At time of writing only one UK tech stock has not been adversely affected by the UK decision to leave the EU – and that is ARM, whose shares are up by about 1%. Every other UK stock that we track has been hit in varying degrees, with Proxama the worst (-39%) though this probably has more to do with its unfortunately timed cash call and uninspiring results (see Proxama calls for cash as strategic change period stretches out).
Internationally spread recruitment firns like Hays (-21%), Pagegroup (-16%) and SThree (-10%) were perhaps predictably among the top losers. Most of the ‘real’ UK tech stocks are down by less than 10%.
The FTSE100 is now 5% down, with the FTSE Techmark index about 3% lower.
It’s not a good look.
Posted by HotViews Editor at '10:18'
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Twilio, the US developer of middleware to enable applications to make voice or video calls and send and receive text and IP messages, listed on NYSE yesterday and saw its share price almost double from $15 to almost $29, valuing the company at over $2b. Twilio made net losses of $35.5m last year on revenues of $167m. Apparently, 17% of Twilio’s revenues derive from messaging app WhatsApp, which Facebook bought for $19b in early 2014.
Will Twilio eventually follow the same path as loss-making SaaS superstars Demandware (acquired by Salesforce.com) and Marketo (acquired by Vista Equity Partners)? And frankly, do we care?
Posted by Anthony Miller at '09:54'
Industry association techUK has just issued a statement regarding the UK decision to leave the EU. We reproduce techUK CEO Julian David's statement in full below:
"Today the British public has decided that the UK should leave the European Union. This is not the outcome that the majority of techUK members were hoping for. It opens up many uncertainties about the future. However, the UK tech sector will play its part in helping the UK to prepare, adapt and thrive in a future outside the European Union.
"Today, just as it was yesterday, the UK remains a great place to start, locate and grow a tech business. It is full of talented, skilled and passionate people with the ideas and creativity to make great things happen. Its consumers are eager and enthusiastic early adopters of new technology. Its world class universities are powerful engines of science and innovation and its politicians and regulators have a strong record of supporting market-led investment. We must now harness these assets like never before and build a world-beating ecosystem for tech that continues the great British tradition of inventing the future.
"Today, at techUK we start work with our members to map out this new future. There will be a long to-do list with many policy and regulatory issues requiring urgent action. Tech companies will need to come together and speak with one voice to ensure their needs are understood and acted upon. To succeed, the UK tech sector needs great people, great infrastructure, world-class science and research, unfettered access to global markets, and a world-class smart and predictable regulatory environment. Without the benefits of EU membership, the UK needs to be at its very best to succeed. That remains our purpose. To make the UK the best place in the world for tech."
We very much share this sentiment.
Posted by HotViews Editor at '09:29'
Accenture’s CEO Pierre Nanterme is now emphasising the growing importance of intellectual property (IP) as a differentiator and value driver.
In the third quarter investor call, Nanterme said ‘Reinvention, innovation, equals intellectual property building’ with Accenture now holding some 5,000 patents and patent-pending applications in areas like such as ‘artificial intelligence, cyber security, drones, virtual agents, internet of things and other platforms’. As an end-to-end service provider that IP isn’t just about software and applications, but also sits behind processes, operating models and methodologies.
We have commented recently on Accenture’s growing ambitions in advanced technologies like machine learning (see Accenture builds up its machine learning capability) and artificial intelligence via its new practice with IPSoft (see here). It has also just formed another partnership with robotic process automation (RPA) provider Automation Anywhere (see here) to continue transforming operations.
The Q3 results show yet again, an impressive performance, with revenue growth of 10% in local currency (lcy) to $8.4bn, and operating margins up 10 bps to 15.5% and vs. 13.7% in Q2. In Europe, there was a particularly strong performance with growth of 12% (lcy), and double-digit growth from the UK, Switzerland, Italy, Spain, Germany, and France.
As Accenture’s reinvention continues, its shift towards consulting continues with growth of 14% (lcy) against 6% for outsourcing. Consulting now makes up 55% of revenues. We expect this shift to progress as more investments are made in the consulting and transformational services needed to drive digital investments. Outsourcing will lag behind this but nonetheless, be we expect to be a beneficiary further down the line.
Digital is the key driver behind Accenture’s continued strong performance – which is growing in double digits and now accounts for 40% of revenues. Nanterme said digital includes Accenture’s interactive, mobility, analytics, cloud and security services, but that he is even now considering the next play - artificial intelligence - including the use of virtual assistants in financial advisory services. IPSoft’s Amelia platform will no doubt play a part in this type of service evolution.
