It is amazing what can be achieved when the IT industry comes together to support an important cause. I have learnt that the HP Charity Ball on 4th June 15 in aid of the Prince’s Trust raised a truly amazing £190,000. Over 700 attended and the evening was supported by a whole range of IT companies. The Platinum Sponsors were Computacenter, Kelway, Oracle, SCC and Tech Data.
On behalf of the Prince’s Trust a HUGE thankyou to HP and all its supporters for this magnificent result.
Posted by Richard Holway at '20:59'
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Ad-tech startup Captify – located in an ‘ex banana warehouse' in London – has raised £8m in a Series B funding round led by London headquartered (and also Nordic focused) growth capital private equity firm, Smedvig Capital. Existing investors including Panoramic Growth Equity also participated. London and Glasgow-based Panoramic led a £1.2m seed funding round in Captify in July 2013.
Captify was founded in 2011 and styles itself as the leading holder of Search Data in Europe. Its clients include all of the top advertising agencies including WPP, Aegis and Publicis as well as major corporate brands such as Microsoft, British Airways and Barclays. Let's hope there aren't any slip-ups along the way!
Posted by Anthony Miller at '18:36'
Everybody’s pointing at it and talking about it. Some are even trying to feed it. Nobody can ignore it. It’s the digital elephant in the room.
Going digital is today’s ‘big thing’ and it is shaping the direction of travel of the UK software and IT services (SITS) market and the fortunes of its suppliers.
Of course, IT has always been digital by definition. But the term has now been repurposed to suggest, broadly speaking, the transformation of traditional business applications and business processes using modern technologies to take the end-user—and most important of these is the customer—on a ‘journey’ from start to finish, and make the journey such a pleasurable experience they will want to repeat it.
The technologies most frequently employed to facilitate digital transformation are the so-called ‘SMAC stack’, i.e. Social media; Mobile technologies—in which class we should include micro-mobile sensor-based technologies, alluded to as the Internet of Things (IoT); Analytics and big data; and of course, Cloud computing. Indeed, one of the best definitions we have heard for ‘digital’ is ‘integrated SMAC’. It’s the combination of these technologies that holds the promise of transforming the ‘customer journey’.
And therein lies the rationale for TechMarketView’s theme for 2015 Joining the Dots that we launched at the end of last year.
‘Joining the Dots’ represents huge opportunities for IT suppliers. The opportunity starts at the very top of the customers’ businesses, with high-level consulting around the ‘art of the possible’, through to nitty-gritty, nuts-and-bolts installation, integration and support.
But be prepared. The underlying ‘rules of the game’ in the UK SITS market have not changed. Customers still want more for less (and better for less!) from their suppliers and ever will. And customers want to minimise the inherent and considerable risk in digital transformation by doing things step-by-step and, in any event, seeking to transfer as much of that risk as possible to their suppliers. With the deflationary nature of new technologies, suppliers will find digital transformation challenging for both revenues and margins.
Which is why you really will want and need to read and inwardly digest our annual keynote reports, UK Software and IT Services Market Trends & Forecasts 2015, and UK Software and IT Services Supplier Rankings 2015, published today.
In UK Software and IT Services Market Trends & Forecasts 2015, TechMarketView analysts outline the trends that will drive the market over the next few years across key segments and verticals, and present their forecasts for market growth.
The accompanying report, UK Software and IT Services Supplier Rankings 2015, reveals our authoritative rankings for the leading suppliers of software and IT services (including business process services) to the UK market.
You’ll see some highlights from both reports here in UKHotViews.
UK Software and IT Services Market Trends & Forecasts 2015, and UK Software and IT Services Supplier Rankings 2015 are now available for download by subscription clients of the TechMarketView Foundation Service. If you are not thus blessed, then don’t forget to contact Deb Seth on our client services team who will point the way.
Just remember – you can’t ignore an elephant!
Posted by HotViews Editor at '10:15'
Capita retained its crown as the leading supplier of software, IT and business process services (SITS) to the UK market in 2014 for a second year, widening the gap with second-placed HP and third-ranked IBM.
There’s little sign that the fortunes of the world’s two largest systems vendors are going to change any time soon—or that Capita is going to lose the plot—so we’d expect no change at the top of the rankings for some time to come.
There was no change in the relative ranking of the top five suppliers and the same names appear in the rest of the top ten albeit in a slightly different sequence. This typifies the jockeying for position in a low-growth market, in which ascendancy is achieved by taking share – or by taking a competitor out!
UK Software and IT Services Supplier Rankings 2015, reveals our authoritative rankings for the leading suppliers of software and IT services to the UK market. Rankings are presented by key segment, including Enterprise Software, Application Services, Infrastructure Services, and Business Process Services.
UK Software and IT Services Supplier Rankings 2015, is available for download by subscription clients of the TechMarketView Foundation Service.
Posted by HotViews Editor at '10:14'
It was a better year than we had expected for the UK software and IT services (SITS) market in 2014, with headline growth of 2.1% to £43.6b. But excluding the effects of inflation, this equated to growth in real terms of a mere 0.6%, though this is good news compared to the 0.7% real terms decline in 2013.
And things are going to get better—a little bit.
We forecast faster headline market growth this year, at 2.3% which should represent just over 2% growth in real terms. Market growth will remain pretty close to 2% for the next few years, probably till the end of the decade if not beyond.
As in prior years, business process services (BPS) is the fastest growing segment of the UK SITS market at 5.0% cagr, and will reach £8.5b in 2018. In contrast, the UK infrastructure services market—the largest segment—returned to growth in 2014 but we expect only marginal ongoing improvement to reach £14.2b in 2018.
The UK application services market—the second largest segment—is expected to fare little better, with 1.4% cagr to reach £13.8b in 2018. The UK software market is expected to show 3.0% cagr to reach £10.7b in 2018.
The UK public sector SITS market fared better in 2014 than previously forecast as the expected pre-election slowdown in the second half of the year did not come to pass. We now forecast cagr of 1.8%, reaching a market size of £12.4b in 2018. We expect slightly faster growth in the UK private sector SITS market, at 2.1% CAGR, to reach £34.8b at in 2018.
Low-single digit market growth may look unexciting, but it belies tremendous diversity in the performance of the players, some of whom have grown well into double digits and others shrinking by almost as much. The opportunities are there for the taking for those suppliers willing and able to ‘join the dots’ for their customers.
UK Software and IT Services Market Trends & Forecasts 2015, is available for download by subscription clients of the TechMarketView Foundation Service.
Posted by HotViews Editor at '10:08'
Capita is continuing to build up its outsourced mortgage administration business, this time taking over Vertex Mortgage Services (Vertex MS) for £35m, on its usual cash-free, debt-free terms.
Capita is taking on 340 people within Vertex MS and its subsidiaries, which include UK and Canadian mortgage providers Vertex Financial Services Ltd and MS Canada Ltd; and UK unit trust and pension administrators Jessop Fund Managers Ltd.
This deal sees Capita paying 1.5x revenue for Vertex MS, which had turnover in FY14/15 of £22.9m and delivered pro forma EBITA of £1.3m (5.7% margin). Vertex MS is however projected to grow 45% over the next twelve months to reach turnover of £33.1m, and an EBITA of £2.7m (8.1%). Capita expects the acquisition to achieve its target return on investment of 15% in 2017.
For Vertex, this disposal pretty much signals its exit from the UK, having already sold off its UK Public Sector business to Serco in 2012 (see here) and its UK Private Sector business to Capita in 2011 (see here). That deal saw Capita take on some 1,400 Vertex employees across five sites in the UK.
This is the second acquisition for Capita in mortgage administration, following the £7m purchase of Crown Commercial Management last May. That deal has already proved very lucrative, enabling Capita to win a £325m, 10-year deal mortgage BPO deal with Co-Operative Bank last November (see Capita cooperates with Co-op). Capita will be hoping to replicate, or even better, this kind of success with Vertex MS.
With the UK housing market continuing to perform well; banks seeking ways to trim costs and respond to new regulation; and new challenger banks entering the market, the mortgage BPO opportunity should be very buoyant in the UK right now.
Posted by John O'Brien at '09:38'
A year is a long time in Mobile Money. Last year's interim results for eServGlobal showed revenue up 24% and a small EBITDA profit from the core business. Things appeared to be looking up, with growing demand and a new Chairman. However the intervening 12 months have seen a significant fall from grace, with the CEO and new Chairman departing, concern over the core business, higher development costs and calls for additional finance. Shares are down 60% over the year. (See here and work back).
Today they report half-year revenues down 24% (to Aus$12.8m, £6.7m) and an EBITDA loss, of Aus$7m. Nonetheless, the new management are confident that full year revenue and profit will at least equal those of last year and look to sustained growth.
