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OS/400 Edition
Volume 3, Number 45 -- November 18, 2003

LANSA Gives New Twist on Old Approach to Selling Software

by Alex Woodie

LANSA's professional services organization introduced seven new prepackaged OS/400 and Windows applications this month as part of its new CodeStart program. The new applications provide much of the capability one would find in an integrated ERP package, including general ledger, order entry, and materials planning, but LANSA insists it is not becoming an ERP software vendor. It's a subtle distinction to make, but the Chicago company says it accurately reflects the changing ways in which companies are buying software today.

Over the last few years, LANSA's business strategy has steadily changed from being a pure-play provider of OS/400-centric application development tools, into a builder of business applications and solutions with a solid set of tools to back it up. This is definitely not a new business model for a software company, but LANSA does have its own take on the matter.

Examples of LANSA's gradual evolution from offering tools to offering software packages include the Commerce Edition products introduced in 2000 that gave customers pre-configured Web capabilities, and the UCCnet Direct product--the only purely OS/400-based UCCnet solution--which is currently selling extremely well for LANSA. Despite the strategy changes these products entailed, LANSA's ongoing evolution entered a period of heightened change in late October when it launched its new CodeStart program.

The CodeStart program includes seven pre-packaged products, including an ERP Financial Framework, a greenscreen program that includes a general ledger, AR/AP, cash management, and currency translation capabilities. Two other ERP frameworks provide specific capabilities for manufacturers and distributors, and a Buy Side Direct procurement program. Four other utility-type products round out the CodeStart introduction, including EDI mapping tools, a project and resource management application, a PDF forms generator, and a PGP encryption engine. The PDF generator and the PGP engine both require the LANSA Integrator product to work.

All of the CodeStart applications run on OS/400; some of them run on Windows as well, although they can all be ported to other platforms because they're written using LANSA's fourth-generation language, RDML. LANSA is providing this application on an "as is" basis, which means LANSA will be providing neither technical support nor ongoing enhancements. Customers must arrange for support and maintenance of the applications themselves. On the bright side, LANSA is providing the source code for customers who want to do this work themselves. In addition to source code, LANSA provides compiled code and the core repository. The per-module license fee ranges from about $3,000 to $15,000.

Because LANSA isn't providing maintenance or support, customers may choose to hire a professional to customize or maintain their CodeStart applications. There are many qualified LANSA experts out there, including third-party vendors and those employed by LANSA itself. Over the years, many of LANSA's business partners have built complete ERP systems in RDML. In fact, LANSA acquired the ERP Financial framework from a business partner that went bankrupt. One of LANSA owner's Peter Draney's conditions of buying that company's software and intellectual property was reportedly that LANSA must not become an ERP software company.

But if a company sells ERP software, does that not make them an ERP vendor? Not necessarily so, says Eden Watt, LANSA's vice president of professional services. While the company is indeed selling ERP, the lack of support and ongoing R&D with the CodeStart products serves to keep LANSA's focus squarely on tools, she says. And this goes right to LANSA's current strategy: sell a solution framework, and then sell the tools they need to customize it and maintain it.

"We're not interested in becoming an ERP vendor," Watt says. CodeStart can provide "a nice solution if a company doesn't want to buy a full ERP package. They get it in LANSA, and it's very expandable, maintainable, and expandable to the Web."

If LANSA could get by leading with tools, it would. But it can't, Watt says. "People are reluctant to do ground-up development anymore," she says, adding that 70 to 80 percent of LANSA's sales are solution-oriented sales where the customer needs a specific capability, and they need it done rapidly. Solution sales open up a lucrative door for tool sales down the road, and that is part of the LANSA business plan as well.

While all of the CodeStart applications today are owned by LANSA, that won't necessarily be the case in the future. This is where LANSA is putting a new twist on the solution sale. Watt says LANSA is looking to build out its CodeStart offerings, perhaps by collaborating with business partners and customers who have written compelling applications with LANSA's tools. For example, one of LANSA's European customers is interested in selling a CRM package it developed. A YMCA has built a compelling Web site that could find use elsewhere.

To provide an incentive to participate in this program, Watt says the company is considering giving customers a "credit" with LANSA. In any case, the ground rules are still being worked out. Diligence will be key in this arena, especially when it comes to LANSA's business partners, who used to be the ones providing shrink-wrapped applications written in RDML.

The CodeStart program could even serve as a temporary home for LANSA's other applications. While a product is being beta tested, it could be available to others through the CodeStart program. Such is the case with the EDI mapping tool, which will be completed in a few months, and the PGP product, which could become a component of the LANSA Integrator product in the future.

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