After 18 months of positioning, Powerlan has signalled its intention to become a serious software vendor by revealing an ambitious plan to dispense with its former core services and focus on four vertical markets.
Powerlan has been pushing to own its intellectual property for some time, but it was only last week that those plans began to fall into place with the divestment of its storage integration business XSI and its Canberra operations, which have been announced to the Australian Stock Exchange (see pages 6 and 8).
The move follows the recent sell-off of its IT careers and education divisions in Sydney and Melbourne. Powerlan acquired Hong Kong-based IT recruitment business CountryTECH and the Sydney and Melbourne operations of the Australian IT Careers Institute and IT&T Education in 2000.
Powerlan managing director Theo Baker told ARN the company will now focus around four verticals: telecommunications and management software applications; banking and finance; knowledge management; and managed services. It will also continue with several "miscellaneous" products.
The company continued its takeover of telecommunications software developer Clarity International last week, to add to a growing number of software products - including Portfolio Manager (acquired as part of Commercial Software Services in 1999) and Rapid Web Publisher (acquired from Entercorp in December 2000) - in its line-up.
In September 2001, Powerlan acquired financial services software developer IMX Software, and at the same time began consolidating smaller divisions of its Web development business.
Powerlan has also pegged knowledge management as a limited opportunity, which it may exploit with its own products and third-party software.
"I think there'll be a boom in knowledge management - it's going to be like the commodity LAN space. All you have to do is play in this space and you'll make money. There's a three-year window of opportunity in this space," said Baker. "But we're not going to be a global leader in the knowledge management space, it's more of a tactical move."
Powerlan also has a finger in the managed services pie with Zento. Zento is a managed services provider, which Baker said will provide remotely managed security and antivirus services.
The changes come as a result of what Baker describes the commoditisation of the services market and the need to reduce the operating costs of the business. Baker claims the company will realise considerable savings as a result of the divestment of its systems integration businesses.
A change in strategic direction is not a new phenomenon at Powerlan, even before it listed on the ASX in 1999. The one-time box mover has made the transition from reseller to systems integrator to services company, with its sights now set on becoming an international vendor.
"We knew we weren't going to survive as a little systems integrator. It was simple, any company that's had any longevity has had to change," said Baker.
"Our value proposition is we change our specialisation. When we first started out we provided boxes. When the potential for growth in that field subsided, we moved into services, which were then in demand. The issue now is that there are enough people out there offering services. We clearly knew we weren't going to survive. Our options were to sell out, grow to a critical mass or look for other opportunities, which we've obviously found in buying the intellectual property of sector-specific products."
Ultimately, Baker sees most of Powerlan's revenues coming from overseas. Currently 95 per cent of Clarity's revenues come from its international operations and Baker believes Powerlan will follow suit.