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TechnologyOne hits out at 'half-baked' cloud solutions, posts big cloud gains

25 May 16

TechnologyOne executive chairman Adrian Di Marco has hit out at ‘half-baked, hosted cloud solutions, retrofitted for cloud’ as the Australian enterprise software company posts 100%-plus cloud growth for the half year.

TechnologyOne posted a 12% year on year increase in revenue, hitting $101 million for the half year ending 31 March.

The increased revenue wasn’t enough to stop the company recording a drop in profit, with net profit down 17% to $7.3 million. Profits were dragged down by $4.2 million in acquisition expenses and a foreign currency loss of $900,000.

Costs associated with TechnologyOne Cloud were also up 120% to $1.6 million as the company continued to grow the business, which it says is a ‘strategically important part of our business’.

Cloud services fees were up more than 100% on the previous year, with the company saying it has signed up 21 new customers for its cloud service.

“Since delivering Cloud 5.0 at the 2015 full year, the company is now focused on migrating all cloud customers onto its 5.0 architecture,” TechnologyOne says.

Di Marco says Cloud 5.0 introduces the start of the company’s ‘mass production software-as-a-service offering’, which he says is massively scalable with significant economies of scale.

“We are now part of an elite group of companies globally delivering true enterprise software as a service, making our software the premier enterprise cloud offering in Australia and New Zealand,” Di Marco says.

“We are also the only enterprise provider offering a fully configurable solution, with a mass production line of servers running our software for our customers.”

Di Marco hit out at some other players in the market, saying there are still ‘hosting providers masquerading as cloud’, something he expects to see a decline of in the coming years ‘as the market increasingly understands the benefits of a true cloud SaaS offering’.

“In the current market, many of our multinational competitors are offering half-baked hosted cloud solutions which have been retrofitted for cloud, rather than completely re-engineered to take advantage of the cloud,” Di Marco says.

“Survivors in the cloud market must offer highly scalable, efficient and cost-effective offerings based around SaaS.”

TechnologyOne says it is ‘well positioned’ for strong profit growth of 10% to 15% over the 2016 full year, based on its strong sales pipeline for the second half.

Di Marco says the company is the preferred supplier for a number of large contacts to close in the second half of the year, something the company says provides ‘significant positive momentum for the second half’.

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