Underlying their optimism is the potential seen in their new standardised platform (PayMobile 3.0). With easier and more rapid deployments they should be able to work through their project backlog (of £3.7m, up 59%) and new orders, booking margin against each project. Also, existing customers are running at 94% of their license capacity, suggesting scope for (profitable) license extensions.
HomeSend, now 35% owned by eServGlobal, looks to be making good progress, with over 200 countries connected and a decision to use the HomeSend platform as the international hub for the broader MasterCard Send proposition. This is a clear sign of commitment from MasterCard to this operation which drives opportunities for eServGlobal’s mobile wallets (supported by PayMobile 3.0).
Significant risks lie ahead, not the least political risk within the emerging markets served by eServGlobal, but the outlook appears more positive. Delivering a good H2 performance via new deployments, coupled with further progress at HomeSend would provide a welcome start to the renewal of eServGlobal’s fortunes.
Posted by Peter Roe at '09:35'
It probably doesn’t qualify as one of the “tough choices” referred to by Microsoft CEO Satya Nadella in his recent mission setting memo to staff (see Further reorganisation at Microsoft?) but the decision to pretty much shut down the display advertising business and also sell off some of Microsoft’s map generation technology to Uber, are action points on areas “where things are not working.”
The company has announced that AOL and AppNexus will effectively take over Microsoft’s display advertising business, leaving Microsoft to focus on search advertising, based on Bing. A 10 year agreement will see AOL opt for Bing as its default search engine (replacing Google) with AOL handling direct advertising sales across Microsoft's content sites. AppNexus will take on programmatic advertising for Microsoft. Media reports suggest c1200 jobs will go but staff are being offered positions with AOL, and Uber.
Display advertising was under the former Microsoft Online group which lost around $10bn over a five year period so the decision to withdraw is not a surprising one. Indeed Microsoft has been extricating itself over the past few years, including taking a $6.2bn write down on the acquired aQuantive online advertising business (see here), and selling aspects of it to Facebook where it emerged as the Atlas advertising platform. The move will not fundamentally impact the business but will reduce a headache and allow Microsoft to concentrate on search advertising which it considers a strength - and its bigger strategic focus on cloud, mobile and productivity solutions.
Posted by Angela Eager at '08:56'
Natural language generation (NLG) software provider Arria NLG is doing its best to come back from the abyss following the loss of its flagship contract with oil and gas giant Shell in May (see here).
It managed to raise a further £3.75m from existing investors at the end of H1, and now claims to have ‘adequate resources to continue in operational existence for the foreseeable future’. Before the fund-raising, cash had slumped 76% to £1m.
This is a high growth business, albeit from a very low base. H1 revenue almost trebled to £904k, from £330k last year, meanwhile, operating losses narrowed to £2.7m from £5.4m last time. Nonetheless the costs are clearly outstripping Arria’s ability to grow – quite simply not sustainable long-term.
We actually think Arria’s technology has lots of potential if it ‘does what it says on the tin’. It uses artificial intelligence and algorithms to mine large amounts of data, which it then converts it into text or voice reports. The technology is in use at the Met Office where Arria’s software is now producing 5,000 reports a minute for localised weather updates.
There are lots of opportunities, with new clients coming on board at 1 per month. Arria would be wise to go after disruptor brands and providers though rather than large incumbent organisations. A new proof of concept with a major online travel company to develop personalised tailored responses to queries, is good win.
Arria fits squarely in our next-gen Business Process Automation space (see Business Process Automation – a brave new world for BPS providers), using innovative technology to automate processes, and improve efficiency and accuracy. Arria is however one of very few to have braved AIM at this early stage. Let's hope it continues to brave these difficult waters, and avoids the murky depths.
Posted by John O'Brien at '08:50'
We are delighted to announce the publication of the sixth in the series of TechMarketView Little British Battler reports, profiling the companies that participated in the most recent event.
The companies are:
Each company has been critically assessed by the TechMarketView research team on its proposition and strategy, market positioning, business performance, and future objectives, and includes a succinct SWOT analysis.
TechMarketView Foundation Service subscription clients can download Little British Battlers – The Sixth Sense right here, right now. Others will have to wait until these companies become Big Global Battlers (maybe!) – unless, of course, you contact Deb Seth on our client services team to find out how you can become a subscriber!
Posted by HotViews Editor at '18:10'
Although not strictly speaking banking per se, Amazon is planning to extend its practice of providing loan finance to the growing army of small companies in the UK that use the Amazon platform and logistics services. The company had already provided short-term working capital loans in the US and Japan, but according to a Reuters report this morning, this service will be extended to selected sellers in the UK, Germany, France, Italy and Spain as well as to Canada, China and India.
Amazon is in a good position to provide such loans as it would usually have a lot of data about the market, the competition and the individual company’s activities. This step by Amazon provides another attraction for companies to use its distribution network and broadens its scope for value creation. It will also disintermediate any bank that might have been expecting to provide short term finance to the SME.
Supply Chain Finance is becoming big business, with communities of buyers and suppliers being built up by the likes of Tungsten, Taulia, PROACTIS and cloudBuy, with innovative financing and discounting packages being introduced. Amazon may well have eyes on this business going forward. In the UK particularly, the government is easing the road to greater competition, see “Fanning the competitive flames in banking”, and whatever Amazon’s plans, more and more activity is being sucked away from the banking establishment.
Posted by Peter Roe at '11:16'
When we wrote two weeks ago that Six Degrees Group (6DG) had got new backers, we suggested that it wouldn’t be long before the company hit the acquisition trail again. Today’s announcement that 6DG has acquired Capital Support Group (CSG) therefore comes as no surprise. CSG is a cloud, software and managed services provider focused on the financial services sector which returned £14m of revenue and £2.5m of EBITDA in 2014. (6DG, in comparison generated £68.9m of revenue and £15m of EBITDA in the year to March 2014).
Charlesbank Capital Partners, 6DG’s new owners have been enthusiastic consolidators in attractive markets (see the progress of Zayo) and is obviously keen to finance 6DG’s strategy of building in the financial services sector. 6DG had already built a position with 7 of the larger investment banks and the new addition brings 170 customers, many of whom are in the hedge fund, private client and alternative investment market, with operations across Europe, North America and the Middle East.
The combination of the two companies should give additional scale benefits in infrastructure and support, as well as opening up cross-selling opportunities, with Unified Communications, particularly UCaaS, being highlighted by CSG management. Our October 2014 report on Six Degrees, available to InfrastructureViews subscribers here, stated that 6DG aims to be the go-to provider of converged technology infrastructure for UK mid-market companies. This deal should further that ambition, with the added appeal of increasing the company’s exposure to the fast-growing, though competitive market in the financial services sector.
This is the first acquisition by 6DG for over two years, but with new backers and a dynamic market for cloud-based services, we will probably not have to wait another two years before the next acquisition.
Posted by Peter Roe at '11:13'
After moving to a 31st March FYE IS Solutions, the AIM-listed systems integrator and value-added reseller, announced preliminary results for 15-months with total revenues of £12.9m, gross profits of £4.7m (after acquisition costs of £270k) and operating profits of £0.7m. In terms of revenue mix Analytics posted revenues of £6m, Portals £5m and Enterprise Content Management (ECM) £2m.
In January the firm completed the acquisition of Speed-Trap Holdings Limited; parent company to Celebrus Technologies Limited which has contributed revenues of £540K since acquisition. IS Solutions and Celebrus have been working with SAS and Teradata on a number of POCs (Proof of Concept) in the financial and retail sectors. The plan being for the POCs to move to a full scale roll out in 2015, boosting licence sales and revenues for professional services and on-going support.
Portals revenues were flat as a result of a major client requesting more of the work to be carried out off-shore. Enterprise Content Management (ECM) posted revenues of £2m after a weak start to 2014. R&D will be the key focus for the ECM business as it’s currently based on legacy technology.
Management sees analytics as an opportunity to provide higher margin license sales plus greater project and recurring revenues. However one only has to refer to a couple of UKHotViews posts to appreciate that this is a keenly contested part of the SITS market (see Silwood Technology speeds move to Big Data, Fusionex signs Giant deal in insurance).
We have commented several times on how disjointed the business is and now portals and the ECM business are not even mentioned in the ‘Outlook’ statement. We think it is time that IS Solutions considered more carefully the ‘sum of the parts’ and made some decisions about the future shape of the company.
Posted by Michael Larner at '10:11'
Redcentric, the UK IT managed services provider built by acquisition, has secured an interesting new contract with England’s Health and Social Care Information Centre (HSCIC). Procured via the G-Cloud framework, the deal is worth in excess of £3.5m over two years and will see Redcentric provide Database as a Service (DBaaS) to power a national repository for healthcare data in England.
