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NEW RESEARCH: Is HP turning around its fortunes in UK BPS?
30 Jan 2015
Tech Mahindra slows the pace
30 Jan 2015
Unisys: Altabef sets out his stall
30 Jan 2015
BT’s Q3: Bigger, Faster, Bolder – in Consumer
30 Jan 2015
EMC FY14 growth slows, cautions on FY15 top line
30 Jan 2015
Wipro inks AIB deal
30 Jan 2015
Growth acceleration continues at NetSuite
30 Jan 2015
Kofax returns to software licence growth
30 Jan 2015
Depop pops another £5m
30 Jan 2015
Kimble Applications: driving smarter use of PSA data
30 Jan 2015
Alibaba shares slump
30 Jan 2015
Amazon reports minor profits and shares soar!
30 Jan 2015
HCL sets the pace
30 Jan 2015
Google on the wane?
30 Jan 2015
UK is CGI's Q115 star
29 Jan 2015
Ideagen aims for further 'healthy' growth
29 Jan 2015
Bridgepoint takes out eFront
29 Jan 2015
Veritas to re-emerge after Symantec executes its split
29 Jan 2015
Greening Government ICT: how cloud can help
29 Jan 2015
UNIT4: spruced up and ready for a digital 2015
29 Jan 2015
Steady progress at PayPoint
29 Jan 2015
TIG’s BPS momentum building in North America
29 Jan 2015
Cosentino defends Totvs ‘meaningful’ miss
29 Jan 2015
Facebook hits 1.4b users
29 Jan 2015
NEW RESEARCH REPORT: Little British Battlers – The Fifth Dimension
29 Jan 2015
Last few places left for Business Lunch on 11th Feb 15
29 Jan 2015
Lansa gears up for SyncManager launch
28 Jan 2015
Want your content to appear in UKHotViews?
28 Jan 2015
Experian sets out its stall
28 Jan 2015
Capita acquires UK Government-owned Constructionline
28 Jan 2015
NHS Wales to use EMIS in Emergency Care
28 Jan 2015
Are Brazilian IT market forecasts still too high?
28 Jan 2015
Sopheon warns on full year
28 Jan 2015
Cloud constrains VMware’s growth forecasts
28 Jan 2015
PROACTIS leveraging success with US bank
28 Jan 2015
No change at Sage – yet.
28 Jan 2015
Yahoo splits to maximise shareholder returns from Alibaba stake
28 Jan 2015
Apple blows expectations out of the water
27 Jan 2015
Lockheed Martin IS&GS struggles in FY14
27 Jan 2015
DWP selects Capgemini as network architect for CHS
27 Jan 2015
VirtTrade trades equity for further funding
27 Jan 2015
Getronics rolls out iPads for Clarks shoe sizing
27 Jan 2015
More dosh for Money Dashboard
27 Jan 2015
Gresham – trading update shows progress
27 Jan 2015
BoJo backs Dojo!
27 Jan 2015
TransferWise chooses backer in bidding scramble
27 Jan 2015
Microsoft: in line Q2 revenue as cloud growth accelerates
26 Jan 2015
AVEVA – macro-issues still prevailing
26 Jan 2015
AOMi and the changing value of ops management
26 Jan 2015
Arria NLG teams up with Watson
26 Jan 2015
SThree pedals harder, works smarter
26 Jan 2015
Netcall calls H1 in line
26 Jan 2015
Fight to save Entrepreneurs Tax Relief
25 Jan 2015
Box - World Gone Mad
24 Jan 2015
Disruption to hit Estate Agents
24 Jan 2015
Now O2 and Three are engaged
23 Jan 2015
WANdisco asks investors to cough up … or else!
23 Jan 2015
Microgen gives up and hands out
23 Jan 2015
IndustryViews Corporate Activity 2014 Review
23 Jan 2015

UKHotViews©

 

Friday 30 January 2015

NEW RESEARCH: Is HP turning around its fortunes in UK BPS?

lWe recently attended HP’s BPS EMEA analyst event where we heard from senior management including Danila Meirlean, worldwide VP for BPS, and EMEA sales lead Mike Donnellan, on the company’s plans to turn its fortunes around in Business Process Services (BPS).

There is much work to be done  for HP to regain its Top 10 position in the UK BPS market. This is a highly competitive space with newer, more nimble entrants chipping at HP’s heels. But there are signs that with a new strategy in place focused around digital transformation, and a reinvigorated management, HP’s UK BPS business could be turning the corner into better times once again.

Subscribers to TechMarketView's BusinessProcessViews and Foundation Service can read the indepth analysis here.

If you're not yet a subscriber, please contact Deb Seth (dseth@techmarketview.com), who will be happy to help.

Posted by John O'Brien at '17:30' - Tagged: bpo   bps  

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Friday 30 January 2015

Tech Mahindra slows the pace

logoQuite in contrast to the prior quarter (see Tech Mahindra picks up pace and profit), Mumbai-based IT services firm Tech Mahindra, saw sequential growth almost halve in Q3 (to 31st Dec. 14) to 2.7%, taking headline revenues to $924m, though almost 17% higher on a yoy basis. Operating margins expanded a tad to 20.1%, but remain three points light yoy.

Tech Mahindra’s core Telecom vertical still accounted for over half the company’s revenues, though a spurt in manufacturing sector – ex-Satyam’s heartland – uplifted its revenue share from 18% to 20%. Undoubtedly, Telecoms will once again surge once November’s LCC acquisition is completed (see Tech Mahindra boosts telecoms credentials with LCC).

We may also see a pick-up in BFSI sector as a result of Tech Mahindra’s acquisition of Swiss financial services consultancy, Sofgen, earlier this month (see here). BFSI has been locked in at 10% of Tech Mahindra’s revenues for the past couple of years.

The last of the India-centric majors, Cognizant, reports next week and soon after we will publish our OffshoreViews annual review, where we will take a closer look at the UK performance of the players during 2014.

Posted by Anthony Miller at '17:02' - Tagged: offshore   resullts  

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Friday 30 January 2015

Unisys: Altabef sets out his stall

Unisys logoOn his 29th day as Unisys CEO, Peter Altabef had the task of presenting the FY14 results. The numbers put into perspective the situation Altabef inherited with revenues falling by 3% year on year to $3.4bn, gross profits down by 8% ($778m) and net income dropping by 52% to $44m. Services revenues fell by 4% year on year to $2.9bn however revenues in the smaller Technology segment rose by 2% to $469m.

On a brighter note, revenue in the largest geography US & Canada (42% of revenues) rose by 1% while Latin America’s were up by 8% (13% of revenues). Geographic challenges include Asia Pacific with revenues dropping by 13% year on year and EMEA (32% of revenues) down by 7%.

The split by industries was also a mixed bag with the US Federal business (16% of revenues) rising by 3%, financial sector remaining flat, commercial (the largest sector accounting for 35% of revenues) falling by 6% while the public sector (26% of revenues) dropped by 5%.

So what are Altabef’s plans? Firstly a re-organisation of the go-to-market strategy, including a restructure of client facing teams plus, in due course, an expansion of industry specific domain expertise. Second, Altabef identified the firm’s engineering and developmental talent as a core strength and will look to differentiate the Services business by developing new software and integrated solutions. And thirdly ‘rethinking how we organize our sales internally’.

In Unisys appoints VP Sales UKMEA we highlighted that James Mayo, new VP Sales UKMEA, planned to boost growth by utilising the company’s portfolio of “End User Computing, Business Process Management, Infrastructure Optimisation and Industry-Leading Applications”. Hopefully Altabef’s ambitions will provide added momentum to Mayo’s plans. 

Posted by Michael Larner at '10:01' - Tagged: resullts  

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Friday 30 January 2015

BT’s Q3: Bigger, Faster, Bolder – in Consumer

logo

Gavin Patterson’s bold moves to revitalise BT’s consumer offer with fibre, TV and mobile, see here, are paying off so far, with Vision stimulating broadband (46% of Q3 net additions) and pushing Consumer revenue up 8% for the nine months to December and EBITDA up 27% (compared to Group figures of -2% and +1% respectively). We await news on the EE discussions, but a deal looks inevitable.

BT also announced its 10-year network vision, offering broadly available 500Mbps using G.fast technology to the cabinet, building on its next-generation architecture.

For Global Services, nine-month figures show revenue and operating costs both down 7%. UK Q3 revenue fell 18%, with Public Sector business down and the impact of selective bidding and contract milestones. Depreciation continued its rapid decline, now down 15% over the year so far, boosting operating profits which were up by 17%. But does this justify the continued strangling of the capex budget, down another 17% for the nine months? Nevertheless, GS had useful contract wins from the Welsh Government, Royal Mail and Procter and Gamble leaving rolling 12-month order level flat.

Elsewhere, BT Business showed a 2% decline over the nine months but with a positive shift to data, VoIP and software and order intake up 8%. Wholesale showed a slackening of the downward trend of Q2, but nine month figures show underlying revenue down 10%, EBITDA down 16% and capex off by 18%. In Q3 Openreach returned record broadband connections and good progress towards national coverage targets.

With Q3 eps up 10%, strong cash flow and the triennial pension funding sorted, guidance remains unchanged. Management expects flat revenue this year and some growth next and EBITDA up 1.5-3% this year and better in 2015/6. Dividends will grow 10-15%.

EE, BT Vision and Consumer will continue to be the focus of attention.

