishnamurty, who will become vp of Mark Systems' LotVue Development group. Krishnamurty's focus, apart from the visualization features of LotVue's platform, is on the collaborative capability:
"When you look at how we can now connect the builder to his or her critical decision chain, whether it's with trades, architects, land planners, real estate agents, buyer prospects, the sales office, the design center, lenders, or any other moving part, our product platforms become truly collaborative, truly time-saving, and truly waste-reducing," says Krishnamurty. "When you remove redundancy, you can improve efficiency."
That's a must these days.