Earlier this year Sage Software bought Tekton Group, a prominent construction software vendor in the British Isles. Last month John Marchant, the group's head of product management, told ContractJournal.com that more consolidation in the construction IT market is likely:

The construction software mid-market is fragmented, with no one dominant player....There are still more than 20 little houses writing financial systems for construction groups, each of them writing their own version of the purchase ledger, and VAT [value added tax] changes, all working away to stay up to date.

Marchant's comment refers specifically to Ireland and the United Kingdom. Nonetheless, it got us thinking -- how widespread is the construction software consolidation trend, and what does it mean for contractors?

Some may argue that it is already happening in full force. For starters, Tekton is just the latest of Sage's acquisitions -- it acquired Timberline Office and Master Builder in 2003 and 2006, respectively. Plenty of other vendors, including AspenTech, Autodesk, Constellation HomeBuilder Systems, eTEK and Primavera, have expanded through acquisition.

However, one must also keep in mind just how fragmented is the construction software industry. Consider the following:

• In the latest CFMA Technology Survey, the leading software tool for estimating, and the second most popular tool for job cost accounting and project management, was "other."
• According to the same survey, the product with the greatest market share, Timberline, has less than one-third of the job cost accounting software market and about one-sixth of the construction project management software market, where its biggest rivals are "other" and "none."
• Two of the most popular software applications used by construction professionals, Microsoft Excel and Microsoft Project, offer no construction-specific modules.
• All told, ConstructionSoftwareReview.com lists roughly 80 construction software vendors -- and we know we're missing a few.

Part of the reason for this fragmentation is the relative youth of the construction software industry, which has a long way to go before it resembles, say, the mature enterprise data management market that is dominated by behemoths SAP, Oracle and Microsoft. Part of the reason, too, is regionalization -- a small vendor that prides itself on customer service and ease of use can very easily rule its own backyard, where it knows the needs of its customers better than a global conglomerate.

Of course, no one can know for sure whether this fragmentation will endure or whether industry consolidation will continue apace. It's hard to know if the company who makes the construction software you are using now will grow, get acquired or go out of business five years from now, or even two years from now.

As a contractor, the key to insulating yourself from this uncertainty is to stay in constant contact with the reps at your software vendor. Ask the reps not just about the software but about the company overall. If a company regularly updates its software, releases brand new products and attracts new customers, it's a good sign that the product you use will survive if the construction software market sees a wave of consolidation. If your vendor does so while opening new offices, expanding into new markets and pleasing investors, it's a very good sign.