Posted by John O'Brien at '09:15'
Proxma’s pivot from mobile marketing and payment solutions to mobile marketing (plus data sales), is in progress but the company needs more cash to tide it over its strategy shift.
As previously announced, a major part of its plan is to sell its Digital Payments business. A potential buyer is lined up (letter of intent, with a proposal in the $10m-$12m range) but the deal is not confirmed (and Proxama is in talks with other suitors) so the cash strapped company is carrying out an equity placing to raise £2m, which management anticipates will fund it until the sale and see it to cash break even by the end of 2017. This is all stretching Proxama's period of strategic change into H2.
Payments is a growing but costly and highly competitive business that benefits from deep pockets, which is something Proxama does not have. Team that with the emerging (i.e. cash consuming) area of beacon-centric mobile proximity marketing and as its FY15 results show, something had to give. Although EBITDA loss narrowed marginally from £5.6m to £5.3m, in the year to December 31 2015, it is unsustainably high despite revenue rising from £650k to £2.5m, especially as cash flowed out leaving £270k (vs. £5.5m).
The company made progress around mobile proximity marketing during FY15 (to December 31 2015), with beacon infrastructure in place, contracts, its first mobile proximity marketing campaigns, plus new partnerships on the beacon infrastructure side and with app providers, and is hopeful that Google’s open Eddystone beacon format will raise help awareness. The first five months of 2016 suggest it is starting to benefit from the changes made during 2015 - income up over 50% and marketing revenue now 24% vs 4% in the previous period, while EBITDA loss stood at £3m, a 35% improvement. It has the abilities, now it needs the proximity marketing sector to bloom.
Posted by Angela Eager at '09:09'
TechMarketView chairman Richard Holway MBE voiced the deep concern of many of our clients and indeed much of the UK tech sector on the risks of the UK leaving the EU (see here).
In addition, TechMarketView Research Director Peter Roe presented our views on the potential impact on the UK Software and IT Services market, with special focus on the Financial Services sector (here).
Undoubtedly we will be in for a period of turmoil, who knows for how long.
But the UK has made its decision. Now we must make it work.
We will comment more once the dust has settled.
Posted by HotViews Editor at '07:30'
Network service provider CityFibre’s agreement to lease its metro fibre infrastructure to Level 3 Communications should prove a key asset in the UK company’s race to profitability.
The Master Services Agreement (MSA) gives Level 3’s international customers access to a high speed network spanning 37 UK towns and cities - another example of a global telco working with a local provider to interconnect its multinational customers. TalkTalk announced a network sharing partnership with Japanese telco NTT Com last month.
No mention was made of CityFibre utilising Level 3’s global network assets to expand its own reach beyond the UK however, suggesting the company is still very much focused on the domestic market. Nor are the two companies strangers, having joined forces to offer gigabit Ethernet connectivity to their UK customers in 2013.
CityFibre’s market strategy rests heavily on sweating its network assets through partnerships, having agreed an additional dark fibre MSA with Vodafone and joint ventures to deliver high speed broadband to residential customers in partnership with Sky and TalkTalk.
Terms and pricing of the Level 3 MSA were not disclosed but we think the deal will go at least a little way to compensating CityFibre for the £90m it paid to acquire the network assets of KCOM Group last year.
CityFibre’s finances remain delicate as it continues to grow its UK network footprint whilst simultaneously forging sharing deals with more service provider partners in a bid to compete with BT Openreach.
The company saw its revenue rise 67% to £6.4m in FY15 but also posted a £6.4m net loss (down from a £7m loss in FY14). It was readmitted to the AIM in January this year via a £80m equity placing at 50p per share and indicated a move into positive adjusted EBITDA in Q116.
Posted by Martin Courtney at '10:06'
There is still a lot of uncertainty over the UK Government’s apprenticeship levy, due to take effect in April next year; we have heard concerns raised by several of our clients. Indeed, their concerns are well-summed up in this CIPD article – Apprenticeship levy: how it will work in practice?
Agilisys Arch (the apprenticeship scheme set up by Blenheim Chalcot and its biggest company, Agilisys in 2012), clearly hopes to be in a good position to help more employers set up Apprenticeship Schemes in time to take full advantage of the Levy (see Agilisys Arch breaches 500 apprentices' mark and work back). So it’s good news that it has got the Ofsted seal of approval: it was recently inspected by Ofsted and was rated “Outstanding” in all areas. The company has recently started its 1000th digital & IT apprenticeship and it looks like it will start over 700 apprentices in 2016. Agilisys is still the programme’s major beneficiary, having taken on over 200 apprentices over the last 4 years, but Google, John Lewis and Barclays have also taken advantage of the programme.
