Vendor
Summary
Intentia
International AB is an internationally established provider of enterprise resource
planning (ERP) software for mid-sized companies in various manufacturing and
distribution industries. Founded in 1984, with headquarters in Kista, Sweden,
Intentia International is the third largest ERP vendor in Europe and eighth-ranked
ERP vendor, with $308 million in revenue in 1998 (approx. 2% of the global ERP
market). The Company has a history of solid growth, with an average of 38% annual
growth over the last five years. The Company's primary product, Movex, a cornerstone
in the Intentia Solution, is a set of more than 1000 components that organize
business processes as sales, marketing, accounting, manufacturing, finance,
and human resources. It is currently available only on IBM's AS/400 platform,
with plans to deliver Movex on Windows NT within the next 6 months. Movex Version
11 NextGen, the first ERP software written entirely in Java, should facilitate
this development. The other critical parts of the Intentia Solution set are
the process-mapping and configuration tool Enterprise Process Manager, and the
implementation method Implex. Soon after its inception and success in the Swedish
market, Intentia branched out into Europe, and began selling in the USA in 1995.
In 1998, Intentia acquired PMSIM Systems A/S, a Danish software company that
specialized in advanced planning & scheduling applications, which was renamed
Movex APP, and is now integrated into the Movex ERP suite. The Company distributes,
implements and supports its products worldwide through its partner network consisting
of subsidiaries and dedicated partners in more than 40 markets around the world,
and derives 18% of its revenue from the non-European market. More than a half
of Intentia's revenue comes from its service and support. By the end of 1998,
the Company had more than 2,600 customers. Intentia International AB is a public
company and currently trades on Stockholm Stock Exchange.
Fig. 1
Vendor
Strengths
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Strong long-term track record and very good reputation
for honest and fair treatment of customers, and for congenial corporate
culture that emphasizes individual initiative and creativity (very low staff
turnover of 6% compared to the industry average of 15%).
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Movex is regarded as one of the most comprehensive ERP
products that can also satisfy the exacting requirements of some specific
industries. The Company employs industry-savvy individuals who not only
provide strong customer support, but are also able to blend industry-specific
functionality into the Movex suite. Movex Fashion and Movex Food & Beverage
products are the main Industry Applications and offer some functionality
that is still unmatched even by more recognized competitors like SAP, J.D.
Edwards, and SSA.
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Continuous focus on product quality and customer satisfaction,
manifested in steady high R&D investment (30% of total revenues), which
provided for development of versatile solutions for both discrete and process
manufacturing and for delivery of Movex 11, the first ERP system written
entirely in Java.
Fig. 2
Vendor
Challenges
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Very low brand awareness outside of the European market,
particularly in North America, which contributes only 8% of Intentia's licence
revenues. Low profit margins and fluctuating quarterly performances will
not be looked upon favorably by discerning US investors. These could be
an impediment in providing equity for channel acquisitions that are needed
to continue strong growth and increase its market presence in North America.
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After posting fairly successful results in fiscal 1998,
the Company stumbled in the first half of fiscal 1999 and posted a combined
$20 million loss in the last two quarters. Intentia's revenue growth in
1Q99 and 2Q99 has been driven primarily by service & maintenance, with significant
deceleration in license revenue (down 13%) while total revenue was up 40%
compared to the second quarter of the last year (see Figs.1 and 2 - Intentia
International AB Yearly and Quarterly Results Chart).
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Some modules, like Human Resources & Payroll, and the intricate
Transportation Management module, are not available at this stage for the
North American market since they were initially developed to abide by Swedish
legislation and regulatory requirements.
Fig. 3
Vendor
Predictions
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Despite a highly competitive environment, we predict that
Intentia will reach $1 billion in revenues within the next 4 years (65%
probability), assuming its successful expansion in the US market and in
the resuscitated Asian market.
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We believe that AS/400 products will contribute more than
70% of total license revenue within the next 3 years. Conversely, Java-based
products running on other platforms will not gain major user acceptance
and will contribute a maximum of 30% of total license revenue within the
same time frame (75% probability).
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Within the next 3 years, 25% of total Intentia revenues
will come from the North American market (70% probability).
Vendor
Recommendations
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Further expand its North American presence, both by opening
new offices and developing new affiliate partnerships, and step up its marketing
campaign in the North American market. Consider acquiring or partnering
with affiliates of languishing competitors with a similar product focus,
e.g. SSA.
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Increase management efficiency within the existing organization
(a radical "restructuring", conducted by some US-based counterparts, would
not be a viable solution for a Swedish company). A revenue per employee
of approx. $0.1 million is one of the lowest within the industry (See Fig.
3 - ERP Vendors' Sales Revenue per Employee).
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Expedite a uniform global availability of all Movex modules
and industry solutions, and deliver more industry-specific solutions (e.g.
chemical and energy). Moreover, expedite availability of NT-based products
and research in order to increase the speed of its Java applications.
User
Recommendations
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We generally recommend including Intentia 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.
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Intentia should be included on a short list in any selection
within the following industries: Aviation; Fashion; Food and Beverage; Paper;
and Steel, on the condition that HR/Payroll and Transportation modules are
not of primary significance to the customer.
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While Intentia service and support is very strong overall,
its industry focus can vary significantly by geographic region. Therefore,
potential clients should conduct preliminary 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.