The award of the contract for this critical data repository, which will enable a range of reporting and analysis to support the NHS, is a significant vote of confidence by the HSCIC in Redcentric’s high availability cloud database environments. It no doubt helps that Redcentric, which now has annual revenues of more than £100m, is already well known to HSCIC through the InTechnology business that it acquired in December 2013 (see here). InTechnology signed a previous contract with HSCIC through G-Cloud in February 2014 and the mid-market specialist has a track record in the UK healthcare sector. Other NHS clients of Redcentric include Kings College Hospital London NHS Foundation Trust, Surrey & Sussex Healthcare NHS Trust and The Mid Yorkshire Hospitals NHS Trust.
We expect to see more of Redcentric in the UK healthcare sector over the coming months. The business, which was formed by the coming together of Redstone Managed Solutions, Maxima Managed Services and InTechnology Managed Services plus the recent addition of Calyx Managed Services (see Calyx MS finds new home at Redcentric), has demonstrated its expertise in healthcare and its mid-market fit with the sector. Moreover, the NHS is increasingly willing to consider private sector partners and cloud-based managed services as it battles to cut costs and improve efficiency (see Personalised Health & Care 2020: SITS Implications & Opportunities for more background if you’re a PublicSectorViews subscriber).
Posted by Tola Sargeant at '09:54'
If you felt so inclined, you could now have your own .BANK domain name. That is as long as you meet the strict eligibility requirements (namely, that you are actually a bank, that you are supervised by a government regulatory authority and that your systems meet certain security requirements). This new, more secure domain is managed by CentralNic FinTech, a London-based specialist domain industry registry, and 4,000 .BANK domain names have already been applied for. The idea is to give greater protection to banking customers as they will be more able to identify legitimate bank websites and also to the banks in terms of reputation and brand identity. The CentralNic Group listed on AIM in September 2013 and in calendar 2014 generated £6m of revenue and £520k of pre-tax profit.
The .BANK domain name may well be a useful enabler as banks look to ways to retain the trust of their customers and give them the confidence to migrate to lower cost, on-line services.
Posted by Peter Roe at '09:54'
Ian Manocha, the new CEO of Gresham Computing, was probably delighted to be able to announce a new contract and potentially important use case for his flagship CTC solution after less than a month in his new position. Over the past couple of years we have highlighted the lengthening list of areas where the CTC reconciliation engine can be employed, see “Insurance brokers underwrite Gresham Computing’s progress” and work back.
This contract with a North American solutions provider in the pre-paid products market will apply the CTC solution to reconcile payment transaction data in the company’s settlement and accounting operations. This contract extends Gresham’s successes in North America and also benefits from the recent PCI-DSS accreditation for use in credit card transactions. It should boost revenues in the current year and provide additional medium term growth.
At the end of March the company talked positively about the current year and we look forward to more information about the company’s progress with the announcement of the results for the six months to June, due early August.
Posted by Peter Roe at '09:52'
You may have read Richard’s comment on the news that Google Ventures has backed two UK tech start-ups (see Lost my...), one of which (Lost my Name) rather stretches the definition of ‘tech’.
However, the other doesn’t. It’s London-based ecommerce predictive analytics firm Yieldify, which has raised $11.5m in a Series A funding round led by Google Ventures and SoftBank Capital. According to the indispensable TechCrunch, existing seed investor Hoxton Ventures also participated.
Founded in 2013, Yieldify’s software aims to increase conversion rates on ecommerce sites. It’s not the only game in town – almost literally actually – as this is precisely the space that UK SME Postcode Anywhere’s Triggar platform aims to serve (see Postcode Anywhere to take Triggar everywhere!). I’m sure there’s room for more than one player in this market.
Yieldify is to use the funding to shoot for the stars – indeed their website has job ads for no fewer than 27 positions from data scientists to finance manager and all stops in between. Will $11.5m be enough, then?
Posted by Anthony Miller at '09:17'
I can’t remember seeing a profit warning from an 'Indian pure-play' (IPP) for a long time, but Mumbai-based ‘business of two halves’ Tech Mahindra has just announced that ‘some headwinds and tailwinds (sic) … could see a risk of marginal decline in both revenue and EBITDA on a sequential basis’. Given that Q1 finishes tomorrow, I’d say that ‘risk’ looks pretty much like a 100% certainty.
Management called out a ‘seasonally weak Mobility business’ (since when is 'mobility' seasonal, I wonder?), and H1B visa costs (see Rising rhetoric on IPP US H-1B visas) as the ‘drag’, though ‘favourable currency movements could help both revenue and margins’. Tech Mahindra had recently announced a £50m, 10-year deal with CircleHealth which operates a network of NHS and private hospitals (see here).
The IPP reporting season commences in a couple of weeks. Tech Mahindra’s warning portends the shape of things to come.
I strongly commend to you the latest edition of TechMarketView OffshoreViews (see IPPs – Be careful what you wish for!) if you want to understand what’s actually happening with the IPPs and why.
Posted by Anthony Miller at '08:40'
Troubled, Cambridge-based, AIM-listed ‘location intelligence’ solutions firm Ubisense is on the lookout for a new CFO as incumbent Robert Parker has jumped ship. Parker joined Ubisense in January 2014.
This is not good news for Ubisense, which has been wracked with deepening losses (see Ubisense senses another ‘miss’) and a seemingly perpetual need to raise cash (see Ubisense senses need for even more cash). Frankly, I don’t think just hiring a new CFO is going to solve the problem.
Posted by Anthony Miller at '08:19'
After an £860k mercy dash for cash a couple of months ago (see MXC cornerstones Pinnacle Technology rescue), Northampton-based, AIM-listed managed services buy-and-build player Pinnacle Technology Group feels it is ready to step back onto the acquisition trail again.
Not that Pinnacle is quite out of the mire as yet. Half-time revenues (to 31st March) were 6% down yoy to £4.0m, though operating losses halved to £0.5m. With the cash raised in April, it looks like Pinnacle will have something like £1m in the coffers with which to go shopping, though they burned through £316k (operating) cash in the half year.
Pinnacle is by definition a business of many parts. Management talks about ‘a more sharply defined focus’ for the company, but this is not yet evident from the broad mix of client industries and ICT services. Perhaps the planned acquisitions ought to be accompanied by some strategic disposals!
Posted by Anthony Miller at '08:01'
Fujitsu UK & Ireland has a new CEO today. Regina Moran, who previously led Fujitsu Ireland, has been elevated to the role. Moran takes over from Michael Keegan who only took over the UK role a year back – See Fujitsu UK appoints Michael Keegan as CEO – when Duncan Tait was promoted to lead Fujitsu EMEIA. Keegan is moving to help design Fujitsu’s product business across the whole of Europe. Keegan will also take the post of Chairman of the UK & Ireland business, where “he will support Moran in her new position and continue to represent Fujitsu in the wider market”.
This is the first change since Tait was appointed to Board of Fujitsu in March 16 – the first non-Japanese person to hold such an appointment. This all seems part of a wider move by Tait to reorganise EMEIA.
We’ll be meeting Moran shortly.
Posted by Richard Holway at '06:26'
On Thursday, I addressed a class at my old school who were taking GCSE Computing. Even though the school is co-ed, not one girl was present which is deeply disturbing. I understood that one girl was in the course but had another engagement. Last year nationwide just 2000 took GCSE Computing and 90% were male. That is just not good enough.
One subject I discussed with these students was apprenticeships and the value of a degree. Almost all of the pupils from my old school go to university. Gaining the qualifications to go to university are, in my mind, vital. (I admit I failed to get the A level grades I needed to go to uni – maybe the best failure in my life!) But whether completing the university course and gaining the degree is a passport to success is questionable. Most of the titans of our industry – Bill Gates, Steve Jobs, Mark Zuckerberg – crashed out of uni before graduating.
I was therefore really interested to read today that 52,000 UK students – some 15% of all graduates - had already set-up a company before leaving uni. Many (27%) believed they could make more money working for themselves. But ‘worries about finding suitable job opportunities’ was cited by 20%.
Personally I find this surge of entrepreneurial spirit hugely encouraging. Having said that, I still think that working for a large corporation for a few years before venturing out on your own, is the best route.
Posted by Richard Holway at '13:30'
I’ve mentioned Becky – now 9 3/4 – on HotViews before as Becky came up with the great idea of a shoe that could work out if your feet had outgrown it and order you a new pair. This was all part of a normal conversation about the IoTs over dinner in the Holway household! See Out of the mouths of babes. I followed this up with a report – Shoes - about the Shoefitr service that Amazon had bought.
