Please note: This article is strictly intended to help construction technology solution providers determine:
- the value of offering an integration
- the most appropriate course of action for bringing that integration to GA
If you work in the construction industry and are looking for help as an end-user and/or purchaser of integrations, please check out our integration calculator and our connector marketplace.
For Construction Technology Developers Looking to Expand with Integrations
Our integration network features over 50 different integration products that have been brought to life via collaboration with nearly 40 different technology solution providers and hundreds of end-users. We’ve seen/heard a lot of motivations for deploying a new construction technology integration.
IF
any of the following statements resonate with you:
- Sales: “[Prospect] just said they’d sign today if we can deliver an integration to [Other System].”
- Also Sales: “That’s the 14th one this year...”
- Customer Success: “[Customer] just called to let us know that they’re migrating to [Competitor] unless we can demonstrate an integration to [Other System] in the next 3 months.”
- Also Customer Success: “That would be a $40k hit to ARR...”
- Product: “We need to prioritize integrations, but our sprint backlog already has our points allocated for core product needs through the next seven months.”
- Also Product: “We’ve never dedicated any time to understanding [Other System]’s API...”
- Support: “Remember that integration we built a few years back? Well, [Other System] just notified us that they’re updating their API infrastructure, so we’ll need to account for those changes.”
- Also Support: “About 34% of our customer base is going to be impacted by this...”
THEN
you’ll probably appreciate the rest of this article.
The Equations
The Build vs. Buy analysis for construction technology integration is complex, nuanced, and iterative by nature. It exists to help determine if your company should invest in the infrastructure and headcount to build your own integration(s) or leverage a partner/service to provide the integration build for you.
In essence, you’ll need two basic equations (with potentially complex inputs):
Question 1: How much revenue do we stand to gain and/or preserve with this integration?
Equation 1: (NR+PR) = Revenue Opportunity
Question 2: Assuming the revenue is significant, should we build it internally or leverage a partner/vendor to build it for us?
Equation 2: (IDC+IMC)-(ODC+OMC) = Cost Comparison
NR = New Revenue
PR = Preserved Revenue
IDC = Internal Development Costs
IMC = Internal Maintenance Costs
ODC = Outsourced Development Costs
OMC = Outsourced Maintenance Costs
But take note of the fact that this approach essentially needs to be reassessed each year. Furthermore, each variable can become a complex equation on its own.
We’ll leverage the rest of this page to dive deep into each variable and its impact on the Build vs. Buy analysis.
New Revenue
What’s a realistic revenue model?
Building a revenue projection is essential to understanding whether the investment to bring a new integration to market is a viable effort for the business. When working to figure out what’s realistic, it’s important to make sure your team is leveraging assumptions that everyone can agree on. While there are several assumptions that can be baked into an equation to help your sales team determine what’s possible, it’s generally best to leverage conservative estimates.
Pricing
The market-accepted price point for a construction technology integration is generally 15% - 25% of the core product sale. For simple math’s sake, if your core product sells for $1,000/m, then you can expect the market to be willing to pay a ~$200/m premium for an automated integration.
Market Share
For a multitude of reasons, not every customer or prospect is going to instantly pull the trigger on upgrading to the integration, so it’s important to build reasonable expectations for market share over a specified period of time. What matters is that your projections focus on market segments with defendable logic. For example, let’s say there’s an ERP with a sizable market share of the types of customers you want to attract to your tool. Let’s say your sales team can attract 100 new clients in the first year with the new integration for that ERP. If those 100 new clients are all paying $1,000/m for the core product, plus $200/m for the integration, then your first-year revenue thanks to the integration is $1,440,000.
When is new revenue a distraction?
Every entity will approach this question uniquely, and rightfully so. But defining the word “distraction” is an important exercise for every sales team. “Revenue at all costs” is a popular mantra that might not actually make sense for every construction technology company. If a new prospect is asking for products or services outside your core business, it’s important to weigh those options carefully with a thorough opportunity cost analysis; even if they’re willing to pay a premium to make it “worth your while.” In the world of integrations, the most successful endeavor is one that can be scaled with the rest of your customer base.
