Attempts to Become 'Lean and Mean'
Jakovljevic - March 27th,
In February, an enterprise application provider Intentia International
announced the merger of Intentia's regional organizations in Europe, the
Americas and Asia-Pacific into one joint organization named Global Operations.
Lars Prochus, presently CEO of Intentia Europe, has been appointed COO
of Intentia International and head of Global Operations. Mr. Prochus
joined Intentia in early 1999 from Genencor Inc., Rochester, NY, where
he was Senior Vice President of Business Operations.
merging our regional operations we are taking an important step toward
achieving better global integration and faster realization of operational
synergies", comments Bjrn Algkvist, CEO, Intentia International. "I am
delighted that Lars has accepted the role of COO since his substantial
international experience will be of great value to Intentia." Intentia's
Global Operations will comprise worldwide marketing, sales, and service
of Intentia's Movex enterprise applications and integrated e-business
pruning of its U.S. organization preceded this event. As admitted on the
company's Web site in January 2000, "The U.S. market for enterprise applications
continued to be very weak during the fourth quarter of 1999. During the
past year, Intentia undertook major steps in the expansion of its organization
through large increases in sales personnel and consultants in an attempt
to leverage the expected increase of license sales in the latter half
of 1999. However, license sales were considerably weaker than expected.
As a consequence of the lower demand for consultants during 2000, work-force
reductions have been undertaken in order to better adapt to the situation,
thereby creating a basis for a positive earnings development in the U.S.
during the year. The staff reduction totaled approximately 60 people,
leaving a staff of more than 350 professionals in the direct and indirect
U.S. channel to serve present and future customers. The developments in
the U.S. for Intentia will have a considerably negative impact on the
results in 1999."
Fiscal 1999 was a difficult year for Intentia, with declining license
revenue and a hefty loss of approximately $42 million. Management caved-in
under pressure to curb further losses and decided to streamline its much-needed
expansion and brand awareness promotion, particularly within the U.S.
market. While Intentia's record of one of the lowest staff turnover rates
within the industry has now been tarnished to a degree, we think favorably
of management's decision to prune its bloated, dysfunctional global organization
and to show a consistent face to customers worldwide.
also believe that the Y2K induced slowdown is only partly attributable
to Intentia's poor new license revenue performance. Another major factor
is the fact that the company remains perceived as only an IBM AS/400-based
product vendor. Intentia's latest Java-based, platform-independent product
release has been experiencing relatively cold initial market acceptance
despite its ambitious and exciting new product release schedule. This
is attributable to a great degree to the company's bland marketing effort.
current changes may be the first sign of management's departure from the
touchy-feely corporate culture and modest marketing approach to playing
hardball and achieving more noise in the market.
We remain firm on our recommendations in TEC's note on Intentia (See TEC
Technology Research Note: "Intentia: Java Evolution From AS/400" October
1st, 1999), that Intentia should be included on a long list of an enterprise
application selection to mid-market and low end Tier 1 companies (with
$50M-$1B in revenue) within the following industries: Automotive; Aviation;
Furniture; Fashion; Food and Beverage; Paper; Pharmaceuticals; Steel;
Wholesale and Retail. Further, we believe Intentia took the necessary
steps not to jeopardize its delivery capability in the U.S. market while
downsizing its operations. Potential clients in North America, however,
should conduct thorough research on industry expertise and reference sites
of a regional Intentia office or an affiliate service provider when Intentia
is included in the selection process.
also encourage existing and potential users to familiarize themselves
with the company's ambitious new products offerings and their availability
(e.g., Java-based platform independent Movex NextGen release, e-Commerce
modules, CRM modules, business intelligence modules, ASP offering, etc.),
since we believe Intentia will be in a position to better leverage its
negotiating position with all vendors involved in a particular selection