On Friday I was reminded of this when the FT ran a review of Sensoria - headlined Talking Socks. They have developed a way of weaving ‘textile sensors’ into such things as running socks, sports bras, jogging T-shirts. These are then connected to a little processor on your ankle (or wherever...) which transmits the info to a smartphone app. It can tell you all sorts of things about your exercise technique and, back to Becky, whether your running shoes are rubbing. As the founder Davide Vigano says "Forget smartwatches and fitness trackers - the garment is the computer". I rather like/agree with that!
The FT concluded that they were only for ‘serious athletes such as marathon runners’. Well, socks at $149 a pair are a bit more than even Anthony pays.
Posted by Richard Holway at '12:43'
The ‘What is a tech company?’ question seems to crop up more and more. Today, I was reading Google Ventures backs two UK start ups in the FT.
Google Ventures has led a $9m for Lost my Name. OK, great idea. But the concept of producing books specially tailored to your child’s name has been around for yonks. My own kids (now in their 40s) had them. Apparently The Little Boy/Girl Who lost His/Her Name series has sold 600,000 copies in 135 countries. I am unsure what the company valuation is, but a $9m investment seems way OTT even if it was for 100%. Surely anyone can rip off this idea? Indeed any simple Google search will find loads of companies that do exactly the same.
That said, I do understand that Lost my Name is a bit more sophisicated. The child whose name is lost, then goes on a quest to find his name, letter-by-letter, with each letter represented by finding a different animal. So ANDREW has to find six animals starting with A for Antelope. There are 300 different possibilities to allow for names with two letters the same. So a little bit more complex than the personalised books of yore.
But still, is this really tech?
Posted by Richard Holway at '15:53'
It looks like the recent reorganisation at Microsoft that saw the creation of the merged Windows and Devices division and the departure of Stephen Elop who had returned to Microsoft with the questionable Nokia acquisition (see here), will have a follow up if our interpretation of a mission setting memo from CEO Satya Nadella is right.
In the internal memo (obtained by GeekWire) Nadella sets out the FY16 mission statement and strategy which centres on three connected themes:
While the themes reiterate much of what Nadella has already said in terms of the commitment to mobile, cloud and ambitions around Windows 10, there were hints of the changes needed to achieve them. "We will need to innovate in new areas, execute against our plans, make some tough choices in areas where things are not working, and solve hard problems in ways that drive customer value," wrote Nadella.
Those tough choices could come in the form of further reorganisation and job cuts. As for “areas where things are not working”, the mobile phone unit must be a prime candidate for attention and that leads us to wonder what is in store for the other mobile hardware business line – Surface. Nadella is a software and cloud man, the mission statement is software and cloud-centric, and he has already decoupled Windows and Office from Microsoft hardware. We can't see Surface being banished but changes in prioritisation and positioning are possible.
Posted by Angela Eager at '11:04'
Loved George O’Connor@Panmure Gordon’s write up on the Sage CMD in his morning note so much that I thought I’d share it with you all…
"I am come amongst you, at this time, not for my recreation and disport, but being resolved, in the midst and heat of the battle, to live and die amongst you all." With his preparations for the Great North Run, Stephen Kelly does not have the body "of a weak, feeble woman", he is "well buffed".
His CMD, as expected, was quite unlike anything ever seen at Sage and, like Elizabeth, was geared to rousing the troops. Mr Kelly is transforming Sage. Typically, transformations fail, run of out steam, and/or do not deliver benefits. Mr Kelly knows that to drive change his team must be supplemented with new staff, a new organisation model, new products, and a new urgency - we have seen evidence of all of these at the CMD. Casualties will include offices, FTEs, products and exceptionals - this morning we factor in £60m exceptionals to forecasts.
The Armada was defeated by a few good men - and now in the implementation phase the spotlight must move from Mr Kelly to the operational team. The CMD did not disclose the graft of the transition, nor was it costed, given a timeline, nor were the start points of the new KPIs disclosed. As to the 'jam' - that promise of better revenue growth (than the slim 6%) and better 28% operating margin are big hurdles as two stage Sage will lead to a decline of 'classic' Sage products. The promised price war will impact profitability.
We too would love "a famous victory over these enemies of God, kingdom, and people" and note over night Microsoft CEO making noises about its forthcoming transition.
Posted by Richard Holway at '10:25'
We are delighted to report that, as we noted earlier this month (and many times before!)– Sophos to IPO on LSE –, Sophos shares will start trading today under #SOPH.
The shares at 225p imply a valuation of £1b (pretty close to the $1.5b we estimated) $125m new money will be raised. 35% shares being offered with option for further 15%.
Cyber security is a particularly hot topic right now. Sophos has a particular niche in SMEs. Much talk about the valuation. But if you think it’s high, take a look at competitors like Baracuda, Palo Alto etal. The issue comes down to GROWTH. How do you value a solid, well run, profitable company with good prospects against new upstarts with high growth (at the moment…) but no profits? We seem to face this dilemma all the time! But Boring old Holway still loves profits and cash!
Anyway, really great to see Sophos on the LSE. Waited a long time for this.
Note - This post has been corrected to change £125m to $125m new money
Posted by Richard Holway at '10:14'
There were no Indian pure-plays in the top 20 of our latest UK Healthcare SITS Supplier Landscape. The ten year partnership, projected to be worth £50m, between Mumbai-based IT services firm Tech Mahindra and CircleHealth could potentially change that over time.
Circle is Europe's largest healthcare partnership and operates a network of NHS and Private hospitals. Tech Mahindra has been contracted to help Circle improve patient care, operational delivery and to reduce costs but the plan is for the partnership to run much deeper. Steve Melton, Chief Executive of Circle, comments “This deal is a sign of the times. Healthcare has yet to see the tech-led disruption that we’ve seen in other sectors, but we think that is about to change.”
Circle will provide the firm with access to its hospitals and clinicians and share its experience of running healthcare; enabling Tech Mahindra to develop new IT solutions for Circle’s hospitals and NHS management contracts. The project will be delivered by nth Dimension, a newly formed wholly owned subsidiary of Tech Mahindra in the United Kingdom.
Mobile health will be an area of focus. Tech Mahindra will support Circle in developing its musculoskeletal care service across Bedfordshire, enabling patients to book their MRI appointments and GPs to view scans and reports via their mobile devices. In addition Circle is looking to the partnership help them obtain financing for a new-build hospital in Birmingham which will also incorporate Tech Mahindra’s mobile expertise at the design phase.
To enter the top 20 Tech Mahindra will need to generate annual revenues of circa £20m; this would require the partnership to expand and also provide a springboard to win other contracts. In any case, the partnership will be worth keeping an eye on as both firms look to shake up the establishment.
Posted by Michael Larner at '10:09'
Atom Bank has now got its licence from the Bank of England and the company is holding out the promise of a new and exciting customer experience as it delivers a “branch-free, paper-free and stress-free” bank. The bank wants to blend new technology via the use of the Unity gaming platform, 3D and biometric security, with innovations in the banking app which will have a “beautiful and intuitive and engaging front end”, making “banking easy and convenient” with “better processes, policies and people behind it”.
CEO Mark Mullen is certainly setting the bar high for this emerging bank and its suppliers. US banking technology major FIS has been selected to build the Atom app and be its core technology partner. This opportunity will be a showcase for its most advanced products. As we have commented before, see our FS Market Trends and Forecast, customer experience is a key differentiator in the banking sector and as customer expectations grow, so does their dissatisfaction with their existing banking providers. FIS’s global study of Consumer Banking suggests that 77% of customers see banks falling short of expectations and these insights may well be useful to Atom as it builds its business.
Atom’s approach promises a lot, and we look forward to opening an account with them as soon as possible to see what they can deliver. We also expect to learn more about FIS’s operation in the UK when we visit them in early July.
Posted by Peter Roe at '09:57'
Accounts just out from UK-headquartered and privately owned reseller and services firm, SCC, show clearly the progress made over the year (FY15 to 31st March 2015) in growing its services business, while exiting low-margin (pass-through) product resale business. In the UK, headline revenues were down 13.3% to £662m. However, this included a contribution of c£27m in the last financial year from the acquisition of M2 Digital Ltd (made in February 2014 - see SCC buys M2 Digital). Organically UK revenues were down 15%.
The decline was entirely down to the products business; product resale revenues decreased by nearly 20% to £503m (still representing three quarters of the business). Meanwhile, services revenues increased by 22% reaching £159m; excluding M2 Digital, services revenue growth was a still impressive 10%. In other words, SCC is comfortably outperforming the UK infrastructure services market.
Yesterday Georgina O’Toole spoke to Chief Executive James Rigby. TechMarketView subscription service clients can delve deeper into the detail behind the headlines and get a better understanding of SCC’s plans for the year ahead in UKHotViewsExtra. If you are not yet a subscriber, please contact Deb Seth to find out how to rectify the situation!