Posted by Peter Roe at '09:48' - Tagged: media   network   pensions  

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Friday 30 January 2015

EMC FY14 growth slows, cautions on FY15 top line

emcEMC announced its FY14 results yesterday, a day late due to the winter storms in the US. Revenue increased 5% to $24.44bn (it was +7% in FY13), with net income of $2.89bn (down from FY13 due to increased costs). As usual, the star players were VMware (+16%) and Pivotal (+27%). EMC’s core Information Infrastructure (II) business (which accounts for almost three quarters of total revenue) is in a different league and inched up just 2%. The company also stated that it would be cutting staff numbers (by an unspecified amount), resulting in restructuring charges of up to $150m. We are yet to hear who will be the official replacement for James Petter, (UK MD), who was recently poached by rival, Pure Storage.

These results are essentially ‘business as usual’ for EMC, with emerging (but small) areas going great guns and the core II business plodding along. It’s certainly not going to excite you if you’re a shareholder. However, FY15 could be a very interesting year indeed. Long-time CEO, Joe Tucci, is set to retire very shortly. Tucci of course has been a great proponent of the EMC federation model (i.e. the strength of the firm coming from its combined component parts: II, VMware and Pivotal). EMC has had the wolves at the door, with activist investor Elliot Management arguing more value could be created for shareholders by spinning off VMware. EMC seems to have settled things (for the time being) by reaching an agreement with Elliott that prohibits the hedge fund from publicly pushing EMC to spin off VMware until September.

For FY15, EMC says the top line will be negatively impacted by foreign currency fluctuations (as in FY14). Fast-growing VMware will also be impacted by currency, in tandem with the effect of its increasing growth in SaaS and hybrid cloud where less revenue can be recognised upfront.

Posted by Kate Hanaghan at '09:46' - Tagged: results  

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Friday 30 January 2015

Wipro inks AIB deal

wiproWipro has announced that its Global Infrastructure Services business has agreed a deal with Allied Irish Bank (AIB) to take over the running of certain data centre services from the in-house team. Wipro was up against IBM and HCL, its ‘usual suspect’ competitors. No financial terms were disclosed but The Times of India reports the contract will be worth $150m (over five years).

This is a good win for Wipro, which like the other India-headquartered firms has been growing very strongly in infrastructure services. Indeed, we estimate that its infrastructure services business will grow 20+% in the UK in the current year (to the end of March 2015) – i.e. better than last year.

Wipro will be delivering hosting and storage services and is establishing a centre in Dublin from which to serve the bank - which is now mostly owned by the Irish government. Wipro will be using its ServiceNXT framework, which includes tooling to enable automation of processes and the standardisation of operating procedures. We’ve no doubt that Wipro’s ability to streamline the running of AIB’s hosting and storage (which of course also impacts the cost of running those services) would have been an important success factor in winning the deal.

Wipro will take on 130 people as part of the contract, which might come as a surprise to readers. However, the India-centric players have become much more open to taking on people over the past few years where it makes sense  - and in particular where it helps them to build relevant onshore capability.

If Wipro can deliver well at AIB, it will certainly help its chances of winning the end user ‘tower’ at the bank, which we believe will be up for renewal in 2016 (the incumbent is HCL).

Posted by Kate Hanaghan at '09:44' - Tagged: contract  

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Friday 30 January 2015

Growth acceleration continues at NetSuite

LogoConfident NetSuite is still seeing growth levels accelerate, something CEO Zack Nelson rightly called out when reporting Q4 and full year results last night. He also took the opportunity to slight both on-premise vendors making the cloud move and Salesforce.com too: “Fiscal year 2014 represents a fifth consecutive year of accelerating recurring revenue growth, which, based on public disclosures, we believe is a record unmatched by any publicly-traded on-premise or cloud software company during the last five years.”    

In terms of the numbers, which were marginally ahead of market expectations, Q4 (to December 31 2014) saw a 37% hike in revenue to $158m with net loss rising from $20m to $25m. For the year, revenue was up 34% to $556m, with deferred revenue up to $300m (vs. $212m), and a net loss of $100m (vs. $70m) as sales and admin costs increased along with product and development costs.    

Interesing to note that NetSuite highlighted strong UK performance, and Sage customers - and partners - moving to NetSuite. The Kelly plan for Sage cannot come too soon but the Capital Markets day planned for the summer, when we expect to hear the plan, seems so far away.

NetSuite’s record of growth is strong and has not declined or been so dependent on acquisitions as Salesforce.com. Its progress reflects increased adoption of SaaS solutions within the back office, combined with larger SaaS ERP deployments as organisations’ confidence around SaaS increases - this was something the company highlighted last quarter (see here). We also noted the growth in SaaS ERP when talking with UNIT4 recently, whose SaaS ERP adoption has been on a sustained upward curve (see here). SaaS ERP adoption has been a slow burn across the market as a whole but is progressing.    

Posted by Angela Eager at '09:40' - Tagged: saas   cloud   software  

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Friday 30 January 2015

Kofax returns to software licence growth

lA return to software licence growth in Q2 helped Kofax reverse a disappointing period of contract slippages towards the end of 2014 (see Kofax disappoints again).

Software licence revenue, the metric determining Kofax’s future growth potential, was up 6.4% to $34.6m on a non-GAAP basis (reversing a 3.5% decline in the previous quarter). Maintenance revenue also grew 6.9% to $36.2m. Professional services however continue to decline, down 4.3% to $10.3m. Overall, Kofax’s Q2 revenue grew 5.1% to $81.1m.

Professional services are on an inevitable slide as Kofax moves away from its legacy capture business towards newer technologies focused around business process automation (BPA) (see Business Process Automation – a brave new world for BPS providers). These technologies require far less traditional consulting, integration and configuration, and are far more about ‘plug-and-play’ to enable rapid time to results.  

We wouldn’t be surprised to see professional services costs being reduced in line with the reducing demand. Profitability was the really improved metric. EBITDA was up 10.1% to $14.4m, pushing the margin up to 17.7% vs. 16.9% last time. Clearly Kofax is taking out cost to reflect its changing focus.

Kofax’s future lies in the success of its newly launched TotalAgility platform, which it calls a ‘smart process application’ providing an important link between systems of record such as ERP and ECM, and systems of engagement (mobile, cloud etc) to help improve the way customers interact with an organisation. It has now inked a global deal with Xerox, to resell, market, deploy and support Kofax TotalAgility within its document management services business. It is also acquiring newer technologies like BPA player Kapow and electronic signature software company Softpro.

This new line of smart process applications and BPA technologies is growing rapidly. In Q2 revenue from them more than doubled (up 74% organically) and they now account for c42% of revenue. This shows how much momentum there is in the market for BPA tools and services, driven by the opportunities it can provide for both cost reduction and improving digital customer experience.

Posted by John O'Brien at '08:47' - Tagged: software   businessprocessautomation  

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Friday 30 January 2015

Depop pops another £5m

logoTo old folk like me it sounds a bit like Exchange & Mart for the smartphone generation. And why not? London-based start-up Depop has found a (mainly fashion-oriented) niche that sits somewhere between eBay (without the auction element) and Pinterest (take pics of what you want to sell on your smartphone and immediately post them), charging 10% commission on sales for the pleasure.

Investors think Depop ‘has legs’ as they have just thrown another £5m into the pot in a Series A funding round led by Balderton Capital and Holtzbrinck Ventures. Depop, founded in 2011, scored $1m of seed funding back in October 2013, with smaller seed and angel rounds prior.

I rather like the ‘social’ element to Depop though wonder what might happen were eBay itself to ‘socialise’ its mobile persona – or indeed should any of the ’social giants’ go ‘trader’.

Posted by Anthony Miller at '08:38' - Tagged: funding   startup  

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Friday 30 January 2015

Kimble Applications: driving smarter use of PSA data

LogoCatching up with Sean Hoban, CEO of professional services automation (PSA) software supplier Kimble Applications, we believe the four year old company is beginning to stretch its legs. $1.8m (£1.2m) of additional funding led by Sussex Venture Partners (the VC arm of the London Business School), and the opening of an office in Boston to accelerate its US expansion, were further confirmation.        

SaaS pure-play Kimble (see here), made PSA accessible to all sizes of people-centric companies in areas such as IT services/management consulting, accountancy and legal, architecture and engineering, thereby opening up a new market segment – which the likes of Netsuite and FinancialForce are busily mining too. Given Kimble’s growth - a flow of new name customers and existing customers expanding their usage (e.g. ACV for existing customers up 25% yoy) - demand and ROI are there.  

Kimble’s remit is improving how PS firms are managed e.g. by identifying and allocating resources to improve efficiency, via an integrated Opportunity management, Resource management including capability management, Delivery, Time and Expenses, Billing, and Management information solution. Automation is part of that but smarter use cases involve exploiting the rich PSA data to identity trends and forecast capability demand, or using the data to understand why gross margins for example have dropped. This is all about guided analytics which is the forward direction for Kimble, although customers are generally closer to the automation/efficiency stage currently.  

We regularly write about the data-driven opportunity (e.g. Does the market need Big Data driven applications? and Kimble is firmly in this area (future initiatives include a benchmarking service which will be purely data-based). Deciding how to monetise the data-driven aspects of the business will be a challenge, as will educating PS firms of the value of guided analytics and the smarter use cases, but the funding and emerging partnerships will help.   

Footnote from Richard Holway - I have been a shareholder in Kimble since the start and have contributed at every funding round. More by coincidence than design, I was also a founder investor in Sussex Venture Partners. So two bites at the Kimble funding this time around!   So far my faith in both have been well justified and, I hope in the future, rewarded

Posted by Angela Eager at '08:37' - Tagged: saas   cloud   software  

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Friday 30 January 2015

Alibaba shares slump

alibabaWe don’t cover Alibaba as a matter of course. But they were the biggest ‘tech’ IPO of 2014 (See Alibaba soars) and, of course, have had a big effect on Yahoo. (See Yahoo splits to maximise Alibaba shareholding)

Last night, despite announcing a 40% rise in sales (to $4.2b), this was well below expectations and shares fell c10% in after hours trading. Gross mechanise value sold via Alibaba sites rose 49% to $127b. Net income/profit fell 28% to $964m.

