TechMarketView’s latest research, published last week, includes Anthony Miller’s regular quarterly update on M&A trends in the UK software and IT services market. The report reveals that for the first time since we started publishing IndustryViews M&A, the top ten acquisitions involving UK SITS companies in the quarter (where values were disclosed) were all conducted by UK players.
TechMarketView’s public sector team has also been busy. After Tola Sargeant’s immediate reaction to the 2011 Budget for UKHotViews (see Osborne plans for growth), Georgina O’Toole published a more considered view on UKHotViewsExtra, which TMV Foundation Service subscribers can read here. Tola also published a research note on GP software supplier EMIS, taking its maiden annual results as an opportunity to scrutinise CEO Sean Riddell’s plans in cross-organisational healthcare. Both Georgina and Tola have been quoted in the press on public sector issues this week; see for instance Compensation cost of scrapping ID cards revealed in Computing, and IT industry supports Budget business relief in ComputerWorld.
The research listed above, plus the invaluable UKHotViews archive, is of course only available to TechMarketView subscribers. If you’d like more detail about subscribing please contact our Client Services team through Puni Rajah or Deborah Seth.
Posted by HotViews Editor at '08:00'
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Cognizant, the fourth largest of the India-based IT/BPO players by worldwide revenues, and fifth largest in the UK, looks set to leapfrog over larger peers in 2011.
In the latest edition of TechMarketView OffshoreViews, we present our annual rankings of the leading India-based players worldwide and here in the UK, and look ahead as to where they might end up in 2011.
We also show our latest estimates of the Indian headcount of the leading European SIs, which once again highlights the difference between those who have ‘got it’ about offshore and those that haven’t!
OffshoreViews is available for download now for TechMarketView Foundation Service clients. Those not so blessed should promptly scribe an email to our Deborah Seth (firstname.lastname@example.org) who will try to answer your prayers in exchange for a very modest donation.
Posted by HotViews Editor at '07:20'
Now there’s something we haven’t seen before. For the first time since we started publishing IndustryViews M&A, the top ten acquisitions involving UK SITS (software and IT services) companies in a quarter were all conducted by UK players. What’s more, in Q4 2010, UK BPO leader, Capita, appeared no fewer than three times in the top ten!
TechMarketView Foundation Service subscribers will be able to see this and our full round-up of the 2010 UK SITS M&A scene in the IndustryViews M&A Q4/2010 Review, downloadable here.
Posted by HotViews Editor at '08:06'
Last week EMIS revealed its maiden annual results since its listing on AIM last March. They might only have revealed flat-ish organic revenue growth (see EMIS appoints non-exec Chair, exits Canada), but the GP software provider looks well positioned to grow in 2011 and beyond.
Combined, EMIS and RX Systems, the pharmacy software provider in which it acquired a majority stake last year, are a sizable force in the UK healthcare SITS market with total revenues of £61.9m in FY10. That should be enough to secure its place in our Top 10 UK healthcare SITS rankings again in 2011.
EMIS’ core recurring revenue from licensing and software support (excluding the discontinued Canadian business) increased by 8.9% to £31.7m, mainly as a result of more GP practices moving to accredited hosted systems. However, not unsurprisingly, discretionary spending on hardware, engineering services and training was affected by pressure on NHS budgets, and income from this part of the business fell by 12.5% to £21.7m. The net effect is a slight decline in EMIS’ organic revenue (from £57.7m to £56.9m) but improved margins (operating margins at the core business are now 34%, up from 29% the year before).
2010 was a busy year for EMIS, during which it laid the foundations for future growth. For starters, having achieved NHS accreditation for its next generation software EMIS Web in September last year, EMIS began the controlled rollout of its new web-based application. With over 2,000 GP practices having already ordered the software or signed up to the ‘familiarisation service’, CEO Sean Riddell expects deployments to crank up later in 2011. EMIS also won new business in Scotland and Australia, launched the Healthcare Gateway joint venture with rival INPS, and moved into the adjacent pharmacy market with the acquisition of RX Systems.
