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14:00:03, Tue 27 June 2000

Electronic Data Still Suffering from Y2K Downturn Wholesale distribution software supplier Electronic Data Processing (EDP) is one of the numerous businesses blaming the Year 2000 for falling turnover in the first part of the year.

The company reported turnover for the six months to 31 March down 17% to #4.5 million with net profits down 21% to #669,000.

EDP(EDP) financial director Julian Wassell told citywire.co.uk: New application software sales are very quiet at the moment. People spent what they were going to spend before Year 2000. There are some inquiries at the moment, but we have seen no new big system sales so far.

EDP provides effectively a complete ERP (enterprise resource planning) system, with everything except a manufacturing module, to the likes of builders merchants, plumbers merchants, tools merchants and electrical suppliers.

In addition to paying an initial licence fee, customers sign up for five years at 10% of the initial licence fee per annum, to cover bug fixes and maintenance. As a result, around 58% of EDPs turnover is from contracted recurring revenues, Wassell said.

Sales of EDPs systems tend to take anything from nine months to three years to complete, so Wassell said the company focuses particularly on generating new revenue from existing customers. It does this mainly through developing add-ons to the product.

The company is now focusing heavily on e-business, and has 12 customers in the process of implementing its new software, Quantum VS, which is a Web-based front end to the ERP system, enabling customers and their customers to order and check order status on the Web.

At the time of announcing its full year results last September, EDP said it was forming its own Internet Service Provider, and also offering a hosted ASP (application service provider) business.

This is a new revenue stream for us, which should begin to impact over the next twelve months, Wassell said. He acknowledged that the ASP market in the UK is still a couple of years behind the US, but said that EDP had started life as a computer bureau some thirty years ago, and he was convinced customers would eventually see the sense of returning to that model and leaving IT to external experts.

Wassell said he expected the post Y2K downturn to continue for up to six months, but said that after that, it should be business as usual.

http://www.citywire.co.uk/smallerCompany/default.asp?section=0&vid=12475&fst=&page=0

-- (Dee360Degree@aol.com), June 27, 2000