Posted by Georgina O'Toole at '09:51'
We recently caught up with one of our previous Little British Battlers (LBBs) 2iC (see 2iC secures Innovate UK funding and work back). In its last financial year (to 31st Dec 2015), the company achieved 30% revenue growth. And it is expecting similar growth again this year. It is also profitable. 2iC was established in 2010, but only really started trading in 2012, and much has been happening as the company matures. It has, for example, rebranded and relaunched its website to identify more strongly as a software company and to communicate that, although the UK MoD continues to offer opportunities, its offering is relevant outside its roots in the defence space.
Since we last met, several projects have completed with positive feedback. In April, it completed its InnovateUK funded project focused on Internet-of-Things (IoT) capability in police. The project demonstrated how police forces can access critical wellness and situational information in the field, on handheld devices, and also from HQ locations to increase situational awareness and officer wellbeing. It also completed a project, commissioned and funded by MI5, MI6 and GCHQ, to demonstrate an innovative way to achieve interoperability and security of the IoT.
But actually, while these latest projects are great references, we sense that the UK market can be a frustratingly slow for a company like 2iC. Some of the company’s most exciting opportunities, primarily focused on wearable and vehicle borne platforms, especially for soldiers, are now coming from outside the UK, e.g. with the US DoD and the Australian Defence Force. It’s still early days. Indeed, its lean operating model means 2iC has only a small core team with all support staff outsourced. But, it looks like some of the opportunities in the pipeline could be game-changing.
Posted by Georgina O'Toole at '09:13'
Atos has signed another SME to its SME Harbour programme under a £1.5m, two-year, deal. The company is EvaluAgent, which was established in 2012 (officially as SocialRel8 - EvaluAgent was the product name), as a Workforce Engagement platform provider for call centres. EvaluAgent will implement the platform across key Atos’ accounts.
EvaluAgent’s raison d'être is to make the call centre environment a better place to work for staff; it turns things around, using performance metrics as a carrot rather than a stick. Call centre workers are motivated through rewards for providing a good service. The platform includes gamification and social networking elements, quality monitoring and coaching capabilities and customer insight and survey capability.
The arrangement makes perfect sense for Atos. Indeed, it looks like EvaluAgent has worked with Atos since the early days, on its flagship account National Savings & Investments. Other clients include Cineworld, Bupa and Ministry of Justice. So, taking the product into other accounts too won’t be a massive step. While ‘virtual agents’ are coming (see IPSoft’s virtual agent ‘Amelia’: First date with public sector), we are unlikely to see robots take over call centres any time soon, certainly not for the most complex cases. So improving things for staff (and hence, customers) seems like a no-brainer.
Posted by Georgina O'Toole at '08:38'
Results from Jon Moulton’s highly diversified private equity firm, Better Capital, give a glimpse at the fortunes of its two remaining tech investments, for which a very best case reading would be ‘unsteady as she goes’.
Microsoft Dynamics VAR m-hance is ‘marginally behind its sales budget, but trading on its EBITDA budget’, which probably means loss-making and getting worse. However, a new division, HighCloud Solutions, has a ‘strategic collaboration’ with NetSuite and has signed its first contract. Moulton’s valuation for m-hance remains unchanged at £12.5m, vs. £14m so far invested.
m-hance was designed as a roll-up to acquire small tech businesses – or ‘patchwork quilt’, as we call it (see Mid-market debutante: m-hance). Ironically, m-hance made it into the Sunday Times Tech Track 100 fastest growing tech companies in 2012 (see m-hance making quiet progress). One of the m-hance businesses, Calyx Managed Services, was acquired by MXC Capital in 2015 for £9m (see here). Moulton paid £17m to buy Calyx Group (which included m-hance) from the Administrators in 2010 having taken it private with his prior PE firm, Alchemy, in 2008.
It’s a swings and roundabouts story for portfolio company Omnico, also formed in 2011 from the merger of ePOS hardware, software and services firm DigiPoS with the taken-private AIM-listed consumer transaction software firm Clarity Commerce (see here). Omnico ‘reported year-to-date sales and EBITDA loss for its FY16 financial year’ and closed its loss-making hardware division. It has since recorded four consecutive profitable months, ‘something that has never been achieved by Omnico before’, and is forecasting more of the same. Omnico’s valuation remains unchanged at £25m vs. £41m so far invested.