But with all the uncertainty in the UK healthcare SITS market at the moment pending the creation of GP consortia, what does the future hold for the GP systems supplier? We recently caught up with EMIS CEO Sean Riddell to learn more about his plans for the company in cross-organisational healthcare. Subscribers to TechMarketView’s Foundation Service can read more in our latest CompanyViews research note – EMIS: Laying foundations in cross-organisational healthcare – which is available for download from today.
Posted by Tola Sargeant at '16:26'
Last week saw the publication of three new pieces of research from TechMarketView. Our Managing Partner, Anthony Miller’s regular quarterly round-up of the venture capital and private equity side of the UK software and IT services sector rolled off the virtual presses on Thursday (see ‘Will LEPs leap to the rescue?’). Tola Sargeant, one of our public sector-focussed research directors, took a closer look at the UK social care SITS market through the eyes of privately-held social care IT provider, OLM Group, in Social Care IT: OLM evolves with the market. And John O’Brien, the research director leading our BusinessProcessViews research stream, analysed Capita’s European ambitions in his latest research note.
It’s also been another busy week for TMV in the press. Georgina O’Toole’s views on public sector IT budget cuts have been widely quoted following her participation in a roundtable on the topic: Public Sector struggles to achieve IT savings in eWeek Europe and UK slow to react on IT budget cuts in DatacenterDynamics, are but two examples. Anthony Miller’s views on HP’s strategy were reported in Computing (see HP strategy: A negative verdict) and there was further coverage of our recent Cloud software report in various publications (e.g. Silicon’s Cloud will hoover up UK software spending).
The research highlighted above is only accessible to TechMarketView subscription clients of course – if you’d like more information on our research streams please contact Puni Rajah or Deborah Seth.
Posted by HotViews Editor at '21:32'
Earlier this year we voiced concern as to whether the winding down of the Regional Development Agency (RDA) network might exacerbate the venture capital funding gap. In its place, the government is ‘devolving’ responsibility to a new network of Local Enterprise Partnerships (LEPs), “locally-owned partnerships between local authorities and businesses”. However, the 30 so far approved do not appear to have got off to the most propitious start, judging by the flurry of press headlines such as that in last month’s FT, Business sounds warning on local partnerships.
In the latest edition of TechMarketView IndustryViews PE/VC Review, we start to take a closer look at this issue, with the first of a series of interviews with the various ‘stakeholders’: Rory Earley, CEO of Capital for Enterprise Ltd, the arm’s length body that oversees venture funding on behalf of the government, and Alasdair Greig, Director at VC fund Northstar Ventures, which has strong ties with the One North East RDA.
We also take our regular look at VC and private equity investments in UK software and IT services companies over 2010.
IndustryViews PE/VC Review Q4 & 2010 is available for download here for TechMarketView Foundation Service clients.
Posted by HotViews Editor at '07:55'
I’ve known Peter O’Hara, CEO of OLM Group, for a number of years and it’s hard to find anyone more passionate about what their company does. Privately-held OLM has provided software and services to the UK social care market since its formation 1991. In the ‘old days’, OLM jockeyed with Anite’s social care application business, which is now part of Northgate, for the leading position in the sector. Our estimates suggest OLM Systems, home of OLM’s flagship CareFirst application, still leads the UK social care case management application market in terms of installed base. But there’s no doubt that competition from ‘younger’ market entrants – such as CareWorks, CoreLogic and LiquidLogic (now part of System C Healthcare, and soon to be McKesson) - has intensified. Local government software and IT services (SITS) market leader Capita has also been making waves in Children’s Services where there are obvious synergies with its education software.
Twenty years after its birth, OLM is still a ‘household name’ in social care IT but it remains a £20m company in a niche market: a company that has traditionally been driven more by a passion for social care than high margins. The Group’s latest financial results, which have just been released, show a company in transition following the acquisition of Hytec, a public sector-focused technology infrastructure player, and Pavilion, a health and social care publisher, in 2008. Having taken steps to cut costs (by £1m) and improve operational efficiency, OLM turned FY09’s £2.6m operating loss into a small profit in FY10 (£250k at the operating level). But revenues declined slightly to £19.9m (FY09: £20.9m).
