TechnologyOne eyes a future with AI as enterprise cloud gains further steam

After gaining 112 new cloud customers in 2017, TechnologyOne chairman Adrian Di Marco told ZDNet there is more market share to claim, especially as artificial intelligence works its way into the enterprise.

Australian enterprise software firm TechnologyOne has released its financial results for the 2017 financial year, reporting AU$44.5 million in after-tax profit, on revenue of AU$273.2 million.

Speaking with ZDNet about the results, founder, former CEO, and now chairman of TechnologyOne Adrian Di Marco said the massive market that is enterprise cloud in Australia is continuing to pick up pace.

"The cloud is a new paradigm for customers. The market is actually massive in Australia, there are government departments, which we've seen huge demand from federal government, state departments, local governments, universities -- they all want to go into the cloud and they really all want it delivered how we're offering, software-as-a-service, not as a hosted thing," he said.

"The cloud is growing exceptionally fast. It's a business that's on a massive trajectory up, and we're excited about what we've achieved and what we're going to achieve over the next few years."

TechnologyOne's annual cloud subscription revenue was up 84 percent to AU$18.6 million, and annual licence fees came in at AU$119.9 million. Meanwhile, revenue from initial licence fees was AU$61.7 million and consultation revenue remained at its 2016 total of AU$71 million.

"The cloud is a big area for us and a huge area of growth, but we're also a total solutions vendor ... we don't just build the software, we also implement it and run it and support it for our customers, it's a total integrated solution of which consulting is an important part," Di Marco explained. "Consulting is still an important part of the business but the driver is the cloud and SaaS."

The company's TechnologyOne Cloud reversed its 2016 AU$2.2 million loss, reporting a profit of AU$2.5 million for 2017.

During the year, the company also added 112 new cloud customers to its books, including Austrac, the New Zealand Stock Exchange, the Department of Industry, Flinders University, Western Sydney's Cumberland Council, Queensland's Moreton Bay District Council, and TAFE Queensland.

During the year, TechnologyOne found itself in a contractual dispute with Brisbane City Council (BCC). BCC terminated its contract, claiming the company failed to deliver an IT systems replacement program that it previously said blew-out in cost by some AU$60 million.

At the time, TechnologyOne said BCC's "wrongful termination" of the contract was expected.

Di Marco said he has moved on from the dispute with BCC.

"I'm so over it. It's part of the past, it's done and dusted, it had no impact on the business as far as new business is concerned, we still had a massive year with local government -- we pretty much dominated the marketplace," Di Marco said on Tuesday.

"It really didn't impact the business at all. People just saw through it and saw it for what it was, which was a political stunt ... we've put it behind us."

Since handing the chief reigns over to long-serving COO Edward Chung earlier this year, Di Marco said a big part of his focus has been more on innovation and creativity as part of its ongoing research and development (R&D) commitment.

During the 12-month period, TechnologyOne spent AU$49.9 million on R&D.

"We have a really full R&D agenda, R&D will continue to be a big area of spend for the company," Di Marco added.

"But another area of focus for us will be in artificial intelligence, building that through the whole enterprise suite, so we've got a very full agenda for R&D for the next five-six years which will create a lot more areas of growth for us as we continue that."

Di Marco said TechnologyOne is eyeing "huge opportunities" over the next five years as more organisations move to the cloud, as well as capitalising on the continued use of mobile devices. He said similarly there are opportunities as AI starts to become a "real thing" within the enterprise.

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