So, five years on and valuations still under water. Has the illustrious Mr Moulton lost his magic touch?
Posted by Anthony Miller at '08:20'
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Posted by HotViews Editor at '14:20'
Adobe was punished in after hours trading last night with shares dropping c4% because it didn’t exceed market expectations in Q2 and opted for a conservative outlook.
The trouble is, if you declare yourself a cloud company – and with 77% of its revenue now from subscriptions and the business running on the Digital Media, Digital Marketing and Creative Cloud offerings – outperformance is the expectation.
Its numbers were actually respectable, with revenue up 20% to $1.4bn and net profit rising from $147m to $244m. Digital Media, Digital Marketing and Creative Cloud delivered 26%, 18% and 37 % yoy growth respectively. Annuity revenue is rising too, with annualised recurring revenue for Digital Media for example at $3.4bn at the end of the quarter, up $285m qoq. With Q3 revenue forecast at $1.42bn - $1.47bn it is on target for its full year growth but its failure to raise guidance (something it did last quarter) upset investors.
Performance has been varied over the past few quarters, including a warning on profits last October, prior to a Q4 quarter that popped, which reflects that transitions are not linear. The market reaction to Q2 is a case of overreaction to a business that has pretty well made the transition to a subscription model and is now moving to ‘normal’ business mode, while still easily delivering double digit growth and raising profits.
Posted by Angela Eager at '09:30'
As well as my admiration for Elon Musk, I also have a growing regard for Mark Zuckerberg and his team at Facebook. Many doubted they could make the move to mobile – now Facebook is cleaning up in mobile advertising. Many saw Facebook as an ageing social network – something for the Dads and Grandads rather than the kids. But Zuckerberg had that covered to with his ‘inspired’ acquisitions of WhatsApp and Instagram. Instagram has just announced it has doubled its user base in just two years to 500m with 300m using it everyday. My little ones over the age of 10 are all fans. You can’t use Facebook until you are 13.
200,000 advertisers now use Instagram. Facebook and its ’Family of Apps’ is turning into a money machine!
Posted by Richard Holway at '08:39'
The clue is in the company name – it’s office space in London for tech companies. And that seems to be the proposition. Fine, I suppose.
I’m referring to London-based Techspace which has raised £5m in a funding round led by real estate investor and entrepreneur Leo Noé and managed by Goldacre Ventures.
I’m a little confused as there is a Techspace based in the US that appears to do exactly the same thing (.com rather than .co for the London firm) but doesn’t seem to be related.
I just can’t get excited about what appears to be just a 'Regus-on-trend'. Am I missing something?
Posted by Anthony Miller at '08:27'
It’s not that often that I applaud an action that sees the share price of one of my holdings crash by 13%. But that’s what happened last night when Elon Musk announced that Tesla was buying SolarCity in an all-share $3b deal. Musk has a substantial – 20%+ - holdings in both.
But, in my view, it makes huge sense.
If you read Elon Musk’s biography, you get the clear view of a ‘Man on a Mission’. SpaceX ‘to Mars’ and his other ventures to rid the planet of its use of fossil fuels. Making cars at Tesla was ‘a means to an end’. It was really all about battery technology. Tesla had already launched the Powerwall – a home battery unit at an affordable $5000 that could store the energy from your solar panels for use at night. It was also building the GigaFactory in the Nevada desert to supply Tesla with the volume of batteries required. SolarCity produced and installed solar panels for consumers and communities. Putting the two together makes great sense. Tesla retail outlets can sell both technologies and services. Tesla charging stations can be powered by SolarCity energy.
I have said, in every post on the subject, that I invested in Tesla with my heart not my head. Despite that it has been a good investment. I’m in for the long term anyway. Musk is one of – if not THE – most inspirational people alive today. He is actually making things happen that seemed science fiction only a few years ago. There seems to be no limits to his ambitions. Hyperloop might actually take off. SpaceX might well colonise Mars. Electric cars might well become the norm. Even in the UK our homes might become self-sufficient in energy. Tesla might well eclipse Ford and GM. We might even get our brains hard wired to databanks.
I wonder what other things Musk has up his sleeve to amaze us?
Posted by Richard Holway at '08:22'
Mumbai-based offshore IT services firm Tech Mahindra seems intent on buying the ‘best of British’!
Last month the company acquired Cardiff based Business Process as a Service (BPaaS) provider, Target Group (see here). And today it has been announced that Tech Mahindra is to acquire London headquartered digital consultancy The BIO Agency in a cash deal worth a maximum of £45m including earn-out and £5m surplus cash.