Alibaba’s corporate governance has come in for criticism. More recently there has been controversy over the supposedly high level of counterfeit goods for sale on Alibaba sites.

Alibaba IPOed at $68, opened at $92 and then went on to a high of $115 in Nov. But last night they were down at $89.

Posted by Richard Holway at '08:36'

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Friday 30 January 2015

Amazon reports minor profits and shares soar!

AmazonAmazing what a minor bit of profit can do to your share price. Last night Amazon surprised the market with a small $214m profit on its massive $29.3b revenue in Q4. Amazon shares rose 14% in after hours trading – although they would still be down on the 12 months. And they still reported a loss for FY14 as a whole on $89b sales (up c20% yoy).

Amazon has always put investment for growth ahead of any desire to make profits. For most of its life its ‘jam tomorrow’ promise was taken as gospel by shareholders. Until they turned nasty last year shouting ‘show us the money’. Hence the joy at the profit!

But methinks it will be short-lived as Q1 forecasts are in the range ‘profits of £50m to a loss of $450m’.

We are Amazon Prime members in the Holway household. It has (for better or worse) altered our buying habits. Having paid a one-off fee for free next day delivery, we tend to make full use of it even on low value items. Ie we are hooked. Prime membership has soared by 53% and Prime members (like us) spend far more. We also get the ‘free’ media streaming service which we don’t use. Which is a bit of a waste as Amazon has apparently invested $1.3b in providing that service.

Amazon has had quite a few failures – its Fire smartphone was hardly a roaring success and expansion in China has proved expensive. But where it does succeed it disrupts. Kindle and books are a classic example.

We are told that Amazon Cloud Services is going gangbusters. Next quarter we are promised breakout figures so we know. But undoubtedly AWS has disrupted that marketplace too with rock bottom pricing. But utilising Amazon resources used elsewhere has made profitability (if there is any) difficult to determine. Analysts reckon AWS makes up c4% of Amazon’s revenue and is now profitable – probably the reason why we might get the breakout figures at last.

Posted by Richard Holway at '07:56'

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Friday 30 January 2015

HCL sets the pace

logoIf you’re wondering where all the Indian offshore services players’ growth went to last quarter, it seems the answer is HCL! The Chennai-based IT/BP services firm posted 4% headline sequential revenue growth for the Dec. ’14 quarter, while most of its major peers pretty much stood still. And on a yoy basis, HCL’s headline revenues grew by almost 13% to $1.49bn, eclipsed only by TCS at just over 14% (see here). HCL’s operating margin story was also impressive – all but stable at 23.8%.

Europe remains the driving force behind HCL’s growth, with revenues increasing over 7% in the quarter (constant currency), ahead of the US (6%). On a calendar year basis (HCL’s FYE is actually 30th June), European revenues grew by over 21%. The UK is HCL’s largest market in Europe, accounting for some two-thirds of regional revenues.

HCL also passed a major headcount milestone in the quarter, breaching the 100,000 employee barrier for the first time.

So, while peers moaned on about unfavourable cross-currencies and the like, HCL just got on with business. Well done them.

Posted by Anthony Miller at '07:55' - Tagged: offshore   resullts  

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Friday 30 January 2015

Google on the wane?

GIt is a brave or foolish man who suggests the demise of any major tech company but…I must admit I get a sense that Google’s glory days as THE internet company might be on the wane. Last night they announced results where revenues missed expectations by $250m. Sure, they still grew by 7% yoy to $18.1b but this was the 5th consecutive quarter when revenues missed expectations. Shares dropped in after hours trading and are now down c10% over the last year compared to a 13% rise in NASDAQ in the same period.

Google’s main problem is that its core activity – search – doesn’t really appeal so much on a small smartphone screen than it did on your PC. Whereas Facebook has prospered by that move; Google has suffered. Users use Apps on smartphones which negate the need to search. In turn Google has had to lower prices on mobiles to attract buyers so ‘cost per click’ is down yet again. 3% this quarter – and the 13th consecutive quarter of decline.

On top of that Google has invested hugely into new ventures but none has really affected the top line yet – but dented the bottom line as R&D and other expenses have soared. Google Glass was a very public failure. But what of driverless cars or space-based broadband?

The contrast with Apple is pretty startling. Go back to the start of the last decade. Google although still young (it IPOed in 2004) was king of desktop search and Apple was at the start of its renaissance under Jobs and had just produced the first of their blockbuster products – the iPod. 14 years later and Google is still a search company which hasn’t quite figured out mobile. Apple has iTunes, iPhone, iPad, App store and Apple Pay, Healthkit, Watch as NBTs for tomorrow.

Posted by Richard Holway at '07:26'

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Thursday 29 January 2015

UK is CGI's Q115 star

CGI logoCGI UK President Tim Gregory is likely to be smiling after a solid performance for the UK business in Q1 2015 (to end December 2014). In FY14, UK revenues had declined at constant currency (by 3.2% - see CGI UK declines in FY14). But we said at the time that the forward picture looked rosier. Now we find out that, at constant currency, UK revenues increased by 2.2%, to reach $229.7m (CAN$), in the first three months of the new financial year. With the impact of foreign currency movements, the increase was 8.2%.

Revenue growth appears to have been all down to the government vertical (though growth there was partially offset by completion of projects in ‘manufacturing, retail & distribution’ and the continuing run off of low margin business). Indeed, the strong performance of the government vertical has continued into Q215; we have already reported on the winning of the an Application Services ‘tower’ at MoJ (see CGI gets justice with application tower) and a cross-Government security vetting contract (see CGI security cleared for Whitehall vetting contract). The book to bill ratio for the UK business for the trailing twelve months stands at 100.6%. The UK business also managed to significantly improve its adjusted EBIT margin – from 7.4% in Q114 to 11.3%, as a result of cost synergies from the integration and the run off of low margin business.

But the UK was the only geography to report a significant increase in revenues. Aside from a marginal improvement in Asia Pac, all other geographies went backwards. In the US, the blame is being firmly placed on additional efforts needed to complete the Affordable Care Act projects. While in Europe, outside the UK other geographies failed to make up for the run off in low margin contracts. At Group level revenues were down 4% to $2,541.3m though the EBIT margin was up from 11.5% to 13.5% i.e. back to Group EBIT margin levels that were being achieved prior to the Logica acquisition. The Group also achieved a 411.6% increase in cash generated from operating activities compared to Q114. Bookings for the trailing 12 month period stood at 112.1% and the company states that its “pipeline of new opportunities is expanding”. But in this period it was the UK's star that shone bright.

Posted by Georgina O'Toole at '09:54' - Tagged: results   SI  

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Thursday 29 January 2015

Ideagen aims for further 'healthy' growth

Ideagen logoIdeagen’s interim results show it continues to benefit from strong demand for governance, risk and compliance solutions in the highly regulated industries in which it operates, as well as its ‘buy & build’ strategy. The information management software provider reports a 53% increase in turnover for the six months to end of October 2014 to £5.65m.

That headline figure is boosted by the acquisitions of EIBS, Pentana and MSS. Strip those out (and exclude £273k of revenue from the cancelled VA PRISM contract in October 2013) and underlying organic revenue growth is 10%. Ideagen’s results also show a 23% increase in ‘Adjusted EBITDA’ to £1.46m, but take depreciation, amortisation and other charges into account and the result is an 11% decline in operating profit to just £451k.

Whilst Ideagen’s performance might not be quite as strong as the figures first suggest, it is still growing and is set for further growth. Indeed, its latest acquisition, Gael - acquired in December for a net cash consideration of £18m (see Ideagen to gain scale with Gael) – increases its scale considerably and strengthens its position in healthcare and manufacturing, as well as aviation.

We’re given few clues in the interim results as to how the various parts of the business are performing, but there is an increasing emphasis on Healthcare, which drove organic growth in its last full year. Ideagen is one of many SITS suppliers that sees opportunity in the UK healthcare market as the erstwhile National Programme for IT in the NHS (NPfIT) draws to a close. It’s now focused on providing digital solutions in six areas: clinical document repository, forms & workflow, clinical enterprise portals, order comms, emergency department management and mobile solutions. Whilst we agree there are opportunities in NHS IT post NPfIT (see Personalised Health & Care 2020: SITS Implications & Opportunities), it is an increasingly competitive market and Ideagen will be coming up against some well established players in the sector on its quest for growth. Nevertheless, as we said in our recent UK Healthcare SITS Supplier Landscape report, Ideagen is ‘one to watch’ in UK healthcare. 

Posted by Tola Sargeant at '09:52' - Tagged: results   software   healthcare  

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Thursday 29 January 2015

Bridgepoint takes out eFront

logobpAnother interesting software provider has been taken under the wing of European private equity house Bridgepoint as eFront, the French HQ’d developer of investment management solutions has been bought for €300m.

eFront had been taken private in 2011 by global private equity firm Francisco Partners and had built its business to serve more than 700 customers in 40 countries. Its UK operations had 39 employees and generated £8.9m of revenue, £5.5m of which was from UK customers. The UK business was also profitable, returning £1m at the pre-tax level for the year to December 2013.

