FrontRange has spent R60 million on developing its next-generation customer relationship management (CRM) solution, and another R50 million has been budgeted for development and marketing expenses in the year to June 2003.
The US subsidiary, FrontRange Solutions, has warned previously that marketing costs will lead to a small loss in the first quarter of its financial year.
Announcing the release of GoldMine CustomerIQ, FrontRange Solutions says the technology is expected to provide the framework for its products for at least the next decade.
The product was built from the ground up on the Microsoft .Net architecture which uses extensive markup language to enable access to information from virtually any location and device.
The group has also announced an industry-specific product strategy.
"We are verticalising the product," says FrontRange investor relations manager Julian Pienaar. "The first two verticals that have come out are for the wealth management and manufacturing industries, and we will be releasing new verticals over the course of the year. We`re very excited about it.
"Yes, we`ve spent a lot of money, but it`s going to be good for us."
The company says that with CustomerIQ it has retained its strong strategic focus on providing CRM solutions for the global mid-market. In the US, penetration of this market stands at less than 5% with even lower levels of adoption in the rest of the world.
FrontRange is hoping that the new solution, the development of which began more than two years ago, will boost its recent gains in market share.
The US subsidiary recently reported that it had achieved a $91 000 operating profit for the six months to 30 June, compared with a $12.9 million loss for the same period last year.
While it has warned that marketing costs are likely to result in a small loss in the first quarter of its financial year, president and CEO Patrick Bultema says he expects the company to be profitable after that and to report a modest profit and positive cash flows for the full year.
Christopher Fletcher, VP and research director at research firm Aberdeen Group, says GoldMine`s vertical industry focus and its adoption of Microsoft .Net is in line with where the industry is headed. "CRM applications for the mid-market have to provide usable functionality and need to integrate with Web and back-office applications virtually right out of the box."
The company recently issued a cautionary notice, which sparked speculation that either a buy-out or buy-in was in the pipeline. The JSE said it was investigating trade in shares leading up to the notice.
"I don`t want to tempt fate, but we haven`t heard anything from them," Pienaar says.
The FrontRange share, which lost 10c to close at 175c on the JSE yesterday, was trading another 10c or 5.71% down at 165c by late this morning.
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