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Application Software
Powered by Battery  |  June 18, 2015
Mendix Acquired by Siemens: How “Low Code” App Development Changed the Custom Application Game

On August 1, 2018, Siemens announced its acquisition of “low code” app developer Mendix*. It has been a long and eventful journey (13 years!) for the Mendix team. Here we are resurfacing a blog from 2015 that showcases how Mendix pioneered the “low code” movement that helps businesses develop custom applications quickly and cost-effectively.

The UK-based insurer LV= (formerly Liverpool Victoria) was facing a technical challenge. A period of rapid growth, including numerous acquisitions, had swamped its IT department with legacy systems and a backlog of demand to support those systems. Saddled with maintenance tasks and struggling to rationalize its IT infrastructure, LV= was missing opportunities to develop innovative new products–and capitalize on all that exciting growth.

Enter Mendix. As a pioneer in the “low-code” development movement, Mendix, a company based in Boston but with roots in the Netherlands, helps businesses develop custom applications very quickly and cost-effectively. Low-code development—also referred to as “rapid application development”– uses visual models to define the various elements of an application, reducing the need for hand-coding and accelerating the development process.

The movement sometimes goes by the more optimistic name “no-code”, although this implies, incorrectly, that anyone can build a Mendix app. Mendix actually radically simplifies complex development tasks so that less technical users, such as business analysts or systems analysts, can build applications well beyond their hand-coding capabilities. Low-code also boosts productivity for professional developers, allowing them to focus on delivering the right solution, instead of worrying about technical details.

The low-code process also improves collaboration between business and IT teams, so that what ultimately gets built by the tech team is actually a useful application the business team can use.

Until recently, chatter about the low-code movement has been limited to IT types – witness this post. But businesspeople are increasingly paying attention, too. The business case for low-code development is fairly compelling: This type of streamlined process significantly reduces both time-to-market and development costs of launching new products and services. Less hand-coding means fewer experienced coders needed to get a project off the ground. And a lightweight development process means each project can be done with fewer staff.

As a result, Mendix empowers companies who wouldn’t normally be comfortable with the Silicon Valley “fail fast” ethos to experiment with new ideas in a low-cost, reduced-risk environment.

Insurance companies are in the business of minimizing risk, for themselves and for their customers. For LV=, working with Mendix dramatically reduced the risk of piloting new product ideas. Together, Mendix and LV= have developed several new insurance products in record time–in some cases, going from idea to prototype in just 30 days. Some of these new ideas have worked, and some haven’t. But partnering with Mendix has had big business implications for LV=: It made experimental product launches in a risk-averse industry both affordable and – at times paradoxically – productive.

For example, working with Mendix, LV= tested a new, value-priced life insurance policy aimed at customers over 50. This particular experiment didn’t work as planned. Rod Wilmott, the company’s director of fast-track innovation, explains that, contrary to expectations, it cost just as much to market the value-priced product as the full-priced version.

But the effort wasn’t wasted. Some aspects of that experimental product are now being folded into affordable new LV= policies for workers seeking extended sick leave coverage. The insurer has developed two versions of this new product: one it sells directly, and another white-label version that could be offered by third parties, with LV= handling the administration.

“The sick-pay products were more innovative and grabbed customer and distributor interest respectively,” Wilmott says. “Rather than the higher-cost, standard income-protection products that require medical underwriting and typically have a multi-year span, this is an annualized contract with very low monthly costs, available to most people, without medical underwriting….It’s aimed at lower income families or people who don’t see the need for more expensive coverage but want some comfort that their essentials like groceries are covered.”

Thanks to low-code, LV= had reclaimed the innovator spot upon which the company had  founded its reputation. “[Sick pay coverage] was pretty much a new entrant offering to the market and enabled us to be seen as a leader in the life insurance space,” Wilmott continues. “The fact we were able to do it so quickly also enhances our reputation with brokers” – a crucial link in the insurance sales chain.

Other elements of these experimental products have proven useful across LV=’s business lines.  Some new workflow capabilities LV= developed with Mendix for its broker division, for instance, have applications to the company’s direct call-center operation.  It’s not always sexy, but low-code’s reusable components can cascade throughout an organization, streamlining multiple systems at once.

Perhaps most importantly for LV=, Mendix’s low-code model lowers the communication barrier between the IT and sales / marketing departments. Instead of sending coders off into a room for months and hoping that they come back with something the rest of the team had in mind, Mendix makes development simple enough that non-coders can give direct input while a product is being developed.

At LV=, “it meant that we delivered a service that the business wanted and (was) expecting, rather than something they hoped for through a long document but got something different,” Wilmott says. As traditionally opposed departments find new ways of interacting, encouraging new processes have emerged: “We now have business end-users prototyping fixes for some issues that arise, which makes the IT team fix much quicker,” says Wilmott. “We also see opportunities to deploy solutions written for one business area into second and third areas very quickly.”

Perhaps low-code’s biggest hurdle among businesspeople is its game-changing quality: To many, it literally seems too good to be true. But businesses that opt to believe are reaping numerous benefits, faster than they may have imagined.

This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity. 

The information and data are as of the publication date unless otherwise noted.

Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.

The information above may contain projections or other forward-looking statements regarding future events or expectations. Predictions, opinions and other information discussed in this video are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Battery Ventures assumes no duty to and does not undertake to update forward-looking statements.

*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.

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