Bridgepoint has featured HotViews before, with the purchase of Phlexglobal in July and sale of Pulsant in June last year. Bridgepoint’s philosophy is to buy well-managed companies in attractive sectors and so we wouldn’t expect massive changes in the way eFront goes about its business. Nevertheless Bridgepoint will be looking for eFront to continue to invest in its portfolio and also in its platform-based and hosted services to capitalise on the significant changes occurring within the industry.

eFront has a broad range of products and services into the niche market of specialist investment managers (including private equity funds) and fund administrators. This group of customers is facing massive changes in regulation and increased complexity in terms of portfolio management and investor reporting. Consequently, there is a significant investment in new technology across the industry and this is driving an element of consolidation both among the investment management community and their specialist software and IT services providers. eFront should find its new home helpful in boosting its industry credentials, and financials, particularly with UK and European customers.

Posted by Peter Roe at '09:51' - Tagged: acquisition   software   private+equity  

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Thursday 29 January 2015

Veritas to re-emerge after Symantec executes its split

LogoLogoSymantec is going ‘back to the future’ when it comes to the name of the information management business that will be formed when it wields the knife and splits itself in two at the end of the year (see here). The standalone business will be called Veritas Technologies Corp.  

The name comes from Veritas Software which was the data storage company Symantec acquired in 2005 for a huge $13.7bn. At the time Symantec believed in the entwining of security and storage and Veritas was the storage counterpart to Symantec’s security solutions. The brand name has persisted but the security/storage vision has not worked, hence the split. The Veritas business generated $2.5bn revenue for Symantec in fiscal year 2014 vs. the $4.2bn of the security division.

The split will provide an opportunity to refocus and cut costs for both entities but will also be a risk period for both. You can be sure security specialists in particular – e.g. Sophos, Kaspersky, FireEye, Palo Alto and the many others – will be poised to take advantage.

Posted by Angela Eager at '09:49' - Tagged: strategy   software   security  

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Thursday 29 January 2015

UNIT4: spruced up and ready for a digital 2015

LogoThere’s a lot of that’s fresh at UNIT4 this month. The company is fresh from its annual kick off meeting, the UK & Ireland has a new MD - Helen Sutton - who took over the role at the start of January 2015, and there is news of a new UK contract geared around digital enablement. We expect this will be the first of many this year as UNIT4 continues to build its SMAC assets and scale the business, which has already become an irritant to the likes of SAP and Oracle.

The contract, with the City & Guilds Group, is for the cloud provision of Agresso ERP across the four divisions that form the City & Guilds Group where it will underpin shared services for HR and project work across the four divisions and 1150 employees.

There are two aspects that stand out. One is the adoption of the cloud for a reasonably sized ERP solution, which is another proof point that cloud is gaining traction in the back office. Back office cloud adoption within the market in general has been slow but for UNIT4 at least, it appears to be ramping up. Sutton points to a rapid take-off within the private sector with more businesses prepared to go straight to the public cloud.   

The other stand-out is Agresso’s role as a digital enabler for the customer who is using the solution, with its baked in social, mobile, analytic and cloud technologies, as part of its strategy to provide digital platforms to its staff. As outlined at the UNIT4 kick off meeting last year – see here – UNIT4 is focussing heavily on building digital technologies and integrating them within the core product rather than viewing them as separate platforms or solutions. As regular readers will know from our “Joining the Dots’ theme for 2015, we believe an integrated approach is key.

UNIT4 has made good progress across 2014 in terms of scaling the business and investing in SMAC development, and as Sutton confirmed, there will no let-up in the intensity in 2015 e.g. along with other initiatives, the Agresso R&D spend is being doubled. UNIT4 still struggles with visibility but also has a fresh partner strategy to help address that – something we will be looking at shortly.

Posted by Angela Eager at '09:14' - Tagged: cloud   software  

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Thursday 29 January 2015

Steady progress at PayPoint

logoPayPoint, the broadly-based payments service provider, continues to grind out revenue growth with a 2% advance, to £58m, in the third quarter. Net revenues (after cost of mobile top-ups and other recharged costs) rose by 4%, marking a slowdown from the half year which had seen a 7% increase.

In the UK & Ireland operations (PayPoint also has a Romanian business) the biggest advance was in Retail services, up 29% where growth continues to be driven by ATMs, debit/credit cards, parcels and money transfers. The Collect+ joint venture with Yodel which also supports chains such as John Lewis and M&S saw transaction numbers increasing by 37% with a very busy Christmas period. Bill and general transactions, still accounting for around half of PayPoint’s UK Retail services, showed only a 1% increase.

Mobile and Online transactions (accounting for roughly 13% of Group net revenue) increased in number by 9%. The largest component here is PayPoint’s mobile parking business, with operations in the UK, France, US and Canada. Parking transactions were up by 17% in Q3.

Looking ahead, the company should be able to drive efficiencies as it invests in the group payments platform and leverage its retail business as it grows its network of outlets and service portfolio.

There has been a lot of innovation, noise and volatility across the wider payments world, exemplified by the varying adventures of Apple and Monitise. PayPoint however has quietly made solid progress, by building its retail network and providing a user-friendly way for the man-in-the-street to access the benefits of new payments technology, generating cash and a healthy pre-tax margin (40% of net revenue for H1). Revenue growth may well continue at single-digit pace (as for the past four years), but that’s not too shabby!

Posted by Peter Roe at '08:54' - Tagged: mobile   payments  

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Thursday 29 January 2015

TIG’s BPS momentum building in North America

lAn encouraging update from The Innovation Group (TIG) on its North American business process services (BPS) shows it is really starting to gain momentum across the pond.

TIG’s recently acquired roadside services business Driven Solutions (see Innovation makes small US purchase) signed a potential $8m three-and-a-half year contract with a Canadian financial institution for emergency roadside services. Although the initial contract is for 6 months, TIG expects it to run to at least three years.

TIG’s NA property division also signed up a Tier 1 insurer for property desk review services, which could be worth over $1.5m over three years.

This is encouraging for a couple of reasons. North America counts for just under 13% of TIG’s revenues, or £27m in FY14, which means it is small today in revenue terms for the group. But as the largest SITS market NA is very important in terms of TIG's overall strategy.

The NA business has been going through a tough time though due to a number of loss making motor and property BPS contracts being terminated as part of the business restructure in 2013. But recent acquisitions like Driven, and strong growth in software sales (up 19% ccy in FY14) (see TIG software growth soars), helped keep the overall NA business growing last year.

Now that BPS is also moving in the right direction, TIG is in a much better position to expand market share in this all-important North American market.

Posted by John O'Brien at '08:52' - Tagged: bps   insurance  

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Thursday 29 January 2015

Cosentino defends Totvs ‘meaningful’ miss

logoAs Laercio Cosentino, CEO of Brazilian (and therefore Latin American) ERP market leader Totvs put it, “(E)ven not meeting our goals for revenue and EBITDA Margin growth for the year, we understand that the results achieved were meaningful. We still believe in the potential of the Brazilian market and on its entrepreneurs.”

And I would agree. Indeed other than the ‘miss’, Totvs’ results for 2014 were quite respectable. Revenues grew by 10% to Rs1.77bn (c.US$440m), and the company managed to hold its operating margin almost flat (actually 20bps light) at 19.6%. Happy circumstances ‘below the line’ resulted in a 17% uplift in EPS to Rs1.61 per share.

A key reason for the miss was the move to SaaS as Cosentino alluded to last quarter (see Brazilian Totvs abandons guidance on SaaS move). This has contributed to a decline in licence fee growth to less than 4% last year, and undoubtedly was a factor in the margin compression too. Totvs is not alone, of course – all the major ‘legacy’ software players share the same pain (see SAP cuts profit forecasts due to cloud acceleration).

I don’t think Cosentino’s faith in the Brazilian market opportunity is misplaced – more like it’s just been waylaid. In truth Totvs has little to worry about from ‘foreign’ competitors in its home market (see Intuit makes sage acquisition with Brazilian ZeroPaper). But the parlous state of the Brazilian economy – reflected in its weak currency – and the considerable infrastructure (and political) challenges facing recently re-elected President Dilma Rousseff, is dampening demand for pretty much all technology bar smartphones (see Are Brazilian IT market forecasts still too high?).

Totvs remains one of Brazil’s few tech ‘local heroes’. It’s just that the sheen has rubbed off a little.

Posted by Anthony Miller at '08:24' - Tagged: brazil   resullts  

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Thursday 29 January 2015

Facebook hits 1.4b users

FBAfter Apple’s record breaking results we reported yesterday, Facebook’s might look a bit puny. Apple made quarterly profits of $18b for Oct-Dec 14 – Facebook ‘just’ $701m (up 34% yoy). But the comparisons are still quite impressive. Facebook now has 1.4b users ‘more than the population of China’ –up 13% yoy. Revenues for the full year were $12.47b – up 58% yoy. Mobile advertising is now 69% of total revenues.

Facebook is now firmly a part of so many people’s lives – including old people like me! Facebook has, in my opinion, been quite clever in accepting that youngsters need a network which their parents (and grandparents) don’t use. So Facebook has kept the likes of Instagram and WhatsApp separate. That doesn’t mean that the youngsters leave Facebook – but it is now not their only social media site. That seems both sensible and sustainable to me. One size will certainly not fit all. Also, Facebook has moved rapidly as users needs change. Their fast move to mobile was impressive. Lately the move to video has been equally swift. People now watch 3b videos a day on Facebook – up from just 1b last Sept.

Big interest now in VR headsets with Facebook’s Oculus Rift acquisition. Microsoft recently announced their entry into the VR headset market – so clearly some big bets on this being the NBT.

Facebook – like Apple and others – moaned that the strong dollar knocked c4% from its revenue growth. Interesting that I can never remember any company making a point of this when the dollar had weakened in previous years!

