TechnologyOne posts profit growth

Executive Chairman has a crack at competitors SAP and Oracle

ASX-listed software provider, TechnologyOne (ASX:TNE), has posted an after tax profit rise of 47 per cent to hit $5.7 million for the six months to 31 March.

In a statement, TechnologyOne also said its revenue over the period grew by six per cent to $59.2 million.

Research and development expenses rose one per cent year-on-year while non-R&D expenses increased by three per cent to $39.6 million.

TechnologyOne executive chairman, Adrian Di Marco said the company was moving towards a solutions based provider.

“We are really uniquely placed to do that. I would argue that SAP and Oracle wills struggle to do that, and have struggled,” he said. “If you talk to people they’ll tell you they are struggling. The reason is, SAP and Oracle are software companies, that is all they do, build the software. They still use third parties to implement the solutions and we believe that fragmented model is not going to work in the future. Because, in the end, it is about doing the whole thing. You build it, you implement it and you support it and service it. Having your people do the whole thing you are able to capture all the places where it is not working and fix the solution. You can’t do it when you have that fragmented business model.”

Di Marco did not agree with some industry analysts that competitor Oracle’s acquisition of Sun Microsystems gave the vendor an attractive vertically integrated solution.

“I think that is absolutely crazy,” Di Marco said. “Hardware is just a commodity; databases are becoming a commodity. I think Oracle is, I hate to say it, living in the past. Microsoft has shown that with SQL server. We find that eight out of 10 people buy SQL server because all they care about is a commodity database and it will do and scale to 90 per cent of where Oracle is.”

He continued to say SAP’s acquisition of Sybase was also difficult to understand.

“We are looking at this and thinking ‘my God’, this is just crazy stuff at the moment,” Di Marco said.

In recent times, the company has won deals with: TAFE institutions across Victoria; the High Court of Australia; Newcastle Airport; and National Transport Insurance, among others. In May, the software provider unveiled its new R&D centre in Fortitude Valley in Brisbane, Queensland.

“The R&D centre is really about getting the company to the next stage of growth,” Di Marco said. “It is really focussed on collaboration, cooperation and creativity. So it is specifically designed to encourage that and it is also about where we are going to build our next products.”

In March, TechnologyOne committed to continuing its push into the UK market despite a $1.5 million loss on the business venture in 2009.

In an ASX statement, the company said the UK market remained challenging due to the global financial crisis and was further exacerbated through TechnologyOne’s status as a new entrant. Di Marco restated this position on the back of the latest results.

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