Open Text Moves Towards Services

Computergram International, August 13, 1999

Open Text Corp, the Waterloo, Ontario-based developer of web-based collaborative knowledge management application software, has reported fourth-quarter net income of $14m, after a loss of $5.9m last year, on revenue that rose 83.3% to $29.4m. Net income for the quarter before tax adjustments and the acquisition costs of Microstar Software in July was $6.3m. End of year net income was $20.1m after a loss of $6.2m last time, from 12-month revenue up 104.2% to $92.5m.

Collaborative knowledge management technology has matured in the last eighteen months, allowing faster and larger implementations, says Europe, Middle East and Africa vice president Tony Heywood. It is very different from four years ago, says Heywood, when an unnamed Dutch oil company purchased 45,000 seats from a competitor, and had only installed software on 5,000 machines after three years, "simply because what was involved was just too great."

The Canadian company will move towards offering implementation and support services. "You can't sell technology any longer," says Heywood. He has seen "a shift away from 'IT is good' to 'IT is good if you can show that it's made a difference to our business.'" He estimates that the firm will derive up to 40% of its total revenue from services within two years. The aim is to have 10 million installed seats of LiveLink in two years' time. "You have to have a substantial installed base to be a major player in this industry," says Heywood.

Open Text intends to extend its offerings for vertical markets, to include petrochemicals and insurance, says Heywood. It already focuses on the telecoms, financial services and high-tech manufacturing markets. The company will use the insurance specialists at Toronto-based Lava Systems Inc which it acquired in January.