But it was the 87% rise in costs – with R&D tripling - that many analysts centred upon and caused a 2.2% decline in Facebook’s share price after-hours. Seems like Facebook is a long, long way from producing the kind of uber results that we now expect from Apple.

Posted by Richard Holway at '07:59'

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Thursday 29 January 2015

NEW RESEARCH REPORT: Little British Battlers – The Fifth Dimension

reportYou’ve read snippets about them in UKHotViews over the past few weeks, and now you can read the full screed – but only if you subscribe to the TechMarketView Foundation Service!

It’s the latest report in the TechMarketView Little British Battler series, comprising concise profiles and analysis of the twelve privately-held UK software and IT services companies that participated in our fifth Little British Battler day in November last year:

  • CommonTime
  • emapsite.com
  • eTech Solutions
  • Fairsail
  • Motionlab
  • OSMO Data Technology
  • Quickheart
  • Rimilia
  • Screendragon
  • Software (Europe)
  • Surevine
  • Tascomi

Each of these companies are punching above their weight in their respective markets, and some have already generated interest from the wider industry (if you get our drift). That’s just one of the benefits of being entitled to sport the Little British Battler logo.

Little British Battlers – The Fifth Dimension is available for download now. If you don’t already subscribe to the TechMarketView Foundation Service, Deb Seth will point the way.

And if you have aspirations for your ‘small but perfectly formed’ company to participate in the next Little British Battler event, just keep an eye on UKHotViews for the announcement of Little British Battlers – The Sixth Sense!

Posted by HotViews Editor at '07:47' - Tagged: lbb  

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Thursday 29 January 2015

Last few places left for Business Lunch on 11th Feb 15

WCITSaddlersI have been told that we are down to the last few places for the Worshipful Company of Information Technologists Business Lunch that I will address @ 12.15pm on Wednesday 11th Feb 15 at Saddlers Hall – – the magnificent mansion house a few yards from St Paul’s Cathedral. So if you really intend to attend BOOK NOW before it’s too late.

Amazingly this will be for a record-breaking third time that I have addressed a WCIT Business Lunch. The first was in 2000 just after the dot.com bubble had burst. The second was in 2003 when the IT sector in the UK was seriously on its knees and soon after I had given my “IT’s All Over Now?” speech at the inaugural Prince’s Trust ICT Leaders Dinner. 

The lunch is open to all and, of course, all the proceeds are to the WCIT . You can see more details and book at  Business Lunch Booking

Posted by Richard Holway at '07:31'

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Wednesday 28 January 2015

Lansa gears up for SyncManager launch

logoBest known for its application development & modernisation tools for IBM’s legacy mid-range programming language RPG, Lansa has been quietly building its profile in a completely unrelated – but arguably much higher potential – product category, known in supply chain circles as Product Information Management (PIM).

The Australian-born software company launched its original PIM product, Data Sync Direct, back in 2002. When I met up recently with CEO Martin Fincham in Lansa’s EMEA headquarters in St Albans, he revealed that beta testing of its new SaaS-based PIM product, SyncManager, was well under way with marquee clients. Fincham is confident that new product functionality, along with the simplicity of a SaaS implementation, will open up Lansa’s market to SME’s in the supply chain industry alongside its existing enterprise client base.

Lansa’s PIM challenge is as much to do with the SaaS business model as it is with product differentiation. SyncManager represents Lansa’s entrée into SaaS delivery – all its current products (PIM and tools) are traditional on-premise software. Lansa is not the first software player – and certainly will not be the last – to switch part of its product portfolio to SaaS. As others before them, they will undoubtedly wrestle with the technological, service level, and of course financial implications of the transition.

But possibly the trickiest challenge will be in marketing the new PIM. Many software companies have an expectation for a SaaS launch that ‘if they build it they will come’. PIM is complicated. Success for Lansa will depend on targeting the right market segments with the right messaging, right pricing and right support. This is the same for SaaS products as for any other.

Posted by Anthony Miller at '16:05'

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Wednesday 28 January 2015

Want your content to appear in UKHotViews?

SP imageDid you know you can now embed a Sponsored Post directly within the main body of the UKHotViews e-newsletter and have it appear on TechMarketView’s website for seven days, as well as in our Twitter feed?

UKHotViews is arguably the UK’s most respected, authoritative newsletter for informed opinion and analysis on what’s happening in the UK Software and IT Services (SITS) market.

Considered a must read for anyone with ‘skin in the SITS game’, UKHotViews enjoys a high calibre readership of some 20,000 decision makers in UK tech. It reaches a broad spectrum of companies from the largest SITS players to emerging SMEs; as well as key players from the investment community, press, government and CIOs.

Engage with our audience…

Now you can insert your article – 250 words provided by you along with images and links – into UKHotViews to get your message across to our audience.

A Sponsored Post is an ideal way to raise your profile and brand awareness; attract customers, partners or investment; promote white papers and events, or recruit the best calibre applicants.

If you'd like further details on Sponsored Posts, or to request an advertising brochure, contact Helen McTeer in our client services team. 

Posted by HotViews Editor at '11:34'

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Wednesday 28 January 2015

Experian sets out its stall

logoWe were not particularly enthusiastic about Experian’s Q3 update published earlier this month, see All eyes on Experian in 2015, and called for management to get the business firing on more cylinders to realise the Group’s significant potential by virtue of its massive reservoir of customer data and experience.

Today the management enumerated the conclusions of their “capital framework review” and although their report does not include any fireworks or other surprises, there are some interesting and important nuggets;

Beginning next fiscal year, average indebtedness of the organisation will be allowed to increase to 2.5x EBITDA (from a level of <2x), enabling additional investment in growth opportunities.

Acquisitions will again be a feature of Experian’s growth strategy, but targeted at core operations. It looks like the group will have a more focused operational scope going forward and that a more cautious approach will be taken when evaluating new opportunities.

Their target will be for mid-single digit growth in medium term organic revenue. This is in line with 2013/14 and near the historic long term trend. (Although organic revenue was flat in H1 as the dollar strengthened).

Central to the group is its underlying ability to generate cash with over US$1bn of free cash flow in 2013/4 and growth of 17% in operating cash flow in H1. This will enable the company to pay a growing dividend stream and to return additional capital to shareholders, starting with a US$600m share repurchase which will also keep earnings per share growth ticking along.

Not particularly exciting, but sound - and we look for progress and greater momentum in 2015, especially as the North America Consumer Services business is turned around. More information may also be forthcoming at today’s Investor Seminar.

Posted by Peter Roe at '09:53' - Tagged: analytics   big+data  

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Wednesday 28 January 2015

Capita acquires UK Government-owned Constructionline

lCapita is buying the assets of the UK Government-owned Constructionline service for £35m on its usual cash free, debt free terms.

Capita’s acquisition is something of a first in the UK SITS market. We can’t think of any other Government-owned assets that have been completely sold off to a private sector SITS supplier. We know of many outsourcing/BPO deals of course, and other joint venture or mutual relationships.

As an acquisition, it means Capita now has the perpetual rights to Constructionline, its assets, personnel, and IP, rather than under a contractual term agreement. Capita has been providing the Constructionline service for the Department for Business, Innovation and Skills BIS (formerly the Department of the Environment, Transport and the Regions) since 1998.

The operation was initially set up for public sector construction contracts, to help drive down the costs (£165m annually) for buyers and suppliers, particularly SMEs, of repeatedly providing pre-tender information. Constructionline is effectively a national online database, providing the UK's largest register for pre-qualified construction contractors and consultants.

Now Capita wants to invest in the service, and broaden its focus across both public and private sectors. It plans to invest in a new IT system which will make the business more effective and agile and improve efficiency, while bringing more automation to the application process.

In terms of size, Constructionline is a small deal for Capita – FY14 revenue was £9.3m and pro forma operating profit was £4.1m. However it is significantly under-penetrated at just 15% of the addressable construction supplier market, which Capita sees worth £30m p.a. CE Andy Parker expects it to grow revenue 40% in the next two years under Capita's ownership. We think there is significant potential to grow within other sectors too. So, it may be small today, but the opportunities to scale are considerable.

As for the Government, the sell off means it won’t now directly benefit from Constructionline's growth. But it could benefit indirectly from a reduction in costs to SMEs, which could help boost productivity and growth more broadly.

Posted by John O'Brien at '09:45' - Tagged: public+sector   manda  

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Wednesday 28 January 2015

NHS Wales to use EMIS in Emergency Care

EMIS logoEMIS, a supplier of software and services to the UK healthcare market best known for its GP software, seems to be gradually gaining traction with its Secondary Care (hospital) offerings too. Today EMIS announced a framework agreement with NHS Wales that will see its subsidiary Ascribe provide a clinical solution to manage Unscheduled Care in Wales. Two of Wales’ six health boards have already ‘called-off’ from the framework, which has a maximum value of £7.6m over the initial seven year period, and will deploy EMIS’ Symphony software into their Emergency Department and Minor Injuries units.  

Deals like today’s with NHS Wales show the advantage EMIS has over some rivals with its ‘connected healthcare’ story. The many Welsh GPs that already use EMIS software will now be able to easily share information with hospital clinicians in Unscheduled Care. It’s this digital integration of care that NHS England is also trying to achieve (see Personalised Health & Care 2020: SITS Implications and Opportunities).

Despite some contract success in 2014, EMIS’ Secondary Care division didn't storm ahead last year as strongly as CEO Chris Spencer might have hoped (see also EMIS storms ahead in 2014). The larger contracts make its revenue ‘lumpier’ than primary and community care and the higher upfront costs mean margin is recognised further down the line. But today's success and the division's strong pipeline suggest it should perform better in 2015. Indeed, Spencer is excited by the opportunities created by the end of the National Programme Local Service Provider (LSP) contracts.

