Intentia CEO to get it out of inertia

By ADAM GIFFORD

Bertrand Sciard doesn't mince words.

The company he runs, Swedish software maker Intentia, is in need of a good kick and Sciard is the one who will deliver it.

In the first quarter of this year Intentia lost 118 million Swedish kronor ($23.5 million) on revenue of SEK653 million ($130 million).

The second quarter it made an operating profit of SEK14 million ($2.8 million) on revenue of SEK767 million ($152 million).

Sciard, a former Geac vice-president, said costs were still too high and the company had been doing silly things - such as not collecting maintenance fees from customers in its Scandinavian and European markets.

"That means recurring revenues are only about 20 per cent of the total - about half the figure you would expect from a software company which has been around for 20 years and has 3000 customers around the world. "The former management was a good team which created and funded this business, but it tried to grow by 30 per cent a year by gaining market share," said Sciard from Sydney, where he was attending a user conference.

"While they never made a profit in 20 years, they considered the fact that the company was growing would make shareholders happy.

"To me they completely misunderstood the messages market has been sending for the past two years."

Sciard said enterprise planning software was considered a mature industry, so the company should be happy with growth of 3 to 5 per cent as long as it was making profits of 15 to 20 per cent of revenue.

"The problem is we have a company structured to support a much bigger business."

Sciard will cut 450 of the 2750 staff by the end of next month. New Zealand and Australia will be unaffected, with most of the cuts in Europe.

"Customers expected this kind of decision years ago. They knew the company could not stay unprofitable, and they were asking what was happening with their investment in this technology and whether they should look elsewhere," he said.

"We need to be closer to our existing customers and protect their investment."

Sciard said in the past, Intentia put too much focus on winning new name customers, often by promising to develop special functionality.

Intentia's growth has been limited by the fact that it does all its own implementations.

Sciard said that had to stop, and he was looking for suitable partner organisations.

"We want the Accentures and the IBM Global Services to have a Movex practice, as well as the smaller implementers who have expertise in specific industry niches," he said.

Sciard has backing from the board and from new United States-based investors Tennenbaum Capital Partners, which with another US fund, Symphony Group, will own about half the company.

This US investment means it is likely to seek a Nasdaq listing.

Intentia trades on the Swedish stock exchange.

Intentia founder Björn Algkvist last week stepped down from the board and pledged his support for the restructuring.

Sciard said Intentia had the chance to become market leader in supplying software to tier two manufacturing companies.

Its main competitor there, JD Edwards, has been swallowed up by Peoplesoft.

"I don't see the threat as coming from SAP or Peoplesoft, but in four or five years from Microsoft.

"Right now their product sucks, but I have too much respect for their marketing to count them out," he said.