Tech One slams channel sales model

The chief of ASX-listed ERP software and services provider Technology One has attacked the traditional vendor-reseller sales model, claiming it is fundamentally flawed.

Adrian Di Marco, executive chairman at Technology One, said the developer had recorded its strongest sales ever in the 2005 financial year. That success was due to direct sales, he said.

The company signed some 80 deals during the period, capitalising on opportunities in the general commercial, local government and higher education markets. The deals included sales to the Government of Samoa, the Royal Flying Doctor Service, Wesfarmers and James Cook University.

The developer was winning business against multinationals by focusing on a direct relationship with customers, Di Marco said.

In the traditional vendor-reseller model, implementation costs and risks were the responsibility of the reseller. The traditional channel model was "fundamentally flawed", he said.

"There is no doubt it has been a very profitable business model that has allowed our competitors to opt out of dealing directly with the customer, moving the costs and risks associated with implementing their software to a third party -- the reseller," Di Marco said.

"However, these days the market is far more educated, and we are winning significant business from our competitors through customers who have been burned by vendors over-promising and under-delivering."

Technology One took "full responsibility" for the implementation and support of the product, Di Marco said.

"We sell a fully integrated out-of-the-box solution to our customers, taking total responsibility for the software, implementation and the support. If a customer is unhappy for any reason, the buck stops with us and we fix it," he claimed in a statement.

The enterprise market had improved and had become more sophisticated, Di Marco said.

Further, companies were seeking "one solution from one vendor" to manage all their business IT requirements, he said.

"Technology One has developed the intellectual property and R&D for a full suite of financial applications, from financial management to human resources and payroll, supply chain, business intelligence and work and asset management," Di Marco said.

The company reported a net profit after tax for the 2004 financial year of $9.5 million on total revenue of $50.5 million.