EMIS has also strengthened its Secondary Care division following the departure of former Ascribe CEO Stephen Critchlow last year, with the appointment of Duane Lawrence as MD. Lawrenece was previously CEO of decision support software provider InferMed and GM of Misys Healthcare International. His mix of experience, in both primary and secondary care and internationally, should prove useful for EMIS as it looks to further its success in ‘connected healthcare’.

Posted by Tola Sargeant at '09:42' - Tagged: contract   software   appointment   healthcare  

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Wednesday 28 January 2015

Are Brazilian IT market forecasts still too high?

pivMany readers will know of my personal - and increasingly professional - interest in Brazil. Indeed I am off again to the land of the samba sun (it’s summer there!) in a couple of weeks, coincidentally (honest!) in time for the annual carnival.

I have been banging on about the unrealistic industry growth forecasts for the Brazilian IT market since I first started meeting the captains of industry on my regular trips (see Still pipedreaming in the Brazilian IT market?). I just could not reconcile the substance of their ‘here’s how it really is, Anthony’ conversations with the hugely upbeat narrative coming from the usual-suspect industry watchers.

Well, it sounds like reality is finally dawning. The most recent forecasts from one such global research firm now puts expected Brazilian ICT market growth for 2015 at 5% to US$166bn, of which the largest component is the ‘CT’ bit, forecast to grow by 6% to US$104bn. This pegs IT growth at just 3% to around US$60bn.

I think that even this forecast is too high. The same report alludes to the main areas of investment being mobility and cloud as a means to reduce spending (my emphasis), which is precisely what I would expect in a moribund economy (yes, Brazil’s GDP is essentially flat). Contrast that with our forecast for a flat (real terms) UK market for software and IT services (i.e. even excluding the price-depreciating IT hardware market) in 2015 (see UK SITS Market Trends and Forecasts 2014) – and that’s assuming a modicum of UK GDP growth.

True, the Brazilian IT market is not as well developed as ours. But frankly, that is only an indication market potential, not a propensity to spend. The reality I feel will be very different.

Posted by Anthony Miller at '09:10' - Tagged: brazil  

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Wednesday 28 January 2015

Sopheon warns on full year

lA warning on FY14 revenue and profits sent Sopheon’s shares crashing 24% as the product lifecycle management software provider capped off a disappointing year (see Fewer licences at lower ASP blights Sopheon and work back). It followed a warning issued in December when it became clear a number of ‘material transactions’ would be deferred to 2015 (see here).

This latest update points to revenue for the year ended 31 December at c$18m, which would be down 14% on the $21m reported in FY13, and EBITDA profits ‘substantially lower’ than the c$3m achieved last time (see Sopheon confirms year end surge). Sopheon changed its reporting from Pounds to Dollars during the year, reflecting its strong US focus (60% of revenues). This is also one of its big challenges. Sopheon is now a smaller fish in a bigger pond. Its shares are now down almost 50% in the past twelve months.

Posted by John O'Brien at '09:09' - Tagged: warning   software  

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Wednesday 28 January 2015

Cloud constrains VMware’s growth forecasts

vmFY14 numbers out overnight from VMware delivered well against guidance. The company surpassed the $6bn mark for the first time ($6.35bn), registering growth of 16%. This time last year we wrote about VMware’s “growth buds” – including what was then the very recent purchase of AirWatch. At the time, VMware said it was forecasting FY14 growth of between 14-17%. As it happened it came in at the high end of that guidance. The non-GAAP operating margin “just” exceeded annual guidance of 31%. The company spent c$700m during the year repurchasing 7.6m shares.

However, in the past 12 months, VMware’s share price has slumped c15%. This is partly because of the unsettling activities that have been rumbling in the background regarding its future ownership. Hedge fund, Elliott Management, took a $1bn stake in EMC with the ultimate intention of petitioning the company to break itself apart – which of course runs counter to EMC’s federation model. However, EMC seems to have settled things (for the time being) by reaching an agreement with Elliott that prohibits the hedge fund from publicly pushing EMC to spin off VMware until September.

For FY15, VMware is forecasting revenue of between $6.64bn and $6.76bn, with slower growth of 10-12%. Top line growth will be held back by the negative effect of currency, but also the impact of its increasing growth in SaaS and hybrid cloud where less revenue can be recognised upfront. 

Parent company, EMC, reports its FY14 results tomorrow.

Posted by Kate Hanaghan at '08:44' - Tagged: results   saas   hybridcloud  

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Wednesday 28 January 2015

PROACTIS leveraging success with US bank

logoYorkshire-based and AIM-listed PROACTIS, the provider of expenditure control software for large organisations, seems to be making some more progress. This comes after a busy year, three acquisitions and a good set of results which we commented on in October, see “Progress from PROACTIS”, here.

The news today is that a deal signed last year with Fifth Third Bank of Cincinnati has morphed into something bigger. Obviously the original contract, worth US$2m over five years, went well as PROACTIS and Fifth Third will now collaborate on developing expenditure control and procurement solutions for the US regional banking industry, taking into consideration the sector’s specific operational, risk and regulatory requirements. PROACTIS and Fifth Third will jointly market these solutions to other regional banks.

This looks like a good way to drive faster growth for PROACTIS due to the importance of domain expertise in targeted markets and the benefit of having flagship customers and successful use cases. It looks like the management is actively looking to leverage partners, having also built a platform-based offering for its core spend control solution to support BPO providers.

We can expect continued growth in the core business, aided by last year’s acquisitions, but we will also be looking for news of progress in the company’s recently launched “Activate” Trading Network. This would link PROACTIS’s customers with their suppliers, enabling electronic trading and subsequent efficiencies, opening up interesting commercial and financing opportunities to PROACTIS and its customers alike. This could provide a significant boost to the company’s already attractive outlook.

Posted by Peter Roe at '08:31' - Tagged: saas   software   platformbasedBPO  

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Wednesday 28 January 2015

No change at Sage – yet.

LogoToday’s Q115 trading update indicates there has been little change in the shape of Sage Group’s financial performance since it released its full year results (see Reliable Sage delivers again).

Organic revenue for the period to December 31 2014 was up 5.3% and is on target for 6% in 2015, with organic subscription revenue growth (up c29%) the prime driver for the business as it was when the year end results were released. While all regions contributed to subscription growth, Europe was particularly strong. The weaknesses in North America (payments) and France (enterprise) have continued into Q1 and are a focus for action. The target operating margin of 28% fr 2015 also remains on target.    

There is something of a pregnant pause at Sage as new CEO Stephen Kelly - 90 days in - does his rounds of the company and customer base and prepares his growth strategy, which is likely to be revealed at the capital markets day this summer. Sage is carrying on as normal with its established steady mode of operation - but Kelly may well change that with disruptive plans for the company. Keep watching.    

Posted by Angela Eager at '08:12' - Tagged: software   tradingupdate  

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Wednesday 28 January 2015

Yahoo splits to maximise shareholder returns from Alibaba stake

YahooAs I admitted in my annual round up of the Holway Share Portfolio in Dec 14, I had sold my Yahoo shares when they had doubled to $40 believing that all the gain had been realised from their stake in Alibaba now that company had IPOed.

I was wrong. Last night Yahoo announced that it was to split itself in two (seems to be becoming a corporate habit – see HP splits in two) One (Spinco?) will hold Yahoo’s 15% Alibaba stake. The other will be Yahoo’s existing business. As a result, Yahoo shares surged to $50 in after hours trading.

The ‘old’ Yahoo produced mixed results for Q4 with revenues a bit better than expected but profits over 50% lower than last year. Their biggest revenue earner – display advertising – declined 4% yoy. Mayer praised Yahoo’s ‘stability’…

The big issue is whether shareholders have any interest or faith in Yahoo without its Alibaba stake – I didn’t. Marissa Mayer came in with great expectations which have hardly been realised. All the credit for Alibaba must go to Jerry Yang who invested back in 2004. Now I’m really unsure if Yahoo has a route map to a successful, independent future.

Posted by Richard Holway at '07:31'

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Tuesday 27 January 2015

Apple blows expectations out of the water

AppleI was waiting for the Apple Q1 results (whilst watching the Chelsea v Liverpool game) when up popped a Tweet saying ‘Unless Apple hits 70/70 (B revenue and M iPhones) I don’t think investors are going to be happy’.

Well, Apple investors ARE very happy. Revenues in Q1 (Oct-Dec 14) are up a massive 30% to $74.6b and iPhone sales were up an even more massive 46% to 74.5m. ie busting expectations by quite some margin. Nett revenue (ie profits) were $18b – an all time record and apparently the most earned in a quarter by any company in history. EPS was also up 48%. Apple now has $178b in cash – more than many major nations. Not surprisingly, Apple stock is up 5%+ in after hours trading.

A massive 70% jump in revenues from China was the main contributor. BTW – Still the 2nd largest iPhone market – didn’t quite overtake the US. It really does look as if people around the world – particularly in China – want the cache of a real Apple product however good the look-alike cheaper competition might be. Much of Apple’s success seems to be at the expense of Samsung.

Apple sold 5.5m Macs – also up 14% yoy. As Tim Cook said ‘Truly remarkable given the downturn in the global PC market’. Apple services were up 9% at $4.8b – mainly as a result of a 41% increase in sales at the App Store.

If there was a downside it was the 18% lower iPad sales – still 24.1m were sold. It really does look as if the five year old iPad has peaked. With the iPhone 6+ almost as big as an iPad Mini, many users question why they need both devices.

