IT services company Powerlan is moving away from general IT services and into services based on the Intellectual Property it continues to acquire, according to chief executive officer Theo Baker.
After a brief siesta earlier this year, Powerlan returned to its buying spree last month by acquiring financial services software developer IMX. At the same time the company has been consolidating some smaller divisions of its Web development business.
"Services are still very important to us - the majority of our staff work in offering services," Baker said. "But we are starting to focus services around our products and less around third party products."
He said the export success of products such as its Portfolio Manager (acquired as part of Commercial Software Services Limited in 1999) and Rapid Web Publisher (acquired from Entercorp in December 2000) has seen the company re-focus its efforts on deriving revenue from licensing, transaction and maintenance fees on its own IP.
Powerlan commits significant resources to any IP it acquires with Baker citing of the Portfolio Manager product as an example. Six staff were working on Portfolio Manager when it was acquired from CSSL is 1999. Today Powerlan commits over 60 staff.
Baker said Powerlan's aim is to continue acquiring software developers at relatively cheap prices, and use its local and international distribution and marketing capabilities to move the products globally. "While the companies we acquire tend to be cheap in the context of our business, in the context of the developer they are still getting a realistic evaluation of the value of their product," he said. "If they were to take their product to the next level on their own, it would have cost them a great deal of money."
According to Baker, IP has become the only way to create real wealth as an organisation considering most of the vendors are becoming services companies. "If we were purely a services organisation we would only be competing with the likes of Compaq anyway," he said. "There is an enormous amount of organisations selling services now, even from international markets like India. The competition has created some aggressive pricing, so the margins there are disappearing."