By Jessica Twentyman
In September last year, Meta4 SA, an eight year-old Spanish developer of human resources software, opened its new US headquarters in Atlanta, Georgia. Until 1998, Madrid-based Meta4’s efforts at international expansion had been aimed primarily at Portugal and the Spanish-speaking countries of Latin America, where it met with considerable success. In 1997, revenues grew by 53% to 15.9m euros ($16.6m).
But over the course of the last 18 months, the company has built on those efforts by establishing sales, services and marketing organizations in France, Germany and the US. In July this year, Meta4 topped off the expansion program with a flotation, becoming the first Spanish IT company to list on the European Easdaq exchange. The move was hailed as a success by analysts, and Meta4’s shares rose 11% on the first day of trading. But while Meta4’s revenue soared 81% to reach e28.8m ($30.1m) in its last financial year, this growth was still derived mainly from its home market, and the costs of its expansion abroad led to net losses which rose to e24m ($25.9m) from e5.7m ($5.9m) in 1997.
Meta4’s product set, Meta4Mind, is built on a component-based architecture, and incorporates technology that enables customers to rapidly deploy applications across corporate intranets and connect with other parties via the internet. Earlier this year, the company also introduced PKMS, a ‘people-centered knowledge management system’, selling its first license for the product in April.
Earlier interest in Meta4 from Dutch ERP vendor Baan NV now seems unlikely to help the company realize its international ambitions. In January 1998, it accepted a $22m investment from Baan to establish a non-exclusive sales and marketing relationship under which it would provide the human resources and payroll functions for Baan’s ERP suite, BaanERP. However, since then, Baan has been hit by internal problems, coupled with a more general slowdown in the market for ERP systems, and sales of its software have plummeted. That does not bode well for Meta4. And although its relationship with Baan is non-exclusive, Meta4 has yet to forge similar links with other ERP vendors.
This has left some analysts concerned about Meta4’s prospects. According to a report from ERP market analyst firm, AMR Research: Meta4 faces some significant challenges in entering the big league. Most ERP packages, it points out, already provide rich HR functions. According to Meta4, however, the HR modules of traditional ERP packages focus primarily on productivity and cost savings. Meta4Mind, it says, has a much wider range of function and, because it is component-based, it can be used to complement those systems. To that end, Meta4 has established links with a number of the major international ERP implementors and systems integrators, including Andersen Consulting, Ernst & Young, Cap Gemini and PricewaterhouseCoopers.
Gaining a global user base for its products will become increasingly important. With its Easdaq IPO now completed, Meta4 is forging ahead with plans to list on both Nasdaq and the Spanish stock exchange, Bolsa. However formidable the obstacles ahead, it is clearly not averse to taking on the challenge.
