Stories by Tom Pullar-Strecker, BusinessDay.co.nz

Xero achieves NZ first in top 10 fastest-growing firms

Wellington online accounting firm Xero is the first Kiwi business to make it into Deloitte's list of the top-10 fastest growing firms in the Asia Pacific. The NZX-listed firm was eighth on the list after recording more than 2000 per cent growth last year. Xero has yet to break even, but investors in the firm are counting their blessings, as Xero's share price has double from its original public offering in 2007. In the latest of a series of developments, Xero announced it had cleared the way for faster growth in Britain by letting customers automatically import into Xero details of transactions with 55 banks and financial institutions. The integration work is first fruit of a partnership with United States firm Yodlee, which acts as a middleman between 11,000 financial institutions and software firms that want to use their transaction data. Chief executive Rod Drury said Xero had spent hundreds of thousands of dollars on the development. "We have always been hamstrung in Britain by not having a broad base of feeds."

Telecom cancels plan to send IT jobs abroad

Telecom will bring back in-house hundreds of information technology jobs outsourced to Hewlett-Packard, ending fears that as many as 1500 jobs might be lost to India. Spokesman Ian Bonnar said yesterday that a significant proportion of the work outsourced to HP would in future be done by Telecom's Technology & Shared Services division, which is based in Wellington. Telecom had cancelled a tender that could have resulted in it repackaging and outsourcing that work along with other IT functions, he said. Mr Bonnar would not comment on a claim by Labour communications spokeswoman Clare Curran that some jobs might nevertheless be lost in the transition, which will take place in the next few months. One effect of the rethink would be that some work now done for Telecom by HP overseas would be repatriated, he said. "These jobs are definitely in New Zealand." Hewlett-Packard NZ inherited the Telecom contract through its US parent's 2008 acquisition of EDS. Former Telecom chief Theresa Gattung outsourced many of Telecom's IT functions to EDS in a 10-year $1.5 billion deal in 1999. Ms Curran was pleased Telecom was "contemplating bringing jobs in-house and keeping them in New Zealand as opposed to outsourcing them" but concerned about the overall impact on jobs. The Government's "inability to make concrete decisions" about its ultrafast broadband scheme was causing too much uncertainty, she said. "The jobs of hundreds and potentially thousands of New Zealand workers are uncertain." Mr Bonnar said HP would retain some work and it would be reasonable to expect some HP staff might be offered Telecom jobs.

Telecom profit drops

Telecom has reported a 37 per cent drop in first-quarter net profit to $103 million. Revenues were down 2.9 per cent to $1.32 billion. Earnings, before, interest, tax, depreciation and amortisation were slightly ahead of analysts' expectations at $443 million. "Operational performance was satisfactory with good cost control offsetting significantly higher regulatory costs and intensifying competition," chief executive Paul Reynolds says. "Telecom absorbed $16m of new regulatory costs, and the impact of the Canterbury earthquake of around $3m, to achieve EBITDA that was on target and within market expectations. "On ultrafast broadband, Telecom is continuing to engage in detailed discussions with both Crown Fibre Holdings and the Ministry of Economic Development, and we await further announcements."

Vodafone sees profits slide

Vodafone's profits have dropped by almost a third to $121.6 million. Revenues for the year to the end of March edged down $9 million to $1.609 billion. The company faced fresh competition from 2degrees during the second half of its financial year, and from Telecom's XT mobile network for most of the year, but said it believed it had maintained its share of the market. Vodafone is believed to account for about 60 per cent of the mobile market, by revenue.

'Cloud-based' software throws a helpful spanner in the works

Wellington software company Core Technology is weeks away from the global release of a "cloud-based" software development environment that it hopes will change the way many business applications are built and improved. The company, which employs 65 staff in the capital, Palmerston North and Australia, has spent six years and "many millions of dollars" creating its Aviarc software. The Foundation for Research, Science and Technology and New Zealand Trade and Enterprise have contributed hundreds of thousands. Core chief executive Shane Mercer says the completely web-based Java software lets customers see what applications look like as they are developed and annotate features and functions with comments. If customers come across an error before or after the application is developed, they can drag and drop a "spanner" to the offending item and developers can relive what went wrong, exactly as it happened. Head of markets John Boon says numerous international studies show that only about one in three software projects are an outright success, and that ratio has not improved. Mercer believes the software could change the relationship between IT departments and their business customers. "It is the first time the business can see if it is going to get what it wants before it is too late." He expects Aviarc will be used mostly to develop "line of business" applications that fall in between mission-critical enterprise systems and "situational" applications that users might develop for themselves, such as Excel spreadsheets. The idea is that once applications have been deployed, they can be continuously improved through the interaction between users and developers that the software allows. Aviarc has been used by 30 customers. An Australian private health insurer used it to develop an application to manage sales commission incentives and another developed software to let call centre staff send out information electronically rather than on paper, saving more than $2 million. Next month, it will be generally available for businesses to buy and use themselves. Boon says Aviarc is likely to appeal to IT managers who are under pressure to show they are being responsive to the needs of their business. Once end users regained confidence in IT departments to deliver "tactical" applications, they often also asked them to sort out software they had developed themselves, he says. Core Technology, an IBM business partner, was this month chosen as one of eight firms on a panel appointed by Internal Affairs to help advise government agencies on cloud computing initiatives. Mercer says the firm's biggest challenge is getting across the message to customers that Aviarc is something fundamentally new.