Digital disruption takes hold in construction – The Australian Financial Review

Melbourne-based building services company Away Digital might have made the Fast 100 in 2022, but it’s downgraded its growth forecast for the 2023 financial year as the volume of new homes being built plummets.
The construction boom, fuelled by record low-interest rates over the last two years, saw Away Digital’s revenue jump by 76 per cent, to $22.6 million, in the 12 months to June 30.
Modelling is a part of the services offered by Away Digital. 
But in recent months it has seen the pipeline of several of its home builder clients drying up.
“There’s no hiding what these interest rate rises are doing to potential buyers of new homes. Everyone’s hurting,” Away Digital co-founder Gary Blieden says.
“The level of inquiry is the same as it’s been for the last two years but the uncertainty around how much interest rates are going to go up is holding people back from committing,” he says.
Despite these headwinds, Away Digital’s future looks bright.
Construction activity may slow but it won’t stall. And the structural pressures which have fuelled demand for its services in information management for building information modelling to date are not subsiding.
Away Digital co-founder Gary Bliede. 
The construction sector is plagued by market capacity shortfalls, declining productivity, supply chain challenges, inflationary pressures, growing community expectations, and post COVID-19 skills shortages.
In response, big buyers of infrastructure services, such as the NSW government which has committed $112.7 billion capital expenditure over the next four years, are mandating dramatic changes to information handling and digital delivery that play to Away Digital’s strengths.
At the same time, Away Digital has diversified into two new revenue streams – a software platform that allows homebuyers to virtually ‘walk’ through their new home before its built, and a recruitment service that matches any type of employer to skilled professionals abroad.
“All three businesses have some nice tailwinds,” Blieden says.
A qualified electrical engineer, Blieden started Away Digital with his brother-in-law Aidan Wollner in 2013 to plug a gap in the market for efficient workflow management tools in the building game, particularly among geographically dispersed teams.
It now has 400-odd staff, of which about 35 are based domestically and the rest in Vietnam.
International expansion is a top priority for the year ahead. Away Digital picked up several overseas jobs in the United Kingdom, Hong Kong, and United States in the past 12 months. In markets like the US, the largest volume home builder does more projects than the top 100 in Australia combined, Blieden says.
“The international opportunity is massive but we’re identifying the right places to be,” he says.
Away Digital may have to repeal its model of self-funding growth and seek external investors to grow its new software platform fast enough to secure sufficient market share.
Digital disruption appears to be finally taking hold in the building and construction sector, which for a long time was considered a digital laggard.
“In other sectors people want to be the first to adopt and exploit first-mover opportunities. In construction everyone is waiting for someone else to fumble the ball a bit first, then learn from that,” Blieden says.
Builders who are at the cutting edge have digitised at great expense, and amid growing margin pressure, he says.
“There is awareness that digital disruption is all around them, and the software and tools are all there,” Blieden says. “The government is mandating it in a number of different ways. Builders are having to deliver those [digital] services or they’re not going to win those bigger jobs.”
Sydney-based revenue operations consultancy Cattle Dog Digital has flagged a shift from services to more product-based sales as it attempts to supercharge growth by breaking free from the constraints of hourly rates and fixed fee engagements.
“The big play for us is starting to move into a product that allows organisations to do a bit of this for themselves,” Cattle Dog Digital chief revenue officer Sarah Orell says.
Sarah Orell, of Cattle Dog Digital.  
Cattle Dog Digital’s revenue jumped 72 per cent, to $5 million, for the 12 months to June 30, on the back of key contract wins, including retail giant JB Hi-Fi and pharmaceutical company Bayer.
Revenue operations, or revops, is one of the hottest technology segments globally. Companies recognise that handing off customers from one functional silo to another, and using different technologies, people, and processes, is impeding growth. They want to integrate sales, marketing, and service departments to provide a better end-to-end view of revenue generation.
Seventy-five per cent of the highest growth companies in the world will deploy a revenue operations model by 2025, according to technology research house Gartner.