Founded in 2006, BIO appears to be the archetypal ‘small but perfectly formed’ digital agency. They turned over £12.5m in FY16 (to 30th April), some 75% higher than the prior year. If they managed to sustain the same 29% operating margin as in FY15 then they truly are a nice little earner. BIO derived roughly one-third of its revenues from the US in FY15 from a standing start, and had 44 employees on the payroll.
And actually they’re after the best of Italian too. Last December Tech Mahindra acquired a majority stake in famed Italian motor industry design house Pininfarina (see here).
Posted by Anthony Miller at '07:44'
TechMarketView, in association with programme sponsors, MXC Capital, is delighted to announce the publication of the eighth Little British Battler Report in the series.
This report profiles the 12 companies that participated in our Little British Battler Day in April 2016:
These companies typify the highly innovative, UK-headquartered tech SMEs vying for attention in the local – and global – market.
Each company has been assessed by the TechMarketView team on its business fundamentals and market proposition, supplemented by an insightful SWOT analysis.
At the end of the report we list some of the salient themes that appeared in these SWOT analyses. We think these are common traits and characteristics among SMEs and suggest that CEOs of other small companies might want to check their own businesses against them.
Subscribers to the TechMarketView Foundation Service can download Little British Battler Report – LBB8 report by clicking the link. For further information, please contact our Client Services team at email@example.com.
Posted by HotViews Editor at '06:00'
A flurry of recent announcements shows the rude health of the alternative payments industry, as the number of different product offerings continues to grow, UK regulators promote fairer competition and as investors remain eager to fund start-ups in this once staid corner of the financial services sector.
The recent US$44m funding round for Plaid Technologies, led by Goldman Sachs, illustrates an important issue as banks, corporates and individuals adopt new payment systems. Plaid allows payment systems such as the successful Venmo digital wallet owned by PayPal and the high-profile Transferwise remittance system to connect to users’ bank accounts.
Getting access to accounts and to user data is an important step forward in increasing adoption rates, supporting better analytics and also in improving security. The banks will also want easier integration of these new technologies with their legacy platforms and data systems. Gaining real traction with the banks is difficult for the new payments providers, as Earthport will testify.
The Bank of England has also announced plans to increase access to settlement accounts for all payment and e-money institutions, enabling a more level playing-field and thus a greater choice in payment services. The Payment Systems Regulator also renewed its push for better access to the central payments infrastructure for new payments companies.
In addition, payments minnow Boxhill Technologies has just reported a successful first quarter. This is one of the growing number of small systems vendors with a wide range of technology partnerships, in this case across the payments, lotteries and e-commerce sectors, hoping that one solution will hit the mark and make it big.
TechMarketView has written a series of reports surveying Fintech and Financial Services innovation. You can access our report on “Innovation in Banking” here and work back to the other reports.
Posted by Peter Roe at '09:54'
UK SITS market leader Capita has acquired Trustmarque, the software reseller and services arm of Liberata Group - less than two years since Liberata bought the business with the backing of PE owner Endless LLP (see here).
Capita is paying the holding company Ardbid Ltd £57m in cash, or just 0.3x Trustmarque’s FY15 revenue of £191.9m. Trustmarque’s net revenues for the year, which exclude pass through agency sales, were £107m, and underlying operating profits were £4.3m. This is way off Capita profit expectations, but its 15% post-tax return on investment is expected by 2018.
Trustmarque continues to be a good growth business – revenues have grown consistently over the past few years from £131m in FY12 to just shy of £200m today. It has 1,450 private and public sector clients and employs 620 people across offices in York, Coventry, Sheffield, Edinburgh and London. Key relationships are in the NHS, accounting and legal services, and with Microsoft, where it is a major reseller into the public sector with over £100m of licenses annually. It is also increasingly focused on Microsoft cloud solutions based around MS O365 and Azure.
Trustmarque is also a Capita partner, as the embedded software fulfilment partner within its reseller arm Capita Technology Solutions. The acquisition therefore fits neatly with Capita’s tried and trusted strategy to acquire partners who they know well.
It’s really not that long ago since Trustmarque became part of Liberata Group, although they were kept as separate entities (see our analysis Trustmarque’s services ambitions post Liberata takeover). The focus for the past two years has been steadying the business and returning it to financial health – the benefits of which now look certain to be felt by new owner Capita.
Posted by John O'Brien at '09:26'
Rather a surreal morning on HotViews today as we bring you a story about the Magic Pony and the Wand.