Other downside was the strong dollar. Apple said that revenues would have been 4% higher on a constant currency basis – and would be 5% higher in Q2.

Looks like the new Apple initiatives are going well too. Apple enthused about Apple Healthkit. Apple Pay is now responsible for $2 out of $3 spent with contact-less cards in the US. Apple Watch will ship in April. Tim Cook said “I love it. I use it every day. I couldn’t live without it’.  The partnership with IBM in the enterprise space also seems to be really motoring.

Other than their now even greater reliance on one product - the iPhone - it really is difficult to criticise Apple’s current performance. Here at TMV we love high growth but we love high profits and high cash generation EVEN more. It is extremely rare – if not unique - to get ALL of these in one company. Can Apple sustain this uber performance? If you look at Apple’s forward guidance, they seem to think so. Then, on top of that, you have all the new categories and initiatives.

Note – I’ve been a long term Apple shareholder for a decade now. They have been the best performer in the Holway Portfolio. I have no intention of selling!

Posted by Richard Holway at '22:47'

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Tuesday 27 January 2015

Lockheed Martin IS&GS struggles in FY14

Lockheed martin logoIt is hard to garner anything about Lockheed Martin’s international performance, let alone its UK performance, from its FY14 results announcement. For the record, despite an “outstanding performance in the fourth quarter”, worldwide net sales crept up just 0.5% to $45.6b.

Diving down into the numbers a little bit, annual net sales from the Information Systems & Global Services (IS&GS)’ business (essentially where the IT services business sits) declined by 7% to $7,788m (down 5% in Q4). It appears the business failed to make up for the winding down or completion of programmes (reduction in net sales of $645m) and the decline of ongoing programmes (reduction in net sales of $490m). New programmes and growth in ongoing programmes had a positive impact on net sales but only to the tune of $550m. The IS&GS operating margin remained relatively steady (9.1% vs. 9.0% in 2013).

We know that Lockheed has an ambition to increase its international revenues; international customers accounted for 17% of net sales in FY13 (we await FY14 detail). The aim is to increase the proportion to 20% over the next few years. In the UK, where Lockheed has its biggest footprint outside the US, the acquisition of Amor in September 2013 was intended to help the company towards that goal (see Lockheed Martin acquires Amor). The combined business had a couple of interesting UK wins in 2014, with the Metropolitan Police and the Highways Agency (see UK Public Sector SITS Supplier Landscape 2014-15). When we last spoke to Anne Mullins, VP Global Solutions, she highlighted the UK as one of Lockheed’s major growth focus areas and was forecasting UK CAGR of 25%+ over FY15 and FY16 (organic and acquisitive combined) . We hope to catch up with the UK management team soon to determine how FY14 went.

Posted by Georgina O'Toole at '15:11' - Tagged: results   public+sector   defence  

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Tuesday 27 January 2015

DWP selects Capgemini as network architect for CHS

Capgemini logoCapgemini has been awarded a framework contract by DWP worth close to £100K to provide specialist cloud services related to the implementation of the Crown Hosting Service (CHS - see New Crown Hosting Service: the implications). The contract documentation states that Capgemini will act as “an expert security design organisation that can outline a logical architecture to provide a modern secure structure that Crown Hosting can be designed against”. CHS is intended to support applications which are not yet ready to move to the cloud but still need legacy data centre hosting. DWP is expected to be one of the CHS founder organisations (alongside Highways Agency and Home Office).

In our view this is a true ‘systems integrator’ role. Vendor and product agnostic, Capgemini will offer specialist architectural consulting, for example, reviewing the network architecture and undertaking network design and engineering, network build, network security run and network engineering. In Capgemini’s ‘supplier service description’, the company highlights its experience of integrating many types of security network technologies.

The 12-month contract was awarded at the end of December on a ‘lowest price’ basis. In our conversations with the Cabinet Office, they have always asserted that systems integrators should ‘do what it says on the tin’. This award is in line with that belief. What is clear is that departments and agencies to not have these kinds of skilled people, such as network architects, within their organisations. As a result, demand for ‘consultancy’ is increasing. This was highlighted in a recent communication to ConsultancyOne framework suppliers. According to blog Spend Matters, in a letter relating to an extension to the framework, suppliers were asked to reduce their maximum rates by 5% and offer volume rebate as “spend is increasing”.

Posted by Georgina O'Toole at '09:49' - Tagged: public+sector   centralgovernment   contract   network+services   hosting  

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Tuesday 27 January 2015

VirtTrade trades equity for further funding

logoNever having been a collector of anything much in my youth (or indeed my dotage) I hadn't realised how big the trading market for cards and collectables is (and I still don’t). But it’s clearly big enough to attract recently AIM-listed Mercia Technologies, to plough in a further £1.5m to take a 21% stake in Tunbridge Wells-based card and collection trading platform developer VirtTrade.

VirtTrade was founded in 2012 by John Howard and Peter Smith, who had worked together at virtual trading card platform, moonfc.com. I assume VirtTrade has a ‘bigger and better’ business model - and ambitions - but whatever it is, I hope it ends up making them and their investors lots of money.

Posted by Anthony Miller at '09:49' - Tagged: funding   startup  

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Tuesday 27 January 2015

Getronics rolls out iPads for Clarks shoe sizing

getGetronics has announced its contract to issue Clarks shoe shops with iPad technology for measuring customer shoe sizes. Clarks, a long-time Getronics customer, wanted to improve the in-store experience for its customers.

The technology, used in conjunction with bespoke accessories and applications designed by the shoe retailer and Design Works, enables staff to measure the size of children’s feet through an interactive iPad experience that involves animated characters. Many children are of course savvy tablet users, and Clarks hopes the new technology will enhance their shopping experience, and perhaps even make the whole process a little less stressful for parents!

Previously the company used electronic foot gauges, and since iPad implementation says it has “seen a reduction in the time it takes to measure children’s feet”.

One of the key challenges for Getronics was rolling out the new technology without causing disruption to stores and staff along the way. What we like about this contract is that this it's not just technology for technology’s sake; the process of measuring small, wriggly feet has been speeded up while the customer experience has also been improved. Although this is not about the use of ‘bleeding edge’ technology, it demonstrates the tangible benefits of an improved customer experience, which is a critical component of a digital and more joined-up approach (read more about TechMarketView's Theme for 2015 'Joining the Dots').

Posted by Kate Hanaghan at '09:47' - Tagged: contract   ipad  

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Tuesday 27 January 2015

More dosh for Money Dashboard

logoAs TechCrunch puts it, it’s the personal finance app that tells you why you’re broke!

Appropriately headquartered in Scotland’s financial centre, Edinburgh-based Money Dashboard has announced a further £2.5m funding round, led by Calculus Capital, with investment from Ariadne Capital, Par Equity, and The Scottish Investment Bank. Founded in 2008, Money Dashboard had raised an initial £2.7m in seed funding in November 2013, also led by Calculus (by the way, also an investor in Reading-based operations management software firm Active Operations Management International – see IndustryViews Venture Capital Q1 2014).

Money Dashboard’s app is free. The money-making bit apparently comes from dangling ads for financial services in front of users’ eyes and taking a cut of the commission if the punter bites. Hmmm. According to TechCrunch, Money Dashboard also sells anonymous spending data and trends to market research companies. As they indeed say, “you are the product, after all”!

Money Dashboard is participating in the London Stock Exchange’s admirable ‘Elite’ programme which aims to accelerate the IPO path for high-growth UK companies. The app seems similar to US-based Mint, so one wonders whether an alternative exit is perhaps more likely.

Posted by Anthony Miller at '09:21' - Tagged: funding   startup  

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Tuesday 27 January 2015

Gresham – trading update shows progress

logoGresham Computing, providing real-time financial transaction control software, has published a confident trading update for the year to December. This comes after the company re-set expectations in October as management warned of contract delays, see here, pushing revenue and profit into 2015. After the October announcement, market forecasts were rattled back due to Gresham’s licence-based model with high up-front revenues. New forecasts suggested a 9% decline in revenue (rather than a 7% increase) and the EBITDA expectation was more than halved.

The company has begun its rehabilitation, with the announcement of three significant contract wins in November, see here, and today’s trading statement which cites a near three-fold increase in recurring revenues for CTC (the flagship in-memory reconciliation solution) and a more-than doubling of the CTC customer base over the year. The company has also announced another contract win for its US sales team.

We would expect Gresham to continue picking up new contracts as its system is directed towards more use cases in financial services and in the wider management of complex transaction sets. Revenue per user should also rise as CTC is more extensively deployed in existing customers. The management emphasises the strong order book and balance sheet which should give Gresham a good base from which to build in 2015.

The stumble in October has “shifted” market forecasts around eighteen months to the right in terms of profit and revenue and we repeat our view that time and good news flow will be needed to repair the damage of dashed expectations. The positive update for the period to the end December is a good step forward.

Posted by Peter Roe at '08:50' - Tagged: trading   intersystems   software  

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Tuesday 27 January 2015

BoJo backs Dojo!

logoThe London Co-Investment Fund (LCIF), the recently launched start-up funding initiative backed by London Mayor Boris Johnson, has just completed its first investment, with an £800k funding round in London-based venue locator app, Dojo (not to be confused with classroom support app ClassDojo). The round was led by Playfair Capital, along with advertising giant M&C Saatchi’s investment arm, SaatchInvest, and angel investors from Citymapper and MarketInvoice. Dojo targets the 18-35 set and aims to point them to entertainment and dining venues in London before they are discovered by the masses. Whatever.