Posted by Georgina O'Toole at '09:47'
Further to my Birthday Honours post and a Albert Ellis pointing out that I had omitted the OBE for Harvey Nash’s Carol Rositi, I’ve had a number of other emails:
Co-founder and CEO of Justgiving.com, Zarine Kharis was made a Dame for services to business and charity
TotalMobile’s Chairman, Michael Black was made an MBE for services to Northern Ireland. Michael has a very successful track record in tech with BCO Technologies and Guardian24 and is a real champion of tech startups.
Andrew McLoughlin, Co-founder of Huddle, received an OBE for services to UK business and tech leadership. Indeed, what a great UK tech success story Huddle is.
Happy to report these omissions but I guess it is time to call a halt to this. Sorry. Please report faster next time!
Posted by Richard Holway at '09:37'
There is more to Salesforce.com’s move to embed customer service capability into mobile applications than first meets the eye. On the surface Service for Apps is a version of the Service Cloud that mobile app developers can bake into their apps to provide users with live in-app access to customer support (like the Amazon Kindle Mayday button). While the move breathes life into customer support, what makes the announcement more interesting is the move to make better use of existing data, combined the physical aspects of mobile devices, to create new types of purposeful, interactive mobile applications.
Users will be able to use an embedded chat client to talk to a customer support agent without leaving their app and because of this the agent will be able to see data about the user, the specifics of the problem and its context without having to go through a verbal Q&A and interpretation session (often a source of frustration on both sides). There will even be facilities to take additional input from the mobile device such as location data and camera footage.
Service for Apps hits two key trends – it is a data driven application that provides a vehicle for enterprises to extract value from their data assets, and makes moves towards the emerging trend around mobile micro moments, which we highlighted in our start-of-the-year Predictions analysis (see here). Micro moments are short bursts of user activity driven by an immediate need or question. They are the epitome of ‘I want something, and I want it now’ urges that users fulfil by reaching for their nearest mobile device. They have the potential to radically change mobile app design as dedicated apps give way to interaction-driven interfaces that use notifications, widgets and data composition. ESASViews subscribers will be able to read our take on mobile micro moments in the coming weeks.
Posted by Angela Eager at '09:25'
As companies try to use the data they already hold about their operations and customers to drive greater efficiency or craft a marketing edge, they face the real challenge of actually finding where the data is. Companies may well have many different versions of ERP or CRM software from vendors such as SAP, Oracle and Salesforce across their organisations, each with specific data items. As each implementation may have 90,000+ data tables, locating particular data in all these systems to use it in new ways is time-consuming and expensive.
Ascot based Silwood Technology has developed the Safyr solution to automate this process and to shorten the data discovery phase from weeks to hours. The Safyr software harvests metadata, from the ERP data dictionary, which describes the contents and context of data files. Safyr then searches, sorts and filters the information retrieved, determining the relevance, content and hierarchy of the constituent data tables, enabling the data to be consolidated and used in new ways.
This privately-owned “boutique” operation already has c.500 customers, served mainly through re-sellers like CA and IBM. A newly-published case study for Hydro Tasmania shows how Safyr helped them to navigate their SAP and SAP BW data models, citing the time taken to find a specific set of data tables being cut from 93 hours to 35 minutes. Silwood has also announced partnerships with Semanta in web-based BI and MID GmbH, in modelling and data management. MID will add Safyr to its platform which delivers unified enterprise data models, combining input from different systems and vendors.
Silwood looks to have a valuable tool, accelerating the move to Big Data and harnessing the value of data already held within enterprises. Interesting.
Posted by Peter Roe at '08:42'
A recurring theme at Capgemini’s Global Analysts seminar this week was one of movement and progress, at a speed faster than you'd expect from a relatively established company with revenues of €10.5bn and over 140,000 employees.
Yes, it's got its problems, including an overweight position in slow-growing Europe with a large and ageing workforce there, as well as a lack of account management capability. However, there is a noteworthy sense of purpose and optimism. A prime example of progress is the deal announced with Credit Agricole where the bank is partnering with Capgemini to enable the transformation of its infrastructure, innovation process and customer experience. In addition the large consulting activity is being brought back into the centre of the business with a strengthened role in building end-to-end deals and adding to the company's differentiation.
The iGate acquisition (see here) is progressing well with hints of early regulatory approval, enabling rapid integration of the sales teams and India-based resource. iGate will shift the proportion of revenue from the US to c.30% from 21%. Capgemini will then have more than twice the employees in India than in France. The company is actively managing its European labour force and investing in reskilling.
The management are confident in lifting expectations to an organic growth rate of 5-7% with the anticipation of acceleration to 8-9%. Margins should benefit from cloud, innovation and industrialisation of processes, outweighing the impact of additional offshoring and the consequent revenue cannibalisation. Margins are forecast to edge towards 10% in 2015 with a medium term target of 12.5-13%.
Altogether a positive two days, despite the problems of battling through a strike-ridden Paris which must exasperate many Capgemini employees as they look to accelerate the introduction of new technology and disruptive business models.
Posted by Peter Roe at '08:16'
Accenture has yet again laid down the baton to its rivals, following an excellent Q315 performance, and revenue from digital services accelerating from 20% last quarter to 30% (see Digital driving Accenture demand).
Digital services are the focus of much of Accenture’s M&A, with two UK purchases alone in the quarter - retail player Javelin and Salesforce.com consultancy Tquila (see here). It made another digital acquisition this week too, snapping up Swedish e-commerce consultancy Brightstep.
M&A is providing the springboard to enter new digital markets. But it’s clear the majority of growth is organic. In fact, management maintains that acquisitions are contributing just 1%-1.5% growth. This is against headline Q3 revenue that was up 10% in local currency (lcy) to $7.8bn. Within that, consulting and outsourcing grew in double digits – and growth was achieved across all five operating divisions. Group operating margins meanwhile rose 20 bps to 15.4%.
By any yardstick, these are excellent results, and for the third consecutive quarter, Accenture raised FY15 guidance – this time narrowing in on 9-10% growth (lcy) for the year.
Some fascinating stats are emerging. Accenture now has 28,000 people working in digital services, which CE Pierre Nanterme said includes ‘high caliber’ hires like PhDs to drive algorithms in Analytics, and leading edge designers for Fjord. There are now 15 Fjord design centres around the world, with 'more to come'. Nanterme also now sees Accenture as one of the ‘world’s leading developers of mobile apps’ – with over 1,000 developed to date – utilising Accenture’s offshore capabilities.
Mature markets like North America and Europe are generating healthy growth (12% and 7% respectively) pretty much on par with 'Growth Markets' (up 13%). In Europe, this was driven by Spain, UK, Germany and the Netherlands. So it seems, digital is not only driving growth across all service lines, but also bringing all major territories with it.
Posted by John O'Brien at '08:14'
The meaningful use of wearable devices for healthcare monitoring in the UK moved a step closer yesterday with Tim Kelsey, national director for patients and information at NHS England, saying that the public will be able to add data from wearables to their electronic patient record (EPR) by 2018. Speaking at the Health+Care event in London, he suggested that health tracking devices such as Fitbit should be able to plug data into clinical records so that both clinicians and patients could benefit from the data.
The 2018 target - also the date by which patients are supposed to have real-time access to their full digital health record (see Personalised Health & Care 2020: SITS implications and Opportunities) - is typically ambitious but it demonstrates the direction of travel within the NHS and highlights the impact that wearables will have on the market in the future. Whilst we consider it unlikely that all patients will be able, or want, to feed data from wearable devices into their health record by 2018, it is very likely that some will be doing something along those lines within the next three years.
The likes of Microsoft, Google and Apple have long seen the potential for wearables to contribute to health records and the arrival of affordable consumer wearables with health monitoring capabilities makes this dream a reality. EPR providers like Cerner and EPIC already have capabilities in this area, and the UK’s EMIS is working with Apple’s HealthKit, enabling GPs to access personal health records via its EMISWeb product.
We’re also likely to see wearable devices being used more widely within NHS hospitals in the not too distant future. The NHS’ National Information Board met last week to investigate converting the entire NHS estate into a Wi-Fi zone. With Wi-Fi installed (as it already is in some hospitals), wearables could be used to monitor patients in clinical settings. This could, for example, prevent diabetic patients suffering avoidable hypoglycaemic episodes whilst in hospital – something that research shows currently happens to a fifth of patients with diabetes. Clearly there are huge potential benefits for patients and the NHS, but also tremendous opportunities for SITS suppliers.