All this to say, if you’re looking at providing an integration for just one customer, take a moment to broaden your perspective on the matter. Make sure the sales team collaborates with the product leadership team to understand how an integration might be created that can suit the needs of your inquiring prospect, but also the needs of your larger customer base. It’s in those conversations that a truly successful integration design will come to light.
Preserved Revenue
What does your company stand to lose if you do nothing?
Reducing churn and improving ARPA (average revenue per account) should be top priorities for the company’s customer success team. Customer success leaders should be well-aware of the churn rate and the reasons why customers churn. If there’s an unignorable number of customers churning due to the lack of an integration with [Other System], then it’s important to understand the long-term impact of that churn on your overall growth.
The formula for Preserved Revenue is pretty straightforward. Simply segment your churned customers down to the “Lack of Integration” churn reason, and then find the sum total of MRR (monthly recurring revenue) associated to those churned customers.
If you want to be a bit more predictive with this number, then you can take a look at the past 12 months of churn impact and leverage that to forecast the churn impact on the next 12 months ahead. Obviously, there’s no direct correlation or causality to this method, but it should give you an understanding of what’s plausible.
What does your company stand to gain with a new upsell opportunity?
Technically, this would be considered “New Revenue” but oftentimes, upsells to existing customers are handled by the customer success team, so we’ll address it under Preserved Revenue. To figure out the opportunity here, simply take the price of the integration and multiply it by the number of existing customers you believe would buy it. Best practice would be to timebox that number by looking at the first 12 months.
Development & Maintenance
Identifying Roles & Responsibilities
For simplicity’s sake, let’s leverage a comparison table to outline responsibilities. (Warning: this table makes Ryvit look like a very, very appealing option. Which, of course it does. This is our domain, and our iPaaS is purpose-built to keep your in-house resources focused on your core products.)
| Internal Team | Ryvit’s Strategic Partner Program | |
|---|---|---|
| Who’s going to design the integration and ensure product-market fit? | This would typically be fulfilled by some combination of a Business Analyst and an integration product lead. | For each strategic partner, Ryvit provides an integration product lead that provides an integration design consultation process inclusive of deciphering early-adopter feedback into usable designs. |
| Who’s going to make sure the data that your core product produces is compatible with [Other System]’s data input fields and complies with their system logic? | Chances are, your Business Analyst and integration product leader aren’t equipped with the necessary skills and/or knowledge to compare / contrast your API and core product logic to that of another system’s. This will likely require effort from a few of your engineers. | Ryvit’s iPaaS is purpose-built to understand the complexities of each system on the network and ensures that data from one system is properly transformed before being imported to another system. |
| Who’s going to build and maintain the connection with [Other System]’s API? | If you have engineers that specialize in APIs, then they would be your first choice. But even so, they’re most likely not experts in [Other System]’s core functions, so factor in a buffer of time for learning and research. | Ryvit’s iPaaS and partner network are built to account for the ever-changing world of system APIs and security documentation. Your team (with our help) simply needs to maintain connection to one API. The Ryvit iPaaS takes care of the rest. |
| Who’s going to help your clients activate and adopt the integration? | When it’s time to deploy/test the integration with your first few customers, your product leader will most likely be the one responsible for producing the documentation and ensuring a productive feedback loop so that your early adopters become evangelists. | Ryvit’s Strategic Partnership Program is an all-inclusive effort that ensures your product leader, customer success managers, marketing managers, and sales leaders all understand the value proposition and the onboarding process. |
| Who’s going to troubleshoot the sync errors with your clients? | Ongoing maintenance of the integration will demand masterful troubleshooting skills from your product leader and customer support resources. | Ryvit’s strategic partners rest easy at night knowing that their customers’ data is secure and flowing at the right time. If ever there are any issues with dataflow between your system and [Other System], Ryvit’s support team springs into action for you and your clients. |
| Who’s going to build the sales & marketing infrastructure to help with awareness and education in the marketplace? | Your sales and marketing teams have spent years mastering the talking points and value props for your core products. Now they’ll need to start from scratch to figure out how to upsell the integration. | Ryvit’s marketplace is a powerful validation tool and marketing channel for your integration sales. Each strategic partner gets a dedicated landing page, press release, and webinar to showcase the integration capabilities. |
Setting Cost & Timing Expectations
Without rehashing the details in the table above, let’s identify our costs and timeline for bringing an integration to market.