Improving margins is one challenge for OLM in the years ahead. They are currently very low at just above 1% but Peter promises to squeeze out further unnecessary costs. Of course, OLM will also be hoping to return to revenue growth despite tough market conditions. To grow the business in a static case management market, OLM will need to focus on pulling together its various offerings to meet the needs of an evolving sector. It’s already started on this journey and plans to develop a ‘social enterprise platform’ across the care sector that combines content, data, applications and business transactions.
In the meantime, developments in government policy – including a planned £1b investment in the closer integration of health and social care in England – are only likely to encourage more SITS providers to express an interest in the sector. We’ve already seen significant consolidation in the space – think Civica buying in4tek, System C buying LiquidLogic and Advanced Computer Software buying Cerrus over the last couple of years. There is still scope for further consolidation with the likes of CoreLogic and CareWorks potential targets, as well as OLM itself of course. However, our sense is that the price would have to be very attractive to tempt Peter to sell. His long term focus is very much on maintaining OLM’s independence and improving profitability.
For more analysis on OLM’s strategy and how it fits with trends in the UK social care IT market, TechMarketView Foundation Service subscribers can read our latest CompanyViews note - Social Care IT: OLM evolves with the market – which has just been published.
Posted by Tola Sargeant at '16:21'
UK BPO market leader Capita just keeps on surprising. First it warned on full year revenues late last year (Pipeline constipation forces Capita warning), and following its FY announcement (see Capita in slowdown), we learnt it is seeking further expansion outside of the UK, setting up a ‘nearshore’ multi-lingual centre in Krakow, Poland, which will eventually house some 500 people. This decision to seek opportunities outside of the UK confirms our view that Capita will continue to struggle to achieve top line organic growth in the UK.
TechMarketView Foundation Service clients can read our full analysis of Capita’s opportunity and challenges in our subscription service BusinessProcessViews here.
Posted by John O'Brien at '15:55'
Last week saw the publication of our report on the UK Cloud Software Market, which includes forecasts for the market; analysis of the way the market is developing and a discussion of the implications for software suppliers. It has been popular with the press, see for example the coverage in Microscope (see Cloud growth will shake-up the UK software channel). Other hot research includes Anthony Miller’s CompanyViews research note on Logica’s margin challenge. Our recent UKHotViewsExtra articles are also worth a look with Georgina O’Toole analysing the Institute Government’s recommendations more ‘agile’ Government IT; Richard Holway taking a closer look at Iris, one of the UK’s largest software companies; and Tola Sargeant examining iSOFT’s outlook as its revenue from the National Programme for IT in the NHS halves.
All the research quoted above is, of course, only available to our Foundation Service clients.
Posted by HotViews Editor at '09:22'
The acceptance of cloud-based software delivery in the form of SaaS (software as a service) and PaaS (platform as a service) is redefining the shape and structure of the software industry irrevocably. By the end of the decade, we expect that cloud-based packaged software will represent nearly 30% of all UK software spend, leaving the market for legacy ‘on-premise’ products in irreversible decline.
In our latest report, The UK Cloud Software Market, we explain the trends driving the ‘cloud’ software market, and give detailed forecasts on its size and growth.
TechMarketView Foundation Service subscription clients can download The UK Cloud Software Market here.
Posted by HotViews Editor at '14:38'
There’s no doubt that CEO Andy Green’s ambition to move Logica’s ‘adjusted’ operating margin into double digits in the medium term is a fine and noble cause (see Logica UK yet to claw back share). Indeed, to do so could start to put Logica on a similar footing with Accenture which, at 13-14% margins, is surely the gold standard for a (non-Indian) global IT services pure-play.
But could this merely be a pipedream?
In our latest CompanyViews note, we take a slightly deeper look at the challenges facing Logica’s march towards 'margin Nirvana', and offer some thoughts as to how they might be surmounted – with clear lessons for other players in the pan-European IT services marketplace.
TechMarketView Foundation Service subscribers can download Logica’s margin challenge here. Others can dash off an email to our Puni Rajah (email@example.com) to find out how!
Posted by HotViews Editor at '07:46'
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