Posted by Tola Sargeant at '10:06'
With a Conservative Government operating under the driving principle of a ‘shrinking state’, the issue of the suitability of different public service delivery models is at the fore. Last week’s National Audit Office report – Outcome-based payment schemes: government’s use of payment by results – considered the rise of outcome-based payment schemes to deliver public services. The schemes considered included the Work Programme, one that we also looked at in our BusinessProcessViews report: Outcome-based business process services – what’s it all about? Actually the use of pure payment-by-results contracts is very rare in the UK public sector. Only the Ministry of Justice (MoJ)’s Peterborough offender rehabilitation pilot was identified by NAO as having payments 100% based on outcomes. Most contracts currently are what we have termed ‘payment plus results’ i.e. only a proportion of payment is based on outcome.
The report’s conclusion is not surprising: it is hard to get right. If not very carefully designed, PbR arrangements can be risky and costly for commissioners. This is an important message for Government and suppliers, particularly as the use of commissioning accelerates. The aim is to build more accountability into the system and the NAO report does highlight some success. However, in the public sector these types of arrangements are often used to address complex social issues where there is “no straightforward answer”... clearly, that makes designing PbR contracts immensely tricky.
The trouble is there are so many hurdles to stumble over. In choosing PbR, the client must be able to attribute the results being measured to supplier interventions. The scheme then has to be designed effectively; otherwise, for example, it is easy to create perverse incentives for the supplier. The example given by the NAO is the potential to encourage welfare to work provider to prioritise those that are easier to help. Once established, results must be measured; commissioners need accurate, timely information on outcomes achieved to ensure providers are only paid for the results achieved. This has always been a particular challenge for Government; on the Work Programme, DWP estimates it paid £11m in invalid payments up to March 2014.
The conclusion is that the Cabinet Office and HM Treasury need to more carefully monitor how PbR is operating across Government. Four years in, the Work Programme is the most able to provide lessons learned. It is in the interests of both Government and suppliers to make sure new schemes aren’t rushed into without due care and consideration.
Posted by Georgina O'Toole at '10:01'
The deal was signalled in the media as far back as last November and has just been formally announced. Covent Garden-based hospitality industry SaaS firm, Fourth Hospitality, has been sold by prior investor, London-based ECI Partners, to US private equity firm Insight Venture Partners. Terms were not disclosed, though media reports mooted a £200m valuation. ECI acquired Fourth through an MBO in March 2011 (see Fourth accepts ‘hospitality’ from ECI) in a deal which suggested a £50m valuation. ECI had tagged the exit value at £50-100m.
Fourth, which was founded in 1999, acquired US peer Adaco in September 2012. At the time combined revenues were expected to exceed £23m. It’s not clear what happened since as Fourth recorded revenues last year (to 31st August 2014) of £23.4m, up from £18.4m the prior FY. Fourth is nonetheless what you might call a ‘nice little earner’, as net profit last year was just shy of £5m – a great result for a SaaS company.
Posted by Anthony Miller at '09:06'
Eckoh, the secure payments and customer service solutions provider, has said it is in advanced discussions with customer engagement provider Netcall, about a potential takeover.
The proposed deal would see Eckoh offer 1.25 Eckoh shares and 13p in cash for each Netcall share, equivalent to 63.9p per share. The offer represents a 1.2x premium on Netcall's closing share price prior to the announcement, valuing Netcall at £88m.
At the same time, Eckoh announced its full year results for the year ended 31 March, which showed strong growth in revenue and profitability. Revenue was up 22% to £17.2m, and adjusted operating profits shot up 54% to £3.4m (margin 20% vs. 16% last time). Netcall by contrast is slowing considerably (see Netcall calls in slower growth) and in the midst of transitioning customers on to Liberty, its next-generation cloud-based customer engagement and BPM platform.
Eckoh is clearly making good strides with a services channel partner strategy. It also announced a five-year framework contract with Capita to provide telephony services to a leading UK transport organisation. The deal covers call routing, ID verification, and secure automated payments, allowing drivers to pay for vehicle charges over the phone without needing to speak to a contact centre agent.
An Eckoh and Netcall tie-up could be a good fit for both sides. Although they compete in the call centre/customer engagement space, Eckoh’s secure payments offering and Netcall’s Liberty BPM platform could bring together new capabilities and services for customers. Eckoh said there would also be ‘significant cost savings’ from the elimination of duplicate board and public listing costs. We look forward to hearing more in due course.
Posted by John O'Brien at '08:36'
It was a deeply emotional moment. We were already three hours into the proceedings at the Sage Capital Markets Day when Connie Certusi, EVP for SSB (Start-up and Small Business division) in North America, took to the stage. Carelessly – or perhaps intentionally – she had forgotten to bring the Kleenex. Certusi related the touching tale of how one of her customers was so moved by Sage’s loving, caring, all-embracing support that the client burst into tears. I ask you, who wouldn’t? You might call me an old softy, but I swear I felt a lump rising in my throat.
Certusi was just one of endless speakers at the event – sometimes solo, sometimes in cringingly-scripted double-acts – telling the assembled throng of investors and analysts how great the new Sage was going to be ‘after the transition’. The precise timing of that – and the end result – were not made entirely clear.
The presentations were kicked off by Sage CEO Stephen Kelly, who did what Kelly does best – rouse the rabble. Sage, he said, will be the global market leader (‘after the transition’). Sage, he said (or was it one of his minions?), ‘will bring back the fun to accounting’. Oh deep joy.
But it was left to Sage CFO, Steve Hare, to put some words to the mood music in the shape and form of previously signalled numbers. Organic growth of 6%, margins at 28%, during the ‘transition’ – and who knows what when Nirvana is reached.
But here’s the thing.
I have followed Sage man and boy (so it feels) both as industry analyst and (for my sins) equity analyst. I have never, ever, been to a Sage analyst meeting like this one.
I doff my cap to Kelly as he has done something that his predecessors never did and frankly never could. He fired up the troops, gave them a mission, and then led them into battle.
In truth, this may be ‘mission impossible’ or at least ‘mission very tricky indeed’. But the alternative was to cower in their bunkers and get routed by the enemy.
Posted by Anthony Miller at '08:02'
Momentum continues to build at Malaysia-based, but AIM-listed, big data analytics software specialist Fusionex, which has just signed another significant contract for the Giant big data analytics platform that it launched in Q1. Asia’s Takaful Insurance is Fusionex’s latest Giant customer. The contract is a multi-year deal but, like other contracts for the subscription-based product, we expect the rollout to be modest initially with usage (and the subscription value) scaling up significantly over time. Mind you, in Q1 we were impressed by the fact that so soon after launch Giant was already generating notable revenues for Fusionex (see Hot Fusionex).
The latest win suggests Giant is gaining traction and will be a useful reference site for Fusionex in the insurance sector. Takaful, which provides both general and life insurance, will use Giant to help it make better informed decisions by analysing customer preferences and behaviour from structured, semi-structured and unstructured data sets. We expect Fusionex to also be on the radar of UK insurance companies looking to achieve the same goal – some of the 12 early adopters of Giant were UK-based but media and market research companies.
Posted by Tola Sargeant at '09:54'
We are off to the Sage Capital Markets Day in Canary Wharf this afternoon. Sage is the only UK-HQed software company in the FTSE100 so it’s important in our universe. Anyway, I’ve been following Sage since the birth of ‘Holway – the analyst’ in the mid 1980s. Indeed I had the honour of presenting their founder – David Goldman – with a Holway Boring Award in the 1990s. I’ve also been a shareholder since soon after their 1989 IPO and they have been one of the best long term performers we have ever produced. IPOed in Dec 1989 at 130p (that’s 2.9p adjusted for various stock splits since) and a market value of £20m, Sage shares are up around 200x since and their market value is now £5.8b.
Hundreds of acquisition later, Sage seemed to have lost its mojo. It failed to grasp the magnitude of the move to Cloud/SaaS. Its disparate platforms made common global rollouts impossible. Conversely, its clients are not the most adventurous souls. Many still don’t have websites.
We were pleased when Stephen Kelly got his ‘;Dream job’ as CEO at Sage in Aug 14. The market seemed to like it too as the Sage share price is up c50% since. But I wonder what new exciting rabbits Kelly can draw from the hat at the CMD this afternoon? Afterall, we’ve had a raft of new stuff since. See note of my Meeting with Sage CEO on 2nd June. We know about Sage Life - the new Cloud product based on the Salesforce platform. We know that this new product is aimed at new users and Sage will not offer a migration path to existing Sage users. We know about ‘Sage for Life’ with its guarantee to maintain current Sage products ‘forever’ to stop their base abandoning them with the excuse ‘Well, Sage are forcing us to change anyway so let’s look at other non-Sage products like Xero, Intuit etc’. We know about the new partnerships with the likes of Fairsail and Kimble, We know about the Sage Foundation.
