Arcadis Buys E2 ManageTech Reflecting Its New Digital Growth Strategy
On July 27, 2017, Arcadis, the 27,000 employee design and consulting firm for natural and built assets announced that it had definitively acquired E2 ManageTech, the independent EHS technology services provider founded in 1998. The acquisition, for an undisclosed fee, gives Arcadis critical mass in its EHS and sustainability enterprise technology solutions practice with the addition of the 55 E2 ManageTech employees. This also strengthens the leadership team at Arcadis as the co-founders of E2 ManageTech, Glenn Mayer and Joanne Schroeder, will both be retained by Arcadis. Vijay Gudivaka, who only last year became Chairman and CEO of E2 ManageTech after a long career at ERM, will become the new global practice leader for Arcadis EHS and sustainability enterprise technology solutions.
The rationale for the acquisition goes beyond simply bulking up the EHS tech services practice which has traditionally implemented and maintained software from vendors like Enablon, Intelex, SAP and Sphera. Arcadis had 2016 revenues of $3.9 billion and Verdantix estimates based on standard assumptions for billable work per consultant, that E2 ManageTech had revenues between $10 million and $15 million in 2016 not including the remediation business which was carved out. The deal is clearly not a strategic attempt to inflect top line growth for Arcadis. Instead, Verdantix sees this as part of a bigger picture tied into the previously announced digital growth strategy. Arcadis has already made big commitments to using building information modelling (BIM) tools, won a $2 million contract for smart mobility with the State of Louisiana and has won an EHS innovation award for its use of drone technology provided by CyberHawk as part of remediation work for Total. Arcadis also appointed a Chief Digital Officer, Julien Cayet, earlier in July.
Verdantix believes that the Arcadis commitment to digital has significant implications for competitors. In an engineering and environmental consulting market which has experienced very little organic growth in recent years despite a positive economic backdrop, large consulting firms need to reinvent themselves along the lines of Accenture or IBM Global Business Services. They need to deliver more efficiently and more quickly using digital technologies such as BIM, drones, sensors and mobile apps. Firms which grasp this nettle early and cannibalize some of their traditional EHS consulting day rate business will see organic revenue growth above five per cent as they take market share from slow-moving, technology agnostic competitors.
To learn more, download the Verdantix report ‘Arcadis Signals Commitment To Digital Strategy With E2 ManageTech Acquisition’ which is available to Verdantix research clients. To keep track of developments in the EHStech market register for the free weekly Verdantix EHS Insights email.