Intentia’s Growing Pains

Intentia’s Growing Pains
P.J. Jakovljevic - June 15, 2000

Event Summary

According to Intentia's press release, on May 23, Sun Microsystems, Inc. and Intentia International AB announced a strategic alliance. Intentia will offer its e-collaboration Application, Movex NextGen and implementation services on the Solaris Operating Environment. Sun will support Movex NextGen in go-to-market activities, implementation and support processes.

"Intentia's offering goes beyond software technology to a true business solution that will allow us to broaden both our geographic and vertical industry reach. It also substantiates the quality, depth and breadth of our supply chain functionalities," said Robert Youngjohns, vice president, Sun Microsystems, Europe, Middle East and Africa. "The Movex NextGen architecture fits our network computing strategy. Together, we're providing mid-range and growing companies with a world-class e-business solution."

"Together, Intentia and Sun can provide all the necessary technology, functionality, implementation assistance and support services that customers require to take full advantage of Internet technologies in running their e-collaboration solutions," said Bjrn Algkvist CEO Intentia International. "The Intentia and Sun combination can lower the cost of ownership and equips companies to easily extend their business processes."

Sun and Intentia also claim they will provide customers with a compelling and well-integrated service offering. Working with Intentia's business consultants, Sun will provide professional services to maximize the performance of NextGen running on Sun systems and engage with Intentia's implementation methodology, Implex.

Earlier, on April 27, Intentia reported results of its first quarter in 2000. "The demand for enterprise applications systems is slowly turning into rapid growth. Today, the market understands that standardized enterprise applications are key to successful e-business solutions and maintaining a competitive edge in the new economy," stated Bjrn Algkvist, President and CEO of Intentia International AB. "We have been very successful in selling and implementing our e-business solutions and we continuously expand our product offering. Right now, Intentia receives approximately two new contracts every week. The market for business-to-business related projects is growing especially rapidly. Intentia is in a very good position to assume a substantial portion of this market. Today, we can offer current and prospective customers in the forty markets we serve our entire selection of e-business applications, solutions and consultancy services."

The results have nevertheless been mixed on paper (See Figure 1). In regard to license revenue, Intentia International reported a notable increase of 33%. At the same time, total revenue increased by 19%. However, a hefty net loss of approximately $9.3 million has also been posted.

Figure 1.

Market Impact

Intentia has been trying to put behind the harrowing 1999 that resulted in declining license revenue, a hefty loss and significant organizational restructuring, particularly within the U.S. market. The latest results show only a dismal improvement. The company has posted its fifth consecutive loss, and its shareholders may not any longer buy the "growth at all costs" mantra. 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.

Intentia has long been confined to offering only an IBM AS/400-based product. While we believe that its choice of delivering uniform platform-independent products is more practical than, e.g., MAPICS' option of offering dual product lines after acquiring an NT-based product, Intentia's great challenge remains its low market awareness. This is attributable to a great degree to the company's bland marketing effort thus far. The current changes may be the first sign of management's departure from the touchy-feely tacit corporate culture and modest marketing approach to playing hardball and achieving more noise in the market.

The alliance with Sun may create an opportunity for expansion for both companies. Sun's UNIX leadership position increases Intentia's opportunities to sell its product on Sun's technology, whereas Intentia's move to a Java technology-based offering provides new opportunities for Sun, especially in the mid-range server market. The market should expect a similar alliance in the future, possibly with another major hardware vendor, which would promote Intentia's product on the Windows NT platform too.

User Recommendations

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 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.), at least to better leverage their negotiating position with other vendors involved in a particular selection exercise.

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, particularly for recently announced offerings. Intentia has traditionally been honest and forthright in addressing these questions.

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