Intentia Has Been Bleeding For Its Platform Independence

Intentia Has Been Bleeding For Its Platform Independence
P.J. Jakovljevic - September 15, 2000

Event Summary

As published on the company's Web site on August 16, Intentia International AB, a Swedish provider of enterprise business applications, reported financial results for the second quarter of fiscal 2000. License revenue during the first half of the year increased 17%, while the net revenue for the period grew only 4%. Net revenue for the second quarter declined 8%, as a result of decreased consultancy revenue. Net loss for the second quarter was approximately $14.8 million (See Figure 1).

Figure 1


"The turnaround seen in the market continues and the quality and volume of prospects in our customer base improved considerably during the first half, " said Bjrn Algkvist, CEO, Intentia International AB in his comments on the results for the first half of 2000. "It is particularly encouraging to see that the flow of business for Intentia has increased dramatically, including a series of major transactions in which Intentia has already been selected as the supplier and projects have begun while final negotiations are under way. As contract negotiations become more complex, evaluation and decision-making processes take more time. Intentia is performing a greater part of the initial study prior to signing the contract, which also prolongs the decision-making process. Hence, license revenue suffers, because this increases the number of deals that have been decided but not yet signed. The bright side is that this approach increases the security for Intentia and its customers while promoting the profitability of projects".

During this first half, Intentia claims to have taken the lead in technology with its Java-based Movex NextGen product suite. Intentia has successfully implemented Movex NextGen on both AS/400 and NTplatforms. The addition of Unix (Sun Solaris) as a platform has also significantly extended the market for NextGen technology.

Market Impact

The declining license revenue and hefty losses of 1999 seem to be continuing through 2000. The company has posted its sixth consecutive loss, which gives serious pause to its shareholders. Intentia, like many of its competitors, has had the misfortune of concurrently tackling international expansion and ambitious product development in a sluggish and morphing market.

On a positive side, Intentia claims to have rounded out its platform-independent extended ERP product portfolio, which also features strong industry-specific functionality and expertise. Movex, its enterprise resources planning (ERP) system launched in 1999, is a Java-based software suite deployable across multiple platforms. Intentia also offers extended ERP applications that expand beyond traditional ERP functionality including customer relationship management (CRM), supply chain planning and execution, business intelligence, and e-commerce software.

Some notable newly released applications are Movex Supply Chain Planner, an advanced planning & scheduling (APS) application, and Movex Intelligent Agent, a software component that can be used to search the Internet, intranets, or extranets to negotiate deals for activities such as materials procurement. Other relatively new offerings from Intentia are software modules that support Wireless Applications Protocol (WAP), field service management being one.

While gaining platform independence and providing a comprehensive product offering for the new economy tremendously expands Intentia's opportunities, the company's challenges remain the low brand recognition and the need to expand beyond its large customer base in Europe. The recent alliances with Sun Microsystems and IBM may have been an early indication that management is learning the ropes of more aggressive marketing. However, the task of balancing costs of product development, sales & marketing, with a dismal license growth and the low utilization of a bloated consulting practice will be undeniably daunting.

User Recommendations

Intentia's customers should certainly consider the new product offering, but avoid selecting it without looking at what the other vendors have to offer. As for potential customers, 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. 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.

We also encourage existing and potential users to familiarize themselves with the company's above-mentioned ambitious new products offerings and their availability, at least to better leverage their negotiating position with other vendors involved in a particular selection exercise. Current and potential users may want to inquire about the company's plans regarding Internet marketplaces in their respective industries. Which specific market places does (or will) Intentia connect with, what methodology does (or will) the company prescribe to are some of the necessary inquiries in that regard.

Future clients are also advised to request the Company's written commitment to promised functionality, general availability date, price, length of implementation, and seamless future upgrades. Given the fact that the product has been only recently released, each component should be put through its paces using a well-documented set of requirements, scripted scenario demonstrations and rigorous reference checking. Intentia has traditionally been honest and forthright in addressing these questions.

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