Based on its current trajectory, Cattle Dog expects annual sales to hit $10 million within three years, nudging its market capitalisation up to around $36 million.
In March, it snagged JB Hi-Fi head of revenue operations, Linda Godfrey, to sharpen its business strategy as it expands into the United States.
Godfrey hit the speaking circuit this month explaining how Cattle Dog helped JB Hifi eradicate credit card fraud and increase its quote to cash rate by 75 per cent.
Cattle Dog will launch a RevOps Academy in January alongside Zoho SalesIQ so people can get certified in revenue operations.
Its alliance with software partners like SalesIQ – of which it has about 20 – is a crucial source of referrals. But the relationship is very much a symbiotic one. Cattle Dog has developed an integration marketplace to simplify the process of connecting various software packages. Revenue from this integration marketplace is steadily growing.
“We’re pivoting to product development with our integration marketplace, strong alliances with organisations like Hubspot, Conga and Salesforce, and developing our self-assessment tool so you can ‘rate your revops’ yourself and get advice about how to lift your growth,” Orell says.
Cattle Dog is the brainchild of husband-and-wife team, Sarah and Luke Orell, alongside ex-Commonwealth Bank executive, Nashir Uddin.
The trio have deep roots in the technology sector. Both Luke and Nashir spent time in Deloitte’s technology consulting practice, while Sarah did a stint at Salesforce.
They bootstrapped the business in the early years, with Sarah selling her GitLab shares to fund growth.
The trio put their toe in the water for external funding this year but did not end up going ahead with a $3 million funding injection. They are also on the lookout for complementary businesses to tie-up with for mutual benefit.
Custom app developer Appetiser, a Fast 100 company, has been forced to raise its prices by 10 per cent in response to inflationary pressures, including currency fluctuations and skills shortages, which have driven up salaries by 20 per cent for some software developer roles over the last 12 months.
The weak Australia dollar is proving particularly painful for the fast-growing tech company. A significant number of its 210-strong staff are based in the Philippines, and it is building up its presence in Vietnam, Malaysia, and Sri Lanka.
“Being an international company, this really puts pressure on us,” Appetiser co-founder James Shostak says.
Appetiser’s revenue rose by 37 per cent, to $8 million, for the 12 months to June, on the back of the continued boom in mobile apps.
Fast-growing clients have also provided a tailwind, including popular burger chain Grill’d and online marketplace, which listed and was swiftly acquired by Woolworths.
“When our clients grow, they’re generally taking us along for the ride,” Shostak says.
He says Appetiser’s propriety technology allows it to get a fully customised app to market withing four months on average.
“From an industry standard perspective that’s a fraction of the time that people generally expect it to take,” Shostak says.
Appetiser has emerged triumphant from a particularly competitive COVID-19 period. While it didn’t make layoffs during the pandemic and was not a recipient of government subsidies, Shostak says it was forced to compete with rivals that shrunk their teams and were able to plough the JobKeeper stimulus into advertising.
Michael MacRae and James Shostak of Appetiser. 
“That put a lot of pressure on us from a competitive standpoint, but we fought through that and had to get smarter,” Shostak says.
COVID didn’t materially impact Appetiser’s sales but the lockdowns did hit staff extremely hard.
The company has hired a full-time psychologist and is investing more in staff development and well-being programs than ever, as well as undertaking more charitable works.
This has been the biggest driver of performance internally, Shostak says.
Shostak and Michael MacRae founded Appetiser in 2017 determined to maintain a flat structure, with no unnecessary organisational hierarchies.
Five years on, the duo have abandoned this model and started building management layers to support the company’s next growth phase.
In another five years’ time, they want Appetiser’s annual sales to exceed $100 million and to have offices in the United Kingdom and United States.
Along with a rebrand planned for early next year, they will launch an accreditation standard to help other developers follow Appetiser’s unique product design process.
They also plan to launch a client education service to help fast-growing businesses accelerate their growth using technology.
“Our biggest challenge is making sure that we’re not losing focus on continuing to fuel the flywheel as we start the next phase of our growth,” Shostak says.
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