ASX-listed services group Powerlan has divested itself of another of its "non-core" business units, this time drawing the curtains on its Canberra branch. The divestment is a strategic move for Powerlan, which is currently recalibrating its core business initiatives.
Under its new business strategy, Powerlan is gradually abandoning its non-core businesses in preparation for the start of its fiscal third quarter.
Like the Melbourne and Sydney operations of its Australian IT Careers Institute and IT&T Education, which Powerlan recently closed and sold, Powerlan's Canberra business only provided minimal profits.
"The Canberra business never had critical mass", said Theo Baker, Powerlan's managing director. "It primarily offered Web site design and third-party software provision services. But what was our legacy business' - integration and services, Web design, general communication services - doesn't fit our strategy anymore."
Baker said the Canberra business has three or four existing contracts and it is Powerlan's intention to fulfil these contracts. "This will be done through our Sydney office," he said.
Powerlan's new strategic direction is focused on "owning" the IP of software products and services that target specific vertical industries, such as the banking and telco sectors.
"Since margins have dwindled, everyone is now offering services to add value to their products," Baker said. It is this saturation that has led Powerlan to re-evaluate its business focus.
"Systems integration is a tough market now. You need to be a big player already if you want to succeed. If you're not making $500 million in revenues, you're not going to survive.
"We never intended to be the dominant player in this space and therefore made the decision to go niche."
Baker suggested that small system integration players should look at offering specialised integration services rather than general integration skills. "If you can't clearly identify your value proposition to the customer, you're not going to remain in the business," he added.