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Oakton reviews ERP business

Following a disappointing half-year result, ASX-listed IT consultancy Oakton has put its enterprise resource planning (ERP) business under a microscope.

Following a disappointing half-year result, ASX-listed IT consultancy Oakton has put its enterprise resource planning (ERP) business under a microscope.

The company, which recently reported shedding 90 roles in the last six months of 2008, was now amidst a review of the division, according to chief financial officer John Phillips.

Phillips would not confirm or deny whether Oakton had recently cut its headcount in the arm that provides JD Edwards maintenance work; however, he said the review was a response to the company's forecasted pipeline of work in the field.

"I suspect that large scale implementations will be more difficult to get off the ground. Clients are more interested in optimising current investment profiles," he said.

Oakton revealed at its half-year results that it had written down $4 million on projects it had previously expected to come through its pipeline and that it had shed 90 roles in the last six months of 2008, which resulted in a one-off cost of $1.2 million.

There had been further staff cutbacks beyond the 90 reported during the last half-year period, Phillips admitted, but said the company was "close" to where it needed to be.

The company also recently lost chief operating officer Steve Parker, who had been hired to allow chief executive Neil Wilson more strategic time, for example, to scope out acquisitions opportunities. Oakton has made seven acquisitions since 2007, pushing the company's latest headcount to over 1,199 at the end of last year.

Phillips today said that the new three-year debt facility Oakton had put in place was to give it the flexibility to reignite its acquisition strategy if the opportunity arose.

However, the company's revenue outlook remained volatile, he said. While work within federal government agencies had slowed down, in part due to the Gershon review of government spending on IT, Phillips said Oakton had picked up work in the integration of Westpac and St George and the recently merged Bendigo and Adelaide banks.