Who are these handsome young men and women? None other than the founders and first employees of Bentley Systems, the AECO company, taken in 1986 in front of what must have been a very sweet ride:

Bentley Systems turned 30 last year, a milestone celebrated in the company’s new 2014 Annual Report. You probably know the company most for its flagship MicroStation CAD product, but so much has happened in, on top of and around MicroStation in the years since Keith Bentley and Barry Bentley started the company that it’s worth taking a trip down memory lane.

Did you know, for example, that Bentley first introduced subscriptions in 1991? The company bundled maintenance and support into a subscription that included access to the code developers (unheard of even back then). Over the years, subs have grown to represent nearly 80% of total revenue, creating a great cushion of recurring revenue and a predictable growth path. Today’s subscriptions (aka Passports in Bentley-speak) come in flavors that provide access to everything in Bentley’s software portfolio or to role-specific subsets, that may include training, or not — and that can be shared between a company’s country or regional offices. Bentley is a software company, but some of its most interesting innovations have been in business models.

ProjectWise, Bentley’s collaboration solution, was introduced in 1998 –roughly the same time PLM really started to hit it big in manufacturing– to help clients manage the first wave of project offshoring in the infrastructure world. Today, ProjectWise is a key component of nearly every Passport the company sells; CEO Greg Bentley calls it “the workhorse for work sharing” in the AEC domain.

In 2001, the company started an acquisition scheme that doesn’t seem to have slowed since. InRoads, GEOPAK, AutoPlant and PlantWise, AXSYS, RAM and STAAD, ProSteel, ConstructSim, eB, SACS and MOSES, Ivara and Amulet — the company has been snapping up both industry standards and new technologies. Mr. Bentley says that the company has invested over $1 billion in acquisitions and internal R&D since 2008.

Two of these acquisitions, Pointools in 2011 and Acute3D earlier this year, give it the tools to create and edit 3D models from laser scanned point clouds and photographs, setting the stage for what Bentley calls Reality Modeling. Mr. Bentley says that point clouds and photographic “reality meshes” can be directly referenced from within Bentley applications, giving real-world context for design, engineering, construction, and operations. His example: using a drone to do continuous (well, daily) surveillance of a construction site, to monitor and report on progress. No more arguments over whether a foundation was poured — it either was or it wasn’t. Image as proof.

To me, Bentley’s most important technological path has been into operations: the acquisition of Exor and Enterprise Informatics (eB) in 2010, Ivara (now AssetWise APM) in 2012 and C3Global’s Amulet earlier this year connects Bentley into the 30, 40 or 50 year life of an asset –perhaps at the beginning, via design, but also at any point during that long life. Asset management and performance modeling require tying together maintenance histories, immediate sensor data and predictive analytics to keep complex manufacturing processes safe and profitable. That’s big, and only going to get bigger as more manufacturers try to capture this data flow and turn it into something actionable. It’s exciting to see the MicroStation company move so far outside its former realm.

OK. Enough history. You can check out the timeline yourself, here.

Bentley’s annual report and corporate update conference call gave a few bits of information on what happened in 2014 and let us read a little bit between the lines, as well:

  • Revenue for 2014 was $625 million, up 7% in constant currency and on an organic basis; total revenue was up 5% as reported. Given Mr. Bentley’s earlier organic growth forecast of 6% for 2014, the company did better than expected
  • The proportion of revenue from subscriptions continues to grow, and hit 76% of total revenue in 2014 (2013: 74%; 2012: 74%; 2011: 72%). Subscription revenue in $ terms is growing slightly faster than total revenue (8% vs. 5%), which could be due to Bentley’s evolving definition of subscriptions that now include services such as training — but it is also likely that more companies opt for subscriptions in an uncertain AEC climate. EPCs have told me that they like to mix perpetual licenses with subscriptions to maximize flexibility.
  • Renewal rates were again over 97% in 2014
  • Bentley invested over $150 million in R&D in 2014, around 25% of revenue
  • By geography, revenue from the Americas was $275 million, up 3% as reported. From EMEA, revenue was $231 million, up 8% and from Asia, $119 million, up 5%. Mr. Bentley said that growth leaders in 2014 were the Middle East and Africa, Southeast Asia, Greater China, and India, but didn’t give details.
  • One can surmise that some of the regional results are due to infrastructure build-out in Asia and the Middle East, which are balanced against turmoil in Russia/Ukraine and in Brazil. But those are guesses.
  • As a privately-held company, Bentley doesn’t give profitability data. Mr. Bentley did say that operating cash flow “continues to exceed $100 million annually”

What’s ahead? The CONNECT edition, Mr. Bentley says, is the natural evolution of everything in the 30 year timeline so far. The goal is to go beyond design, to trade-off evaluation, analytical modeling, construction modeling and asset performance. The CONNECT Edition uses Microsoft’s Azure cloud to support a hybrid environment of on-premise servers, desktop applications, and mobile apps to create a common environment for AEC: design anywhere, on any platform in a single file format and UI. That’s tough technologically but also from the user’s perspective: AEC tasks require a great deal of control to get from inception to delivery to ensure meeting all of the relevant project standards. Bentley says the CONNECT Edition makes this possible, letting workers do their jobs where it makes the most sense that day, always accessing the latest, most correct information about the project. CONNECT Edition versions of MicroStation and Navigator are available now; more of ProjectWise, AssetWise, Open Plant et al. will roll out through 2015 and 2016.

Mr. Bentley didn’t give a forecast for 2015, but there’s no reason to expect constant currency revenue growth under last year’s 7%; we should also see a bump from acquisitions. What acquisitions? Look for more technology tuck-ins plus more tools to keep tabs on asset performance, what Mr. Bentley considers “the final frontier” to adding value for asset owners. It’s no secret: if owners are happy, everyone in the AEC food chain — designers, architects, EPCs, construction planners and suppliers– is happy. Contractors want to add value and remain relevant to their owner clients after the keys to the asset are handed over; many of Bentley’s recent developments in operations hit exactly that target.

Image courtesy of Bentley Systems 2014 Annual Report.