After a tumultuous 12 months, Dataflow Computer Services was plunged into receivership yesterday and, although still trading, is likely to be wound up in the near future.
A press statement from consultants Arthur Andersen confirmed what many had feared was inevitable after Microsoft pulled the plug on the company in a distribution consolidation last year.
Sources close to Dataflow at the time suggested that the lost MS distributorship stripped Dataflow of close to 60 per cent of its revenues. This was rapidly followed by a series of other mishaps which pushed the former edutainment software mainstay off course.
Dataflow's statement said that the company suffered some critical blows in the last six months including a botched ERP implementation and the "surprise departure" of entertainment supplier Activision in April. This proved to be the "final blow" as it left Dataflow "with inventory totalling almost $3 million with little or no opportunity to realise the full value of this stock", the statement said.
Faltering customer service resulting from the company's shift to new premises also "somewhat rattled the channel", according to the statement. Meanwhile, "negative press" about the fact that Dataflow and e-tail startup smartbuy.com.au had common investors and directors further eroded the confidence resellers held in Dataflow. As these events show, without resellers you have no distribution.
Dr Jeffrey Tobias, founder, chairman and CEO of Dataflow, reflected on what happened to the company he founded in 1983 in one room of a clothing factory.
"What has happened to this independent, Australian-owned company which I built from scratch to sales of $89 million in 1999 distresses me deeply," Tobias said. "Over the last 17 years Dataflow grew to become a well-respected and trusted name in the education marketplace. I doubt there would be a single school in Australia without Dataflow software on its computers.
"Over the years, Dataflow has provided career opportunities for hundreds of young Australians, and building relationships with our team members as well as with our suppliers and our customers is what I have most valued and enjoyed".
The news is a shock for resellers who have dealt with the company for over 17 years. In particular, it has forced the hand of smartbuy.com.au, which is close to finalising a new third-party distribution deal now desperately required to handle its fulfilment logistics needs.
Tony Gattari, smartbuy's general manager, said the company has been in discussions with four other distributors.
"We are currently in the process of finalising our distribution arrangements," he said.
Both Dataflow and smartbuy.com.au share at least one common investor, Allco Finance Group.