Monday, 17 November 2008 14:32

Technology One bucks downturn with strong results and bullish outlook

Australian enterprise applications vendor Technology One does not believe in economic downturns, having just posted a record profit for its fiscal year ended September 30, 2008. What's more, the company's founder and boss, says the market can expect double digit growth again in the coming year.

With annual revenue up 41% to $110.2 million and net profit after tax up 17% to $17 million, it was easy to sense the smile on the face of Technology One executive chairman, Adrian Di Marco, as he shrugged off negative sentiments about the economy.

"This was a strong increase particularly given that we've had all of that economic turmoil happen over the past six months. We come through that without any impact," Mr Di Marco told iTWire.

"What was particularly pleasing is that new license fees were up 23% and we spent $21.2 million on research and development, which was 19% of revenue."

Mr Di Marco attributed Technology One's solid result to the fact that the company is strong in markets that felt little impact from the downturn.

"We're very strong in quite a number of vertical markets such as local government, federal government, state government, education, utilties and most of those sectors typically are reasonably resilient in economic downturns," he said.

"So that's why we're confident that next year we'll have continuing growth. We expect to have profit growth by 10 to 15% next year. Revenue growth could be more than that but we're not putting a number on it."

That's a pretty bold projection given the state of the economy even with the company's solid client base.

"Given the state of the economy (the projection) is not something we do lightly but we go through a very detailed process. It's not just the sectors but also the systems we provide. They're the type of systems that help people cut costs, which is what customers are looking for in this sort of environment."

According to Mr Di Marco, Technology One is winning business against the traditional enterprise applications giants.

"We compete against SAP, Oracle and Microsoft every day," said Mr Di Marco.

"What we find is that those companies are very strong in the more traditional industries such as distribution, manufacturing and retail. The sectors that we target like government and utilities are places where they don't have a strong offering compared to ours."

Mr Di Marco said that Technology One intends to expand its base further overseas.

"We're in Australia, New Zealand, Asia and we've opened a new office in the UK now," he said.

"We've a number of new deals in the UK, such as the Royal Liverpool Hospital, the Institute of Education, which is part of the University of London, and we've also signed a large transport group in Scotland, so we're getting good momentum in the UK."

According to Mr Di Marco, Technology One also differs from other enterprise applications players in that it does all its own project implementations.

"We build it, we market it, we sell it and we implement it - we do it all ourselves. It's a one-stop turnkey solution basically.

"We believe very much that this is the way of the future. People actually want someone to take total responsibility. The fragmented model that has been very common we think will become less common as time goes by.

"People do want the company who makes the software to actually take responsibility and implement and service it. That's one of the unique value propositions that we bring to the table. If you're a customer of Technology One, you buy our software and you also take our services and support. We do the whole thing and there's no finger pointing - it's Technology One's responsibility to give you a successful solution from go to whoa."

According to Mr Di Marco, the latest record result, caps a string of consecutive record results for the past seven years.

"For the past 15 years, we've been doubling in size every two and a half years," he said.


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Stan Beer


Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.



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