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
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.
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TechnologyOne – to replace 13 outdated customer service systems – renegotiated since the rollout could end up 18 months behind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
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.
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.
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
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.