We also know that Kelly will run a two-speed Sage. Well, he has to. He can’t afford to throw away the great cash cow that is the old base. Indeed if he had announced a ‘baby out with the bathwater’ plan, the Sage price would be hammered. So he has to meet current analyst expectations alongside building a ‘new’ Cloud-based Sage. I guess we will hear more about that this afternoon.
But this time we don’t expect the fireworks we predicted when on Kelly’s first day at Sage on 5th Nov 14. See Guy Fawkes, Kelly and a rocket under Sage.
BTW – If you are really keen you can watch the presentations on www.sage.com/capitalmarkets . But more tomorrow on HotViews with our views in other media, I am sure.
Posted by Richard Holway at '09:44'
Ultra Electronics announced in its latest trading statement that the company is changing its divisional reporting structures in line with a new market segmentation model coupled with a standardisation & shared services initiative.
Ultra supplies electronic and software technologies such as military applications, safety-critical devices in aircraft, nuclear controls and sensor measurement. In FY14, Ultra posted revenues of £713.7m with underlying operating profits of £118.1m.
The eight market segments include Aerospace; Communications; Command and Control, Intelligence, Surveillance and Reconnaissance (C2ISR); Infrastructure; Land; Maritime; Nuclear and Underwater Warfare. The Group's Cyber capability will run across all these segments.
Internally, reporting lines will be consistent with the market facing segments and the divisions renamed to Aerospace & Infrastructure; Communications & Security and Maritime & Land. The Group will report against these divisions from the 2015 interim results at the end of the month.
Ultra’s efficiency drive includes standardising systems and some processes with the project estimated to cost about £30m over three years however Ultra believes it will generate enduring annual efficiency savings of about £20m.
Despite uncertainty surrounding defence budgets in the US and UK plus the termination of an IT contract at Oman airport, management maintains performance will be stable in 2015. Rejigging the business is tricky at the best of times but with uncertainty surrounding revenue streams Ultra will need to execute the move perfectly to retain stability.
Posted by Michael Larner at '09:27'
The demise of Quindell is reaching its conclusion (see Slater & Gordon given green-light for Quindell deal and work back).
Its shares have now been suspended on AIM following the outcome of a PwC review into its accounting practices, which showed ‘certain policies were not appropriate’ – principally the noise induced hearing loss cases revenue and related balances that became significant during 2014.
Qunidell said this will ‘materially impact’ previously published financials for FY13 and H114 – its last reported results. It is of course now mid-2015 and we still await publication of the FY14 results. With this latest debacle there’s no knowing when that will be.
If that weren’t enough, the Financial Conduct Authority (FCA) is now investigating Quindell in relation to public statements made regarding its financial accounts during 2013 and 2014.
In our forthcoming UK SITS Market Trends reports, we have excluded Quindell from the rankings – the reason being lack of confidence in the numbers.
Posted by John O'Brien at '09:06'
Big Blue and cloud-based collaboration platform provider Box have formed a global partnership that will see IBM integrate Box technology into its software and services, and both providers jointly selling into their respective customer accounts.
The tie-up appears to be far-reaching in that the companies will integrate each others technology into their products, including IBM content management, Watson analytics and IBM Verse and Connections social collaboration tools. Developers will also be able to integrate Box APIs into IBM enterprise apps and web services.
The intention is to create products and services targeted across industries and professions. Examples cited were medical teams working on complex cases, to individuals negotiating consumer loans by mobile phone, to engineers and researchers identifying patterns in patents, reports and academic journals. They also plan to target omni-channel retail and insurance underwriting with new collaboration tools and analytics insights.
Box is intent on making major partnerships with key enterprise IT players since its IPO earlier this year (see Box - World Gone Mad). It comes hot on the heels of Box’s partnership with Microsoft just week, to extend its relationship with Office 365 for the desktop, Office on iOS and Outlook – so that there’s no need to upload or download files or move back-and-forth between applications. This pitches Box’s offering far closer to that of other cloud storage rivals like Dropbox and Google Drive as they all seek seamless file sharing across devices and applications.
This tie-up is clearly a major new opportunity for Box, which needs relationships with major IT and services providers like IBM and Microsoft to extend its reach into the enterprise. This has the potential to build more sticky relationships and reduce Box’s cost of sale – an important factor for loss-making SaaS players who need to invest heavily in sales and marketing. For IBM, it shows just how important it is to now partner with new and innovative players like Box, to enhance its capabilities in the cloud – and a clear admission that it doesn’t have all the answers.
Posted by John O'Brien at '08:59'
Brady Plc, the provider of trading, risk management and settlement solutions to the energy, metals, recycling and soft commodities sectors, has announced another contract for its trading software solutions, this time with a leading multi-asset trading house for its operations in refined metals and concentrates.
We have followed Brady closely over the past couple of years, (see “Brady rewards the patient with improved full year results”) and work back. Indeed we met CEO Gavin Lavelle last week to get an update on progress.
Central to Brady’s success is its ability to address its customers’ business problems using its well respected expertise in its chosen sectors. This is leading banks and trading companies to abandon in-house systems in favour of Brady’s scalable, specialist platforms. Brady is pragmatic about the move to Cloud, offering a choice of contract models. Around one third of contracts last year were cloud-based and this model is arguably preferred due to ease of management and as contracts are generally larger. The cloud proportion is growing.
In 2014, EBITDA advanced 80% to £6.3m on revenue up 5.4% to £31m, after the company recovered from “a bump in the road” in 2013 due to delays in contract signings. Year-end cash balances totalled £9.6m.
The past few years have seen a significant change in Brady as it broadened its sector expertise by targeted acquisitions, strengthened its investor base through its various funding operations and opened up sales and support operations globally. The customer base is growing as is average contract size and scope. This should lead to improved margins and faster cash generation which should give more room for acquisitions and further strategic development. FinancialServicesViews is impressed by Lavelle’s pragmatic, unruffled approach and will continue to watch with interest.
Posted by Peter Roe at '08:36'
We wrote about Currency Cloud’s US$10m fund raise in April 2014 in a market that was teeming with new start-ups taking advantage of the failure of banks worldwide to offer low cost international money transfers. Since then the market has made substantial progress, with Currency Cloud among the vanguard, providing as it does a platform for the currency transactions of Azimo, TransferWise and as reported in TechCrunch, over 125 remittance and other FX players.
Currency Cloud has now come back for some more money, this time in a Series C Funding for US$18m which will be used to build services and work alongside two of its new investors; SAP (which invested through its venture arm Sapphire) and Rakuten, the Japanese e-commerce company. The Far East is a target market for expansion, given the increase in trade and the growth in remittance traffic there. The company will also be continuing its advance in the US. We are seeing rapid progress as Currency Cloud builds new routes to market and as its distribution partners grow. The presence and keen participation of Currency Cloud’s new shareholders, who are each looking to use their new relationship to further their own strategies is an endorsement of Currency Cloud’s approach. Elsewhere, Earthport is also optimistic of progress, with their chosen strategy apparently weighted more to co-operation with the established banks (see here and work back).
Nonetheless, this is a competitive market, not only for the growing volume of transactions, but also for investors as they rush to participate in such ventures. We have written about the high (US$1bn?) valuation placed on TransferWise, and last week we saw another US$20m raised by Azimo in a Series B funding. As we’ve said before, There’s money in remittances! (See here and work back).
Posted by Peter Roe at '07:28'
Last week, when I reviewed the Birthday Honours, I asked readers to point out any omissions. I received none – until today when Albert Ellis (CEO Harvey Nash Group) wrote to say that their Carol Rosati had been awarded an OBE for services to women in business.
Albert says “A big part of Carol’s Inspire work is ARA (women in tech in the USA) and Women in Technology in the UK. Themes we’ve been actively leading with Inspire which is a global brand. Is there nothing more topical right now in Silicon Valley than the dearth of women in tech? We have been at the forefront of making this happen. A proper UK HQ’d Tech business leading the world in thought leadership.”
I am delighted to put the record straight.
Posted by Richard Holway at '16:59'
Oracle’s Cloud Platform Services took a big step forward yesterday as the company announced a couple of dozen new services in the PaaS and IaaS areas that according to Larry Ellison fill the last of the major gaps its IaaS/PaaS/SaaS portfolio.
Although the new ‘as-a-Service’ offerings cover a broad range of areas from Java, Database and Data Management-as-a-Service to Archive Storage and Analytics-as-a-Service, there was a lot of emphasis on compute capability. This is one of Oracle’s weakest areas, and in addressing it Oracle is putting Amazon straighter in its sights, aiming to compete on both technology and price. It will also come up against Microsoft Azure too, which will be an added competitive dimension.
