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.