In more prosaic terms, we are talking about Twitter’s acquisition of London-based Magic Pony Technology for a reported $150m, and a separate deal by Microsoft to acquire Wand Labs (no word on the amount paid so far). The common link is that both start-ups wield increasingly in demand machine learning technologies.
Magic Pony (founded in 2014 by Imperial College graduates; backed by European venture capital investor Octopus Ventures) applies machine learning in the form of image processing to video and live streams to create high-quality videos from poor quality footage (e.g. grainy mobile phone footage). It is likely to be integrated into Twitter’s Periscope and Vine services to address the need social media providers like Facebook and Snapchat have to quickly stream quality, compressed video across multiple devices. Echoing a similar comment made by Google while ago, Twitter CEO Jack Dorsey said “machine learning is increasingly at the core of everything we build at Twitter.”
This is Twitter’s third machine learning acquisition (after Cambridge-based Whetlab and US-based Madbits) and another indictor that the UK is a hotbed for start ups in the field. Not so long ago Microsoft and Google both swooped on UK start ups SwiftKey ($250m) and DeepMind ($400m) respectively. In 2012 Amazon snapped up Cambridge-based Evi Technologies, while Apple took on Cambridge-based VocalIQ.
Over at Microsoft, its investment went into Wand Labs, a 2013 startup founded by ex-Google employee Vishal Sharma that builds natural language messaging solutions. It will make a good fit with Microsoft chatbot plans, Cortana, Bing Intelligence and Conversation as a Platform initiatives, that received a lot of attention at Build (see here,) and move forward Microsoft’s interests in the emerging era of conversational intelligence.
If you’re in any doubt about the imperative to add intelligence to applications and operations, check out our reports on machine learning and automation in ESASViews and BusinessProcessViews.
Posted by Angela Eager at '09:21'
According to media reports, US private equity house Blackstone Group has received approval from India’s Competition Commission to buy out HPE’s majority stake in Bangalore-based offshore services firm, Mphasis. The deal was announced in April (see here), about a month before HPE revealed it is to spin out its Enterprise Services business and merge it with CSC (see here).
The last thing that CSC CEO Mike Lawrie wanted or needed was investors in an independently listed (in India) renegade business unit (see Mphasis closes a lacklustre year – and era) potentially stirring up trouble while he was trying to crash heads together. Indeed, one is tempted to think that HPE’s disposal of its Mphasis stake was one of the conditions for the merger to take place.
Posted by Anthony Miller at '08:50'
Here’s a nice little earner I hadn’t heard of before. London-based workplace management software firm, Condeco, has raised $30m in a Series A funding round led by Highland Europe – one of the largest tech VC investments we have seen outside of the US. Highland will hold a minority stake in Condeco, presumably buying out a chunk of founding CEO Paul Statham’s 88% holding.
Founded in 2005, Condeco has been growing in leaps and bounds of late. Revenue in the year to 31st May jumped almost 50% to £15.2m – all organic – of which almost 60% derived from outside of the UK. However, a switch to a SaaS revenue model hammered operating profit down from £633k to £103k.
A cash injection of that magnitude should give a real boost to Condeco’s scale-up plans. Good on them!
Posted by Anthony Miller at '08:26'
When aspiring UK-based ‘big-data’ play WANdisco announced earlier this month that CFO Paul Harrison was off to pastures new (see WANdisco calling for cash – again), they said he was leaving for a non-competitive company.
Indeed, it has just been announced that Harrison is to join UK-headquartered food delivery service, Just Eat, as CFO in September. Prior to WANdisco, Harrison spent 13 years as CFO at Sage, and succeeds Just Eat CFO Mike Wroe who will step down in September.
It will be a pleasing change for Harrison to swap a sea of red ink (WANdisco has never made a profit) for an increasingly profitable market disruptor (see Just Eat dining well). However, even disruptors get disrupted, so Harrison and the Just Eat team will need to be looking over their shoulders at Uber as it will surely only be a matter of time before its meal delivery service, UberEATS, will be wanting to dine in on Just Eat’s lunch (see UberEATS – SpoonRocket chokes).
Posted by Anthony Miller at '07:45'
The FT has chosen the attention grabbing headline, “Council takes on its first robot worker”, to describe the selection of cognitive learning/artificial intelligence company, IPSoft, by Enfield Council. Over the summer, Enfield is set to implement IPSoft’s virtual agent, Amelia, in a service desk role. Services are set to be in operation from the autumn. The idea is that Amelia will make it easier for residents to locate information and complete standard applications, while recognising when the involvement of a human agent is required. ‘She’ will also simplify some of the council’s internal processes.
