Timberline Software Corporation History

Company History:

Timberline Software Corporation develops, markets, and supports accounting and management software for construction, estimating, property management, and architect/engineering industries. With roughly $25 million in annual sales, more than $1.7 million in annual earnings, and more than 25,000 design and construction companies as customers, Timberline is the leading national supplier of accounting and estimating software for the construction industry. It is also a developer of accounting and management information software for the property management, architecture, and engineering sectors.

Timberline was founded in Oregon in 1971 by John Gorman. It began operations that year with a staff of four people. In 1975 the company released one of its first industry-specific products, a construction accounting software package for minicomputers. It was the first of several operating environments for which Timberline would design software during its first 25 years (in succeeding years, Timberline would produce software for personal computers, including DOS, OS/2, and Microsoft Windows environments). In 1977 Timberline followed up on its accounting software for the construction industry with the release of a similar accounting package for property managers. In 1979 the company was incorporated as Timberline Systems, Inc. Gorman became president and Leslie F. Clarke, II was named executive vice-president.

During the first half of the 1980s Timberline entered the estimating and architect/engineer markets with software for mini- and micro-computers. In 1980, two years after joining Timberline as a construction consultant, Curtis Peltz designed Timberline's first construction cost-estimating software, AccuBid, for minicomputers. In 1984 Timberline released its first software for personal computers (PCs), the Medallion Collection, a line of accounting and project management software. The PC-based Medallion family operated in the DOS environment and specifically targeted home builders/remodelers and small to mid-sized contractors. Along with the Medallion Collection, Timberline introduced its first accounting system for architects and engineers.

With five products and revenues that had grown from $3.3 million in 1977 to $10.4 million seven years later, Timberline went public in 1984. That same year, Timberline began reducing its national sales force to focus on its two key distribution channels--value-added resellers and direct dealerships--which had grown into a network of 250 dealers. In 1985 the company secured a contract with IBM, in which the computer maker agreed to use its product centers to market Timberline's construction industry software.

For 1985 Timberline's sales remained flat, although the company did reduce its loss of $153,000 a year earlier by more than half. In 1986 Timberline sold its tax preparation software product, deemed incompatible with the company's strategy to serve construction and property-related markets, and sales fell to $7.2 million as losses deepened to $152,000. During the last half of the decade, however, Timberline stepped up its development efforts and increased its number of product releases, resulting in consistently rising revenues and positive income figures between 1986 and 1989.

In 1986 the company changed its name to Timberline Software Corporation and named John M. Meek vice-president of research and development and Curtis L. Peltz vice-president of the company's Estimating Division. Peltz became responsible for leading the development of Timberline's first PC-based family of software for the estimating industry, the Precision Collection, which in 1987 debuted its first core product, Precision Estimating (it replaced the earlier minicomputer estimating system, ACCUBID, that Peltz had developed).

The Precision Collection was well-received. It was an integrated family of estimating software applications that allowed construction estimators to devise project bids based on such variables as architectural design, required building materials, and labor costs. In 1987 Timberline released an accounting and management program for architects and engineers dubbed AEasy. Designed by an outside developer, AEasy provided architects and engineers with basic accounting information. It also generated billing information for design projects. Timberline's distribution network received a boost in 1987 when Businessland Inc. joined the company's network of retailers. Earnings for the year pulled back into the black to $413,000 on revenues of $7.6 million.

In November 1988, following the debut of IBM's OS/2 system, Timberline released the first property management system designed specifically for the OS/2 operating environment: Property Management Gold. This software package, targeting mid-sized to large companies using the OS/2 system, provided property managers with multi-tasking and advanced networking capabilities. The following year Timberline debuted On-Site Residential Gold, a property management and accounting software package for on-site property managers.

Meanwhile, Timberline's accounting software for the construction industry continued to expand during the late 1980s, growing to include Medallion General for general contractors, Medallion Builder for large home builders, Medallion Specialty for speciality contractors, and Medallion HomeBuilder for small home builders. Medallion HomeBuilder, which was favorably received by its target base of small, growth-oriented homebuilders, became available in single and multi-user versions and featured applications to manage job costs, subcontractor schedules, cash flow, and profitability.

During the late 1980s Timberline also expanded its Precision Collection to include Precision Estimating Plus (an advanced version of Precision Estimating), Bid Analysis, Pricer, and several specialized databases. Timberline also released the Precision CADLink interface system that allowed estimators using Precision Estimating Plus to, for the first time, interface with AutoCAD (computer-aided drafting) programs and compile an estimate directly from Autodesk's computer-aided design software/system. The program was later developed to interface with other systems, including those of Primavera and Microsoft. Precision CADLink, targeting estimators and contractors seeking more detailed and accurate construction schedules, provided estimators with the ability to electronically remove dimension and building specifications from any AutoCAD file when compiling estimates. It represented a cutting-edge trend to improve construction productivity by giving access to information used in various building phases.

Between 1988 and 1989 Timberline expanded its distribution reach beyond the United States by signing agreements with a Vancouver, British Columbia-based distribution firm and Tactical Computer Services Pty. Ltd. of Australia, the latter of which began selling and servicing Timberline's construction-industry estimating software in Australia and New Zealand. Timberline closed the decade with earnings of $446,000 on revenues that climbed to nearly $9 million in 1988, and with 1989 earnings of $769,000 on sales that jumped to $10.7 million.

