MAIN HEAD Where now for Strategic? DECK HEAD With its planned acquisition by the Baltic Exchange, shipbroking communications software house Strategic is at a crossroads BODY TEXT Shipbroking software house Strategic has a powerful position in the industry, counting a good proportion of the world's shipbrokers as its clients, using Strategic's proprietary messaging software. The company has undergone serious and highly publicised financial problems lately, mainly due, the company says, to poor investments made in the dot com era. But the company is increasingly facing questions about the financial viability of producing its own software, as mainstream messaging tools such as Microsoft Exchange and Lotus Notes become increasingly powerful and configurable to different business environments; Strategic might be better advised to put its expertise into configuring Microsoft and Outlook to the specific demands of shipbroking houses rather than just trying to sell its own software off the shelf. SUBHEAD In comes the Baltic It is unclear at this stage what the Baltic Exchange will do with Strategic once it owns the company. The Baltic had tried many times to purchase Strategic over the past few years, and also wanted Strategic to build its BalticExchange.com platform at one point, but the talks failed mainly because, it was reported, the Baltic wanted complete control over its system and Strategic refused to allow that. Of course following this acquisition, the Baltic now has complete control over the Strategic software. But there are still questions about precisely what brokers want over their software. If all they want to do is send e-mails, manage contacts and put data into company databases, then they are arguably better off without any dedicated shipbroking software and just sticking to Microsoft or Lotus. And the indications so far are, this is pretty much all brokers want to do with their software. So far most attempts to encourage charterers, owners and brokers to share data in any format other than e-mails, such as StrategicIMX, LevelSeas and BalticExchange.com, have not been able to get off the ground. This is because of the perceived need for companies to keep a very tight control over their own data. Even prior to the acquisition by the Baltic, Strategic was talking about gradually changing its business model from selling its own software to proving more of a support and systems design service, integrating its own products with other software companies, including Microsoft. SUBHEAD A tough time It's been a tough 12 months for Strategic Software. As has been widely reported in the daily and weekly shipping press, the company had gotten into serious financial trouble, the CEO resigned and the owners have been forced to sell off some 75 per cent of the business to raise funds to keep alive. "What we've been through is no pleasure," comments Lawrence Royston, marketing director. "We've had to fight to continue developing our software. But we like developing software. We've been bogged down for the last year and we looking forward to getting back to producing the best software with the best service." SUBHEAD Competing with Microsoft Strategic's business model for the last 15 years has been geared around selling its proprietary communications software, for shipbrokers and shipping companies to manage their messaging. The problem Strategic faces is that it is becoming increasingly hard to compete with software houses Microsoft and Lotus, which of course sell their messaging products to much larger markets and have completely different economies of scale. Strategic's unique selling proposition, that it produces software developed very specifically for the unique needs of brokers, was becoming increasingly untenable, as Outlook and Lotus Notes become more viable and configurable to different set-ups with every new version. The option of configuring Microsoft Outlook to a maritime application, rather than purchasing software specially made for the maritime industry with a much higher price tag, such as Strategic's, was getting increasingly viable. The company has been gently working over the last 6 months to integrate its software with Outlook. It is possible to move messages, task lists and contact information from Strategic Software into Outlook. SUBHEAD So why buy Strategic? Strategic is still very keen to maintain its base as a vendor of software, rather than a consultancy, and as such is keen to explain the benefits its own software has over Microsoft Outlook. The main benefit of Strategic software over Outlook, says Mr Royston, is that it was designed from the outset as a communications tool to allow many people in one company to communicate with many people in another company (such as a team of brokers in one house sending data about open positions to a team of brokers in another house). Outlook was originally designed as a person to person communications system, he says. There is functionality on it to enable mailboxes to be shared, but all this has to be built in. Strategic's software, on the other hand, can have complex mailbox sharing rules which anybody in the company authorised to do so can access. "Outlook's starting point is for one to one communication, then it broadens," he comments. "Our products start with many to many communication, then it goes down to one." "Outlook is a good product. We use it in our office. But we use it as it was designed for, as a personal information manager, for diaries, task management and internal company e-mail. I know if inside out and back to front and I feel I am authorised to comment." The Outlook software itself, of course, is quite cheap, with single user licenses for Microsoft Office XP retailing at GBP 500. However licenses for Microsoft Exchange, the Microsoft server software for managing messages, costs around GBP 5,000. Still much less than a license to use Strategic. However there's still plenty of man hours required to configure Microsoft Outlook to work at a shipping company, Mr Royston comments, particularly if complex folder sharing rules need to be designed and written. SUBHEAD Consulting expertise Whatever happens to its software however, the fact is that Strategic retains very strong expertise to solve a problem where shipping people certainly feel a great deal of pain, managing their messaging. This expertise could be put to just as good use configuring Outlook or Lotus Notes messaging systems for brokers as it could with its own software. This means that the charging models will have to be revised; obviously it is very different creating software for specific clients rather than building software which 500 companies can use. Strategic now plans to move its business more into the consulting arena, installing systems for customers using whichever system they request, and managing them remotely. Lawrence Royston is ready to admit that times have changed. "People used to say to us, 'we want your software, here's our chequebook,'" he says. "We put it in and it worked." But now demands are higher and systems are more complex. "We do see a very strong support and consultancy based facility coming out of Strategic Software." SUBHEAD StrategicIMX Strategic is still moving ahead with its IMX product, which allows data sharing between companies, even though the venture has not been particularly profitable to date. IMX allows brokers, owners and charterers to share data between each other about vessels available and required. The fundamental thinking behind IMX though is that it is a means of automating data exchange which companies were otherwise intending to make by e-mail, rather than creating any requirements for companies to share information they might not want to share. "People send each other so many e-mails containing data, position listings, ships for sale.. " comments Mr Royston. "If its data, you should deliver it as data and not e-mail. That's what the IMX does." IMX does not require that both the sending and receiving party use Strategic Software for their communications, although they do both need to pay a fee to Strategic in order to use it.