We wrote about IPSoft and other technology providers emerging in the AI/cognitive learning space in the BusinessProessViews report ‘Business Process Automation – what is Intelligent Automation’. What makes IPSoft’s approach different is Amelia, a virtual agent that communicates directly with the end user, supporting IT and process automation tasks. It uses natural language and neural networks to understand words and context and learn from experience.
Recently, we noted that Accenture had formed a new IPSoft Amelia practice (see Accenture forms AI practice with IPSoft). The practice has been set up to focus, at least initially, on the banking, insurance and travel sectors. According to IPSoft, Enfield Council is the first customer win for Amelia in the public sector. And we are certain it won’t be the last. The potential market in public sector is substantial, spanning local authorities as well as other organisations that handle interactions and transactions with citizens. Indeed, IPSoft told the FT that it is already in talks with various tax organisations.
The use of ‘robots’ in the public sector will have an impact on the workforce; in local government, in particular, employment is a sensitive issue. Interestingly, we also read an article this morning highlighting Accenture’s views on the impact of AI – see BPO agents to keep jobs despite the rise of robots (The Standard); the article states that agents aren’t necessarily losing their jobs, but they do need to adjust to fit into a new type of role. We agree; as AI takes off in local government citizen services, authorities will have to carefully consider the impact on the shape of their workforce and plan ahead accordingly.
Posted by Georgina O'Toole at '09:48'
It’s getting tougher for companies trading on the world’s financial markets as they seek to reduce costs, comply with ever-increasing regulatory requirements and fight off tougher and tougher competition. In-house, small-scale systems can no longer meet the required quality and cost points, nor can they keep pace with the rapid changes in the market’s expectations and regulations. Increasingly, companies need to look to new “utility” delivery models where they can access scale and expertise as well as shift their costs from a “capex-basis”, to one based more on usage and “opex”.
The founders of London-based Sernova Financial obviously agreed with this scenario as they set up as a provider of turn-key post-trade services last year. Having already signed an agreement with Calypso Technology to use their capital markets software platform, they are now announcing an agreement with TCS for the delivery of cloud-based derivative post-trade processing services. Sernova’s clients will be able to access TCS’s capital markets solutions and Business Process as a Service (BPaaS) models. This partnership will utilise TCS’s Global Network Delivery Model and extend and deepen Sernova’s geographical reach for its portfolio of product solutions in the areas of intermediation, clearing, collateral and risk management.
At TechMarketView we have already written about this important trend towards utility models, see Evolving Delivery Models in Financial Services and Building Utilities in Financial Markets. Sernova Financial is a clear example of the emerging breed of specialist providers that have the market expertise and experience to leverage the scale and muscle of big service providers such as TCS to generate real value.
Posted by Peter Roe at '09:36'
Accenture continues to build its data security service portfolio, appointing Kelly Bissell to head up the business and acquiring cyber security specialist Maglan.
The company also opened the doors of a new research and development lab in Israel as it looks to develop new products and services for a market sector showing consistent growth. The UK government alone is set to invest over £1.9bn on data security over the next five years - see Comprehensive Spending Review 2015: Delving the details for SITS opportunities - as public and private sector organisations shore up their defences against the growing volume of sophisticated cyberattacks arrayed against them.
Bissell’s role at Accenture will span strategic consulting, proactive risk management and digital identity alongside incident/breach remediation and managed security services. He was previously head of global Cyber Risk for Deloitte & Touche where he built the incident response unit, and held similar roles with Arthur Anderson, BellSouth (AT&T), Medaphis, and McKesson.
Maglan is the latest in spate of recent security focussed acquisitions and investments for Accenture which include FusionX, Cimation, Endgame and Team8. The Israeli firm gives Accenture more options around customised security service delivery including attack simulation, threat intelligence and risk advisory services that meld security provision into broader, cross-organisational risk management strategies. It also adds a complement of hard-to-find data security professionals to Accenture’s ranks.
We think Accenture has little option but to expand if it is to compete with its rivals, many of which have also made big investments in their security headcount and portfolios in the last 12 months.
IBM (which reported US$2bn of security related revenue in FY15), brought Resilient; Vodafone created a dedicated cyber security division; and BT announced it will recruit an additional 900 security staff. Elsewhere cyber risk challenger NCC Group saw double digit revenue growth following acquisitions of Accumuli and Fox-IT in 2015.
