TechOne reinvents itself in cloud

Graeme Philipson

Brisbane-based Technology One is Australia’s biggest home-grown software company with close to $200 million in annual revenues and more than a thousand employees.

Next year the company will be 30 years old, with operations in Europe and across Asia. Technology One develops financial and enterprise software, specialising in local government and higher education.

It was founded by 30 year old Adrian Di Marco in a disused tannery in Brisbane in 1987. He had been working for international software companies for many years and says he was not happy with what they were delivering.

“They were good at marketing, they had great systems and processes, but what they delivered was very expensive, with a cookie cutter approach to implementation.

“I compared them to the innovation I was seeing from Australian software companies. They lacked the rigour and the processes and the business discipline, but they were very creative and could do things the multinationals weren’t doing. I saw an opportunity.”

Mr Di Marco approached a number of potential angel investors, and was successful in attracting seed capital from the McTaggart family, who had a large hide processing business (hence its early days in the old tannery).

The fledging company grew very quickly. The first few customers were people who knew Mr Di Marco well and trusted him to deliver, but word soon spread. “Our first customers liked the idea that we were building new generation software around relational database technology, which was still comparatively new at the time.”

He said that he was able to cross ‘chasm of commercialisation’ – taking an idea and turning it into a product and getting early adopters.

“We were profitable within two years and by the early 1990s the company was doubling in size every 18 months. These days we double every four to five years, which is still a fast growing business.”

Mr Di Marco says the biggest challenge in the early days was the cultural cringe. “People found it hard to believe that an Australian company could build software that could compete with the big multinationals like Oracle and SAP. Government in particular was very risk averse.

“I remember losing a contract at Austrade, which on the one hand was telling us how great we were and we should expand internationally and on the other hand was refusing to buy Australian-made product.”

“That attitude was devastating for local industry -when we tried to sell overseas we were told that even our own government wouldn’t buy from us.

“It’s no longer a problem, for us anyway. We’re now a big successful public company, but it was a problem back then, to a lot of companies. I don’t think it’s as bad now. There’s less of it, but it still exists.

“But the biggest challenge has been – and will always be – the pace of change in the industry. We’ve seen the rise and fall of the mainframe vendors, the minicomputer vendors, the PC vendors. Now we’ve got the mobile vendors and the cloud companies.

“The pace of change has been relentless. Technology One has been successful because we’ve evolved and adapted with each of the big changes. Today we have committed $500 million to building a cloud business, which is a journey that will never end. We are rebuilding all our products – again. It is a huge undertaking, but that’s the industry we’re in and that’s what we have to do.”

Mr Di Marco says it is difficult – but important – to bring staff and customers on that journey. “People become very comfortable with the way things are, and when you tell them they need to change there is always resistance.

“When we decided to build a cloud product we needed to demonstrate its viability, by eating our own dogfood. We put everything in the company in the cloud – accounts, email, word processing. There was huge resistance. But if we hadn’t done it, we wouldn’t have understood the cloud. We’re building true cloud product, not just hosting, which we think is a dead end.

“It’s the most exciting time ever in the industry because we have a platform that can really transform business. We can deploy it instantaneously, we can see what people like and don’t like by what they’re clicking on, then we can engineer that into the next release of the software.

“We’re innovating much faster now because the loop is much tighter with the cloud paradigm of the marriage of infrastructure and software and service delivery. It’s a quantum leap from where the industry has been – a true game changer. But it’s not for the faint hearted!”

Technology One has made Mr Di Marco a wealthy man, and he personally invests significant amounts in the Australia tech sector.

“There’s so many great people out of university, very smart and very well trained and very passionate, very entrepreneurial. With all the new technology there are many opportunities to create new businesses.

“It’s great for Australia, but I think the government is being very mean-spirited. Their definition of a start-up is far too narrow. It’s not to do with starting up, it’s to do with businesses that are entrepreneurial and trying to do something innovative and creative.

“You could have a business that has been around for ten years, or which has a turnover of a few million, which needs to attract capital. It’s not necessarily the early stage of a business that is the issue – it’s the early stage of an idea.

“They are the sort of companies that people should be investing in, and where the tax concessions should be. The government should get rid of the R&D tax concessions at the big end and move them to these sorts of companies. Technology One doesn’t need these tax breaks – we’re going to do the R&D anyway, and to give the concessions to multinationals, where all the IP goes overseas, is just crazy.

“The government needs to take a more strategic view, and encourage people to invest in those entrepreneurial companies that are trying to commercialise an idea.”

InnovationAus asked Adrian Di Marco what his biggest worries are – what keeps him awake at night. “Nothing,” he says. “I sleep very soundly.”

The rewards of success.

Do you know more? Contact James Riley via Email.

Leave a Comment

Related stories