Under the new compute cloud service any legacy Oracle, third-party or bespoke application will be able to run in the Oracle cloud environment. Oracle is rightly cautious about the timescale for the cloud shift and hybrid environments: "Everything is not going to move to the cloud by Friday. It's going to be a very a long process," said Ellison. He is looking across the next decade and beyond for organisations to upgrade, move and manage workloads in hybrid environments. That fits with Oracle’s experience whereby existing customers are adding cloud extensions but keeping their on premise solutions, while new customers are opting for Oracle’s cloud services.
The price (and thus the profit) developments will be informative. Oracle wants to capitalise on its ability to provide the complete stack from the hardware upwards, to manage the cost of supply, drive economies of scale, and make use of the cost savings enabled by technologies such as automation along the way. But Amazon Web Services is already profitable, although its challenge is how it can maintain growth without moving deeper into enterprise accounts (see here). As we have noted previously (see here) we’re not sure how Oracle’s single vendor complete cloud stack approach will play out against the broader open cloud philosophy but for all the talk of the transformational benefits, price remains a significant factor in the XaaS decision, as does convenience.
Posted by Angela Eager at '12:51'
On the surface Digital Barriers’ full year results to end March 2015 provide few surprises: results are in line with the February guidance (see Digital Barriers warns on full year). Revenues marginally increased from £19.0m to £19.4m, while adjusted operating losses improved from £12.0m to £10.5m, though are clearly still deeper than management would like.
But there are some interesting trends to note. In many ways, the business is tracking to the plan set out at the time of the IPO in 2010 (though perhaps not at the rate expected at the time). The acquisition phase (Phase 1) has passed (indeed the last acquisition was that of Visimetrics in January 2013). And Phase 2 – integration and international expansion – is also complete. The company took two to three years to integrate all the acquired products and make them fit for market, and has had particular success in the Asia Pacific market. International revenues grew strongly in the reported FY (by 42%) and now represent 37% of revenues (and 59% of product revenues), up from 26% in the previous financial year. The UK, meanwhile, had a strong period for its services business (driven by a large sporting event) but a disappointing period for product sales.
Now, Digital Barriers is in Phase 3: Geographical and Product expansion. It is targeting further expansion in the Middle East and US under new leadership teams. And, as well as expanding its product portfolio (for example, adding a scalable cloud video platform), it has shifted from a ‘discrete products’ to an ‘integrated solutions’ play, adding capabilities around its products to enable larger sales.
There is still significant focus on growth. But ultimately, the business must aim for profitability. According to CEO Zak Doffman and CFO Sharon Cooper on our call this morning, Digital Barriers expects to track towards break even by the end of this financial year. All the major restructuring is complete, profitability now will ultimately be driven by the product mix. The good news is that the Group is beginning to place greater emphasis on standardising its offerings, enabling economies of scale and an increase in contract values. This should be positive for margins in the periods ahead.
Posted by Georgina O'Toole at '09:56'
Mobile engagement SaaS provider IMImobile has closed off a largely succesfful first full year since IPO’ing on AIM last June (see here).
For the year to 31 March, revenue was up 13% to £48.9m, which included 6 months from the acquisition of messaging platform player TextLocal. We spoke with CE Jay Patel, who told us underlying organic growth was 5-6%. However like many SaaS players, profitability that is the tricky part.
EBITDA profits (before all the nasty bits) were up 27% to £9.2m. However including share payments, acquisitions and IPO investments, this dragged IMImobile into a post tax loss of £3.4m vs. a £3.9m profit last time. Investing to stay ahead of the competition is going to be critical to IMImobile’s success.
Patel sees the company growing at a healthy rate in the UK, which is by far the largest market, at c50% of the business or c£25m. TextLocal really boosted revenues here acheiving 21% growth between Dec – May 2015. Apparently the UK’s organic growth overall was an impressive 26%, thanks to renewals with key customers like the BBC and wins with operators and new gambling and gaming companies.
IMImobile is in a hot space, but increasingly crowded with major players like Adobe, Oracle and IBM, call centre players like Genesys, Aspect Software and many more small marketing automation players ‘too numerous to mention’ - all competing for the mobile customer engagement opportunity.
Looking ahead, Patel wants to continue expanding in the US market, where it now has 6 people, while continue looking for small acquisitions, in the financial services and insurance sectors. There should also be plenty of opportunity for partnering with large services providers building on existing tie-ups with Capita and Fujitsu.
Posted by John O'Brien at '09:52'
Many of you know Kate Hanaghan, TechMarketView’s Research Director for Infrastructure Services. Earlier today Kate gave birth to twins – one boy and one girl. All doing fine although Kate, not surprisingly, reports of feeling a little tired! Something she will undoubtedly have to get used to for the next 18 years!
Every congratulations to Kate and her partner and we wish the new family well.
Posted by Richard Holway at '09:45'
Reading-based B2B social media analytics platform developer, Artesian Solutions, has raised a further £5m in a Series B funding round led by existing investor Octopus Investments, along with European debt finance specialists Kreos Capital. Octopus led Artesian’s £2m Series A funding round in February 2012 (see IndustryViews Venture Capital - Q1 2012). Artesian was founded in 2006.
Posted by Anthony Miller at '09:38'
Endava, the ‘nearshore’ but London HQ’d mid-tier IT services provider, shows no sign of letting up the pace of expansion in Eastern Europe (see Endava’s grand Macdeonian opening), with the announcement of a ‘strategic merger’ with Belgrade-based software house PSTech. Terms were not disclosed. PSTech’s 330+ employees develop software for telco and hi-tech clients in both Silicon Valley and the Nordic region, and bring Endava's headcount to 2,250.
We think Endava is just a great story and shows that a well-focused, well-managed IT services business can not only survive but also prosper in today’s demanding market.
Posted by Anthony Miller at '09:10'
Munich-headquartered investment house Aurelius has acquired the remaining 22% of international support services firm, Getronics, from prior owner, Dutch telco Royal KPN, for an undisclosed sum. Getronics was carrying a NAV of €128m on Aurelius' books at the end of 2014.
With significant investment from Aurelius, and under the leadership of UK-based Group CEO, Mark Cook (see here), Getronics has transformed from something of a train wreck looking for a salvage yard to a formidable player in the European support services market and beyond. We estimate that Getronics contributes around 40% of Aurelius’ €1.6bn revenues from its portfolio companies and is growing way faster than the market. Getronics is already a Top 60 player in the UK software and IT services market and looks set to climb further up the rankings.
Posted by Anthony Miller at '08:48'
Apple’s move into streaming with Apple Music caused me to write The joy of ‘owning’ music which created a flood of comment from our readers. Apple Music, in turn, created a flood of complaint from artists who were very unhappy that they would not get paid for any tracks streamed on Apple Music during its three month free trial. It took a mega star like Taylor Swift to get Apple to announce a rare and ‘swift’ U turn.
According to the BPI Yearbook, the recorded music market in the UK was worth £1.22b in 2003 – all of it from physical formats. In the last year, the recorded music market had slumped to £730m. Indeed physical format sales were just £365m – or 50% - of that. Downloads had gone from zero in 2003 to £283m last year. Streaming had gone from zero in 2007 to £76.7m last year. Streaming could well overtake downloads in the next couple of years.
Ultimately, the ability of any artist to make money from sales of recorded music will disappear. It will all be essentially ‘free’.
But is the music industry in ‘dire straits’? No, the exact opposite. The UK music industry is worth £3.8b and is booming. Recorded music is just 16% of the market. Revenues from live gigs now exceed that from recorded music. Music used in all kinds of commercial activity from adverts to movies, is now even bigger business. The UK exports of music are in rude health.
I have used the music industry before as a parallel to the software sector as it moves away from the physical/on premise model to the Cloud (downloads) and SaaS (streaming). If you are a SaaS ‘pure play’ you are in a fast growing sector – for now. But if you are a legacy player you have no hope of your SaaS revenues ever equally those from on-premise sales. Your only hope is to develop new allied business streams. Ie the equivalent of going out on gigs or using your music for commercial purposes! Herein lies the future for the SITS sector too.
I’m sure this is a theme to which we will return…
Posted by Richard Holway at '07:58'
Further to or report last week – John O’Connell launches Scaleup Group – last night it was announced that Vin Murria has joined its Board of Advisers.
I have the greatest respect for Murria having worked with her closely for 15+ years at Elderstreet, Computer Software Group and more recently, Advanced Computer Group – which was recently sold to Vista for £725m. Her track record is exemplary – indeed I have been a very happy shareholder in each of her ventures.
Murria says ‘I look forward to working with talented, experienced and successful people like John O’Connell, Mike Lynch, Mike Tobin and Steve Garnett to help further the goal of making smaller businesses considerably larger’.
We wish Scaleup Group well as its objective is one very dear to our heart.
Posted by Richard Holway at '07:17'
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