Posted by Martin Courtney at '08:57'
Last month Indian Pure Play Tech Mahindra announced that it is acquiring Target Group, a privately-owned specialist provider of Business Process as a Service (BPaaS) in the management of loans, investments and insurance, see here. Over the past five years, this company has grown quickly to exploit its proprietary IP, central processing platform and customer relationships in this complex but growing niche. Target already has a growing pipeline from its business supporting mainstream lenders in the UK and from the expanding alternative lending market. Additional potential is being opened up in the management of loan portfolios.
Tech Mahindra’s acquisition of Target Group appears to offer benefits to both the acquirer and the acquired. Target group had been enjoying good success under its PE owners, but access to a bigger balance sheet and a greater pool of resource should accelerate its progress, enable it to expand geographically and drive higher long-term profitability. On the other hand, Tech Mahindra has bought a centre of excellence and a market position in a profitable, growing and differentiated sector of the competitive Financial Services market.
This report on Target Group, giving an overview of this interesting company and the background to the deal, can be accessed here.
If you don’t yet subscribe to FinancialServicesViews or to other TechMarketView research streams, please contact Deb Seth of our Client Services team
Posted by Peter Roe at '08:12'
We are absolutely delighted to announce that the fourth annual ‘Evening with TechMarketView’ in September will be brought to you in association with NetSuite. NetSuite’s cloud business software suite is used by over 30,000 companies to run mission critical business processes from accounting, procurement and HR through to marketing and sales, and we’re excited to have them as the Gold sponsor for our flagship event.
As avid HotViews readers will know, this year’s Presentation & Dinner will be centred around our 2016 research theme ‘Surfing the Waves of Disruption’. Top of the agenda will be the disruptive trends and suppliers shaping the future of the UK software, IT services and business process services markets, including how these are likely to affect the UK financial services sector and UK public sector. Topics like automation, machine learning, the threat of AWS and the speed of the move cloudwards, will be hotly debated by TechMarketView’s analyst team.
After the analysts have left the stage, there will be plenty of time for networking over drinks and a sumptuous three course dinner with your peers. We’re expecting a similar audience to the previous three years with around 250 ‘movers and shakers’ from the UK tech scene, for what has been described by previous C-level attendees as “the best networking event in the industry”.
The event typically sells out well in advance and places are filling up quickly. If you haven’t booked yet we’d advise you to do so soon to avoid disappointment. The details are as follows:
TechMarketView Presentation & Dinner 2016
Venue: Royal Institute of British Architects (RIBA), Portland Place, London
Date & time: Thursday 8 September 2016, from 6.30pm
Ticket price: £395+VAT per person for TechMarketView research subscription clients and £495+VAT per person for everyone else.
There are also a few tables of ten available at £3,950+VAT – ideal if you fancy bringing the team along or entertaining clients and prospects.
To secure your place, please click here to book or email tx2 events who are organising the event for us on firstname.lastname@example.org.
Other sponsorship opportunities
With its high calibre UK tech audience, the TechMarketView Presentation & Dinner 2016 also provides an excellent opportunity for organisations with an interest in the sector to raise brand awareness, demonstrate thought leadership and attract the attention of potential clients and partners. We are currently finalising the ‘Silver’ sponsorship packages – if you’d like further details, or to register your organization’s interest in being considered as a potential Silver partner, please let us know as soon as possible by emailing TechMarketView director Tola Sargeant on email@example.com.
Posted by HotViews Editor at '08:00'
Dr. Sanjiv Gossain is back at New Jersey-headquartered but very much India-centric Cognizant after the best part of a couple of years at the helm of CSC’s UK, Ireland and Netherlands’ region (see here). Gossain had spent a decade at Cognizant before moving to CSC and has returned to take on a senior VP role heading up Cognizant’s Digital Works initiative across Europe.
We can also confirm that Craig Wilson, who minded the shop at troubled UK-headquartered business process services firm Xchanging pending its acquisition by CSC (see Xchanging CEO Wilson staying to oversee transition), has stepped into Gossain’s vacated role to lead CSC UK/I/NL. This is a job Wilson will be more than comfortable with having done much the same at HPE for several years prior to being snapped up by Xchanging, even more so now that his old patch will become part of his new patch once the merger of HPE’s Enterprise Services business with CSC is complete.
Truly, what goes around, comes around.
By the way, eligible TechMarketView subscription service clients can read our views on the potential impact of the CSC/HPE-ES merger here.
Posted by Anthony Miller at '07:39'
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