Inside TechOne’s ‘lofty’ growth plans and how its share price tripled

CEO Ed Chung says being faster at implementing software than the big consulting firms has benefited both customers and investors.

TechnologyOne boss Ed Chung says the current software implementation model adopted by the big consulting firms is wasting billions of dollars every year.

TechnologyOne chief executive Ed Chung doesn’t mind making a few enemies among the big consultancy firms, saying their “flawed” model “wastes billions every year”.

Mr Chung has kept a relatively low profile despite Technology­One’s share price soaring almost 50 per cent in the past year and tripling since late 2019 to $22.52. This has valued the Brisbane-based company – in the heart of Fortitude Valley, which Mr Chung calls the Queensland version of Silicon Valley – at $7.34bn.

At the centre of TechnologyOne’s growth plans is its SaaS+ product, which Mr Chung describes as a “game-changer” that threatens to puncture the enterprise resource planning software strategies of the top consulting firms, with the likes of Deloitte, KPMG and Accenture in his sights.

Mr Chung says SaaS+ forms the backbone of TechnologyOne’s goal to launch ERP at its clients in 30 days – a fraction of what its bigger rivals can do.

“It’s the industry solution that will completely transform the current flawed model where organisations waste billions every year on third-party consultants commercially incentivised to drag out complex implementations,” Mr Chung said.

“TechnologyOne is already implementing software faster than our competition. Our customers are on average going live in under 300 days, while the average for consultants and system integrators stands at an astonishing 2000-plus days.

“With ongoing investment in SaaS+ including the use of automation and AI, we have a lofty goal to drive down implementation timelines to 30 days by 2030.”

TechnologyOne is not a retail brand, recognised by mums and dads like Canva. But its resource planning software is still involved in key decisions for many Australians, servicing schools, hospitals and government agencies.

If you have applied to build a pool in your backyard or a house extension, chances are it was through TechnologyOne’s software.

Mr Chung – who has spent the past 18 years at TechnologyOne, first as chief financial officer before being appointed CEO in 2017 says his strategy focuses more on the customer rather than what is known as ‘‘consultant creep’’, which involves projects becoming drawn out and expensive.

“It aligns our interests to the customers by prioritising faster go-lives and faster time to value,” he says. “It’s about placing the onus of the implementation’s success on us, and not on the customer. For them, it’s a jet aircraft and a safety net.

“We can do this because TechnologyOne is the only company in the world that owns all parts of the value chain – we develop, sell, implement, support and maintain our software in-house.”

Analysts have warmed to the strategy. UBS’s Apoorv Sehgal upgraded the company to a buy rating in July, citing “positive customer feedback” around TechnologyOne’s product stack and “willingness of customers to spend more with TNE over time”.

Morgans says it is “increasingly confident of management’s ability to execute and deliver shareholder value”, while Jeffries says “the culmination of Power of One, SaaS+ and best-in-market implementation times have put TNE in a leading position in the UK to tap into the market, which the street has yet to give them credit for”.

If all goes to plan, TechnologyOne is set to double in size every five years, hitting $1bn in annual recurring revenue by 2030.

At its latest financial results – its half-year earnings in May – the company’s ARR soared 21 per cent to $423.6m, putting it firmly on track to reach its “ambitious” target. Net profit, meanwhile, surged 16 per cent to $48m, allowing it to hike its interim dividend 10 per cent to 5.08c a share.

Organic growth has continued in the first half through partnerships with councils in Australia and New Zealand, such as Newcastle City Council and New Plymouth District Council, as well as education providers including TAFE WA and Southampton Solent University in Britain.

It has borrowed from WiseTech’s playbook – which focuses solely on logistics software – electing just to offer local government and higher education products in Britain.

“Just as Salesforce changed the world and turbocharged SaaS, TechnologyOne is going to change the ERP world with SaaS+,” Mr Chung said.

Originally published as Inside TechOne’s ‘lofty’ growth plans and how its share price tripled