by George Nott

TechnologyOne prepared for litigation in Brisbane City Council dispute

Jan 30, 2017
GovernmentGovernment ITIT Management

TechnologyOne says it is “confident of its legal and commercial position” should Brisbane City Council (BCC) decide to litigate over a dispute involving the implementation of the council’s local government platform.

In an ASX announcement issued today, the software giant slammed the council for “frustrating” its ability to complete the project and for going public with its concerns.

Brisbane Lord Mayor Graham Quirk last week announced he was seeking to have the contract with TechnologyOne – to replace 13 outdated customer service systems – renegotiated since the rollout could end up 18 months behind schedule and $60 million more expensive than anticipated.

“This event is being seen by the market as unique to BCC, because it has been made public by BCC without ever initiating the normal contracted remediation processes. In my 30 years in business I have never seen this before,” said TechnologyOne CEO Adrian Di Marco, one of the longest serving CEOs of an ASX-listed company.

“TechnologyOne has had challenging projects like BCC in the past and they have been resolved to both parties satisfaction. Unfortunately BCC has taken this to the public arena without first following contractual protocol, and allowing us the opportunity to resolve the matter. This has caused needless angst to our shareholders and impacted our share price which is disappointing and totally unnecessary,” Di Marco added.

The company’s share price fell by more than 9 per cent in the two days following the council’s release.

Scope creep and bureaucracy

The company said a significant increase in the scope of the project and lack of input from the council to configure business processes were the cause of the problems.

TechnologyOne added that it had notified the council that it “cannot continue to frustrate our ability to complete the project”. The council’s bureacratic approach “will delay the project needlessly and contribute significantly to a blow out in costs”, it added.

The company also clarified the figures in the lord mayor’s press release, emphasising that the value of the contract to TechnologyOne was $50m over ten years, “substantially below the $182m that has been inferred”. The difference was not part of the contract to TechnologyOne but costs associated with council staff and contractors, the company said.

TechnologyOne reassured shareholders that the dispute would not have a “material impact” on its future earnings and that it anticipated no effect on its sales pipeline.

The council has said it wants to continue working with the company on the project, the ASX statement said.