| Internal Overhead | DIY LOE | Ryvit Strategic Partnership Program | |
|---|---|---|---|
| Integration Design & Build | 3-4 FTEs for a total salary of ~$500k + benefits | F6-12 months (interdependencies with the data compatibility effort) | Consultation and Do-It-For-You services available. |
| Data Compatibility | 1 FTE at ~125k in salary + benefits | 3-6 months (interdependencies with the design & build effort) | Consultation and Do-It-For-You services available. |
| API Connection & Maintenance | 1 FTE at ~$150k in salary + benefits | 3-6 months for initial setup; then routine maintenance (interdependencies with the design & build effort) |
Handled by the Ryvit iPaaS. |
| Client Onboarding & Support | 2-3 FTEs for a total salary of ~$240k + benefits | 1-2 months for initial process documentation, then ongoing effort for each client (can’t start until certain milestones are reached in the design & build effort) |
Consultation and Do-It-For-You services available. |
| Integration Sales & Marketing | 2-3 FTEs for a total salary of ~$300k + benefits | 1-2 months for initial development of marketing materials & training, then ongoing iterations (will rely on several decisions made within the design & build phase) |
Consultation and Do-It-For-You services available. |
| Totals | Up to 13 FTEs for a total potential salary of ~$1,315,000 + benefits | Can take up to 18 months from the time you decide to start design work to the time you successfully deploy your first integration. | Price typically includes a base partnership fee plus a small monthly fee for each activated client. |
Additional Considerations When Building Yourself:
- If your current headcount can’t cover the work, then you’ll need additional lead time (3-6 months?) for the recruiting process.
- If [Other System] requires a partnership agreement, then you’ll need additional lead time (up to 3 months when legal gets involved?) for the paperwork and relationship development.
- If [Other System] is significantly larger than you, then they’ll likely have a fee structure bent in their favor that can become cost prohibitive when compared to your revenue potential.
- If your current system doesn’t meet security and compliance requirements as outlined by [Other System], then you’ll need lead time (up to 2 months to select tools & vendors?) to harden your tech stack.
Need More Data Points To Convince Yourself That Working With Ryvit Is A Great Decision?
How about these compelling perspectives from highly respected Construction Technology developers...
For us, the decision to work with Ryvit was pretty easy. The first thing we noticed about their team was their innate expertise around data flow to/from the ERPs that they work with. Having this broad-stroke expertise for multiple systems under one roof was quite valuable for our development efforts. Additionally, we really appreciate their focus on customer success and sales transparency. They’ve done a great job building a community of partners and end-users with a unified goal of reliable data flow. We’re excited to join the integration network and leverage all that Ryvit’s iPaaS has to offer.
Ryvit is a fantastic fit for our growth journey. They’ve built an iPaaS dedicated to the world of AEC, and the data flow expertise they bring to the table as a partner is incredibly powerful. We’re excited to accelerate our reach to new customers through this dynamic integration network. By integrating once with the Ryvit iPaaS, Raken will be able to create comprehensive integration profiles between our highly rated construction management software and four of the most widely used ERPs in AEC.
Ryvit’s partnership group is an amazing group of folks that is strategic, responsive, results-focused, and (dare I say?) really fun to work with! I have been lucky to work with some fantastic technology companies, including several iPaaS players – the Ryvit team is right up there with the very very best in tech, go to market, and partnership approach.