In June 1990 Timberline, after teaming up with ASG, a leading developer of AutoCAD applications, released Precision CAD Integrator. It provided a link between Precision Estimating Plus and ASG Architectural software and joined the contractor information used in design and building phases. Timberline also introduced Precision Estimating Extended, featuring greater capabilities than Precision Estimating and Precision Estimating Plus. By the end of 1990 Timberline had grown into a company with 170 employees and $12.7 million in revenues.

During the early 1990s growth was hampered and the company was affected by a weak construction market and economic uncertainty created by tensions in the Middle East. Earnings slipped to $429,000 in 1990 and revenues remained flat in 1991, as income plummeted to $15,587. The following year revenues climbed to $14.9 million and earnings rebounded, though far from record territory, to $328,000. In response to the weakened market, Timberline adopted a strategy designed to distance itself from competitors and siphon market share by developing products for future OS/2 and Windows-based applications. This move was specifically aimed at capitalizing on the advent of graphical user interface (GUI) technology that was revolutionizing the software industry with on-screen graphics and multiple windows that provided users with quicker and easier access to information.

In 1992 Timberline released its first GUI product for Windows, Construction Gold, a construction accounting and management program for use with Microsoft Windows or OS/2 platforms. Construction Gold streamlined information searches by allowing users to move through a series of computer-screen windows to find precise bits of data. The construction accounting program became Timberline's biggest selling software. Following on the heels of Construction Gold, Timberline released an updated version of Property Management Gold for GUI environments.

In 1992 Timberline also released the DOS-based SitePro, a program for managers of residential properties. It also offered a database estimation package, ASG Estimator (compatible with the Precision Estimating series and created for the System ASG product line); and an estimating software add-on, Precision Buyout, designed to automatically create purchase orders and subcontracts from a project estimate. In 1992 Timberline also released AEasy Plus, which replaced a high-end time and billing program and incorporated the design of Timberline's low-end forerunner, AEasy.

In 1993 Timberline joined with other software developers and computer makers, including Microsoft, IBM, Lotus, Novell, Oracle, Borland, Sybase and Gupta, to support Open Database Connectivity (ODBC), an industry standard for sharing data between proprietary and mainframe database products of different vendors developed by Microsoft Corporation. That same year Timberline joined with PageAhead Software to develop an ODBC driver for Timberline's Construction Gold 2.0 version software. The new version allowed Timberline customers to directly access data stored in Construction Gold that used any other OBDC-based spreadsheet, word processing, or database application.

For 1993 Timberline's revenues increased 22 percent to $18.2 million while income nearly doubled to $620,000. Contributing to the rise in profitability was the success of Construction Gold, as well as the growing revenues generated from support services, which increased from 23 percent of all revenues in 1988 to 40 percent in 1993. In 1994 Timberline upgraded its entire product line to comply with OBDC standards. That same year the company released a new feature called "Modeling" for its estimating product line. The feature enabled users to make more accurate preliminary estimates while reducing the time required to refine estimates as a project was modified. Timberline also released an architect/engineer application called TimeTrax that enhanced and streamlined the process of tracking billable time and labor costs.

For 1994 Timberline increased revenues 19 percent to $21.6 million and boosted earnings 93 percent to $1.19 million. Support services accounted for revenues of $8.8 million, and constructing and estimating represented nearly 80 percent of all software sales. In October 1995 Timberline released Construction Gold 3.0, a significant update providing increased performance, improved controls, and additional enhancements for construction accounting. Construction Gold's accounting applications signaled Timberline's intent to enter the highway/heavy construction market. To that end, the following month the company released Equipment Costing, an accounting and information application (which interfaced with Construction Gold 3.0) for equipment-intensive construction companies involved in the heavy/highway construction market segment.

Timberline was ranked 139th on Forbes magazine's list of "200 Best Small Companies in America" in 1995, the first time the company was ranked by Forbes. The company's attributes that led to inclusion on the list included a five-year average return on equity of 16.5 percent and five-year average earnings growth rate of 119 percent. Timberline was the only software firm of its type featured on the list and one of only five Pacific Northwest companies. The company's leading product line, Construction Gold, was the best-selling software package for the construction accounting market and the only one available for Windows or OS/2 operating environments.

In January 1996 Timberline restructured its operations to focus on applications rather than targeted industries. The company reorganized into two divisions; the Estimating Division was the only one left untouched, and the areas that had previously been represented by three divisions&mdash′operty management, construction, and architects/engineers--became the Accounting Division.

Timberline entered 1996 in a heavy developmental mode, with its entire product line being retooled for Microsoft's Windows and Windows 95 (an operating system which was released in 1995 and offered significant new features). The company's construction and estimating product divisions were expected to release their first Windows 95 products by July of that year, while the first Windows 95 products for architect/engineer and property management industries were also under development by the beginning of 1996, although no release dates had been scheduled.

Further Reading:

• Barnett, Jim, "Timberline's New Software Program for Contractors Leads to Sales Jump," Oregonian, June 5, 1994, p. N11.
• Black, Pamela, "Customers Aid Vendors," Venture, January 1986, pp. 88-89.
• Frankel, Gerald, "How a Software Firm Teamed Up with Big Blue," Business Marketing, October 1985, p. 37.
• Girardi, Jim, "Timberline Estimating System (Precision Extended)," Builder, September 1994, p. 162.
• "Project Accounting Package Bridges a Gap," ENR, December 13, 1993, p. 34.
• "Timberline Software Corporation Company Profile," Beaverton, Ore.: Timberline Software Corporation, 1995.

Source: International Directory of Company Histories, Vol. 15. St. James Press, 1996.

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