Delayed contract hits TechnologyOne

Delayed contract hits TechnologyOne

Summary: TechnologyOne downgraded its guidance today, flagging decreased growth in total revenues due to the delay of a major contract.

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TOPICS: Legal
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TechnologyOne downgraded its guidance today, flagging decreased growth in total revenues due to the delay of a major contract.

"In recent days a large multimillion dollar licence fee contract for which TechnologyOne had been the selected supplier since early 2009, and which TechnologyOne had confidently expected to finalise before 30 September, has now been delayed," TechnologyOne executive chairman Adrian Di Marco said in a statement.

The business case for the project was being re-evaluated, he continued, meaning that the finalisation of the contract would be delayed into the next financial year. "Clearly this is a disappointing situation," he said.

The company didn't mention which contract had caused the pain. In May it announced deals with the Queensland Department of Premier and Cabinet, the City of Melbourne, Seqwater, the Children's Medical Research Institute (CMRI), Future Flow, Barwon Water, Reliance Petroleum, and VicTrack. It also recently announced wins in New Zealand.

This case was by no means a one off, according to Di Marco. "We are now seeing signs that contract finalisation time frames for large projects may take longer than in the past, as boards take a more conservative approach, requiring additional due diligence and further justification before proceeding to finalise contracts."

Contracts were still going ahead, the executive said, but were taking longer, leading TechnologyOne to reassess its guidance.

The expenses were also higher than the company had forecast, despite cost cutting measures. Di Marco had decided not to cut R&D headcount, only freezing it to keep the company's talent. "Unfortunately, the decision not to reduce our R&D expenditure has impacted our short-term results, but I am confident it was the right decision and will deliver significant long-term benefits," he said.

Di Marco believed the cost initiatives and the R&D would stand the company in good stead for next year.

Topic: Legal

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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3 comments
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  • Incoming...

    Pink slips at 4 o'clock....
    anonymous
  • I guess it couldn't last forever

    Yes it was coming, lets see
    Heavy penetration in their local markets OZ and NZ, which have been a relatively easy sell for them.
    Longer lead times as they try to penetrate bigger customers - those take time
    Slow economy
    Slow penetration to other OS markets - UK would be very slow and extremely competitive at present.
    Not too difficult really
    anonymous
  • vapourware 2.0

    the delays in contract signing are more likely due to the fact that current customers are very dissatisfied with their product(s) & services. there is enough of a groundswell to be reaching people before they make the same mistake.
    anonymous