Melbourne IT on $18m Oracle revamp

Melbourne IT said today that it had selected the suppliers for its $18 million integrated services system revamp.
Written by Suzanne Tindal, Contributor and  AAP , Contributor

Melbourne IT said today that it had selected suppliers for an $18 million systems revamp.

To transform the company into a "full IT services company", Melbourne IT has chosen to implement Oracle financial management systems, managing director and chief executive Theo Hnarakis said today at the company's annual results to 31 December 2009.

Benefits of implementing the systems would include a rise in billing process efficiency, enabling cross selling and upselling to improve average revenue per user, eliminating duplication to save costs and increasing sales productivity, he said.

Hnarakis said that a systems integrator had also been chosen, but left it unnamed, as the board meeting that approved the appointment was only made today.

The upgrade will start in March this year and will be completed in 2012 for a total cost of $18 million, $11 million of which was capital expenditure. The return on investment would start in 2012, he said. It would also reduce costs by replacing multiple systems with one.

Melbourne IT has also embarked on a program to improve the reliability of its operational support systems at a cost of $7 million over three years, which has also seen it switch storage vendors from IBM to EMC. Data corruption that had occurred on its IBM storage systems were blamed for a several day outage experienced at the company's WebCentral web-hosting business.

Hnarakis said that for the same cost, the move to EMC had enabled it to purchase 50 per cent more storage and had lowered its power usage.

Melbourne IT reported net profit after tax of $16.8 million in the year to 31 December 2009, with a recovery in earnings in the second half contributing to a revenue jump of 7.5 per cent to $200.1 million.

The DBS and enterprise services units produced the bulk of Melbourne IT's second half 2009 earnings growth, with EBIT for the units jumping 226 per cent and 633 per cent on the first half of 2009 respectively.

DBS had added 150 new customers in 2009, the company said, including Schweppes Australia, Sanofi Aventis and the Tetley Group. For enterprise services, the Queensland Department of Education and Training resigned a long-term contract.

The small to medium business (SMB) e-business solutions unit saw 2009 revenues decline 0.9 per cent to $42.8 million, while its average revenue per user fell from $329 in 2008 to $307 in 2009.

Hnarakis said tight cost controls had helped the company to meet its full-year guidance. The new planned investments will mean net EBIT growth in 2010 would be "modest".

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