LCIF is managed by Funding London in collaboration with London incubator/accelerator Capital Enterprise (not to be confused with the now defunct government SME funding initiative, Capital for Enterprise – see here), and is supported by £25m from the Mayor of London through the London Enterprise Panel’s ‘Growing Places’ Fund. LCIF aims to participate in co-investments totalling £80m in London tech companies through till 2017. Get it? Got it. Good!

Posted by Anthony Miller at '08:38' - Tagged: funding   startup  

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Tuesday 27 January 2015

TransferWise chooses backer in bidding scramble

logoIn November we noted that TransferWise, the money transfer and remittances group which relies on peer-to-peer netting for its low prices and much-vaunted potential, was about to be valued at $1bn, see here. This has now happened, according to the FT, but with an initial investment by Andreessen Horowitz (early backers of Facebook) rather than Sequoia Capital who appear to have been left behind in the bidding war.

Press comments also suggest that this is the start of a move by US funds to invest more in UK and European tech start-ups and the squabble over who bankrolls TransferWise again shows that there is a huge amount of money chasing a limited number of exciting investment opportunities.  It is encouraging to see that the UK – and London in particular – is now looked upon so favourably by US investors. Indeed Michael Bloomberg was last year heard suggesting that London is now the best place in the world to set up a tech business. Grouping tech companies together with advisers, mentors, investors, lawyers, accountants, PR guys etc. is how other tech clusters – most notably Silicon Valley – were established. Many other locations have tried to emulate that but few have succeeded. So far Cambridge has been the most successful “cluster” in the UK and Innovate Finance is making progress in FinTech.

This shift of emphasis by investment funds could signal a wave of even higher valuations across the sector, but it also opens the door to another layer of froth and potential disappointment as investors leave their common sense at the door of the negotiating chamber.  Just look at Richard’s comment yesterday “Box – World Gone Mad”.

Posted by Peter Roe at '07:34' - Tagged: private+equity   venture+capital   payments   innovation  

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Monday 26 January 2015

Microsoft: in line Q2 revenue as cloud growth accelerates

LogoMicrosoft dealt with Nokia costs, restructuring, declining PC shipments and the cloud transition during Q2 (to December 31 2014) so against that background an 8% in line uplift in revenue to $26.5bn and operating income down 2% to $7.8bn was not too bad a result. But the market showed its dissatisfaction, driving shares down 2%-3% in immediate after hours trading.

Based on an initial review of the results, there were no real surprises: Windows revenue down (OEM Pro and non-Pro revenue both down 13%), commercial cloud revenue up (144% due to Office 365, Azure, and Dynamic CRM Online), overall commercial revenue up (5% to $13.3bn) but Commercial licencing revenue down (2% to $10.7bn due to the cloud shift). The stalwart Server products and services segment continued its upward progress (revenue up 9% on the back of continued demand for SQL Server and System Centre). The overall picture is that of a company transitioning on multiple fronts and within that experiencing notable progress on its cloud strategy.   

The big question is what impact Windows 10 will have on the company - whether customers will fall in love with the new cross device OS - and in particular what pricing model will apply. While executives have made it clear that the traditional OEM and pay-up-front Windows model will remain as the main sales model, the devil will be in the detail. Will there be a subscription option and if so will subscribers get access to additional services as a means of promoting adoption via a Windows-as-a-Service (see Windows 10 moving to WaaS?) approach?

Windows is not the only significant business area within Microsoft but it continues to be the one that attracts attention and on which it is judged. However, cloud progress is more meaningful these days in terms of assessing direction and progress, and it is now making a better job of it than many other ‘old world’ providers also making the transition.

Posted by Angela Eager at '23:52' - Tagged: results   cloud   software  

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Monday 26 January 2015

AVEVA – macro-issues still prevailing

logoAVEVA, the fully-listed provider of engineering data and design IT systems has updated the market with respect to its trading since October. In November they published their interim results, see Macro issues depressing near term, which confirmed the revenue and shortfall announced in September, leading to a precipitous fall in the share price and a major down-grade of full year expectations.

The management put a brave face on the more recent trading performance, having achieved a level of rental renewals comparable to last year and some new customer wins. Nevertheless, it warns that its most challenging quarter is ahead with several key rental renewals at a time of significant uncertainty over oil prices and concern over the levels economic activity.

Earlier in January AVEVA bought the 8over8 business providing contract risk management software to the natural resources sector for £26.9m. (AVEVA had £120m of cash at the end of December).  8over8 generated £10m of revenue and £3.1m pre-tax profit in the year to December 2013 with additional growth forecast in 2014. This acquisition is to give AVEVA additional credibility in managing large contracts and real-time contract risk.

The management seems to be doing what it can in the present situation. The company has net cash, is cutting costs across the business and shifting its portfolio to areas which should be less affected by the current turmoil in the oil and gas markets. It is also continuing to develop its AVEVA 3D software and pushing the “One AVEVA” concept to glean incremental revenue and margin from its installed base. However, with 45% of its revenue generated in the Oil and Gas market, it is largely at the mercy of the macro-economic trends and has to keep working hard to weather the storm.

Posted by Peter Roe at '09:49' - Tagged: acquisition   sofftware   risk  

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Monday 26 January 2015

AOMi and the changing value of ops management

LogoThe impact of the £5m investment operations performance management provider AOMi secured early last year (see AOMi bags £5m to scale the business) is apparent in its level of growth and strengthening pipeline, but its rise is also the outcome of good timing and a market maturing into the sector.

The company has seen a 40% increase in users of its cloud-based Workware software over a six month period, from new customer wins and increased rollouts. New clients include “three well-known banks” in the UK and Ireland and a major UK-based financial services processing firm, while on the international market, Abu Dhabi Commercial Bank (ADCB), Xchanging. Nedbank and Barclays Africa have all extended their usage.

The growth data underpins CEO Richard Jeffery’s view that operations performance management is beginning to move beyond the productivity areas of decreasing overtime bills or speeding up processes and is moving into strategic territory, as a tool for enabling business strategy and driving differentiation and competitiveness. In our view it plays a key part in linking strategy to execution because of its ability to span tasks ranging from matching work to capacity, to forecasting and optimisation to support transformation strategies. Its ability to bring a standardised approach to the management of business helps manage the practicalities of transformation and also dovetails into risk and compliance, which are both front of mind among C-level executives.

The change in perception of the operations management value proposition parallels changes in thinking around HR systems, with both taking on a more strategic position. It is early days for AOMi and other sector players such as eg Solutions, Verint and Nice in terms of the strategic shift but the market is opening up, as indicated by growth across the sector, and more direct sales and partnerships with consultancies and SIs for AOMi.          

Posted by Angela Eager at '09:46' - Tagged: software  

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Monday 26 January 2015

Arria NLG teams up with Watson

logoAn interesting snippet in today’s Regulatory News Service was the announcement that Arria NLG, an expert in Natural Language Generation Technologies, had entered into an early stage partnership with the IBM Watson Group. Arria NLG will be prototyping analytics products for oil and gas exploration and extraction in its work within the Watson Developer Community. At first sight the approaches of Arria NLG and IBM Watson appear complementary due to the joint focus on natural language systems.

The company has now been on the AIM for a year, signing a 3-year agreement with Shell, inking  a framework agreement with a major Canadian insurance company and working with the UK Meteorological Office and you can see our December annual results comment, here. Notwithstanding this progress the shares have consistently drifted down throughout the year to less than a quarter of its IPO price.

Looking ahead, we would look for further advances in the oil sector, the Financial Services industry and North America but recognise that Arria NLG shareholders will have to be patient. However, hitching a ride on the coat-tails of the high profile IBM Watson project looks like it could be a good idea.

Posted by Peter Roe at '09:36' - Tagged: analytics   big+data  

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Monday 26 January 2015

SThree pedals harder, works smarter

logoAs expected, there was a more nuanced story to tell at main market-listed, UK-headquartered, international recruitment firm SThree than portrayed in last month’s FY trading update (see SThree rockets ahead). Nonetheless, when it all washed through to the bottom line the result was an indubitable success, with net profits for the 52 weeks to 30th November 2014 more than doubling to £15.9m, on revenues of £747m, 18% higher yoy (Note: FY2013 was 53 weeks).

The nuances were in the way management mitigated gross margin decline (FY14: 29.2%; FY13: 31.5%) with smarter delivery, lifting operating profit by 56% to £24.5m, and expanding operating margins from 2.5% to 3.3%. This growth filtered down to EPS, which more than doubled to 11.9p per share.

There were also nuances in regional performance, with SThree’s core UK market – still the largest geo region – recording gross profit decline, albeit by 2% to £58.9m. And although gross profit grew in every other region – most notably the US (+59%) – gross margins declined in every region. The UK now represents 30% of group GP (FY13: 31%), while ICT recruitment – the UK heartland – fell from 43% to 39% of group GP. This should be read as a success story in sector and geo diversification, by the way.

The underlying message is that the UK remains a very competitive recruitment market, with little headroom in fee rates for either contract or permanent placements. ‘Pedal harder, work smarter’ remains SThree’s mantra.

Posted by Anthony Miller at '08:35' - Tagged: results   recruitment  

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Monday 26 January 2015

Netcall calls H1 in line

lAfter starting the current financial year off well (see here), Netcall, the customer engagement software/SaaS provider, is continuing to trade in line with expectations for H1. Cash is also on the up reaching £13m as of 31 December, up from £11.4m six months earlier.

Netcall said it has achieved ‘significant interest’ in its next generation cloud-based Liberty customer engagement platform. Apparently, there are good levels of cross and up-sells from its existing customer base.

Getting new and existing customers to move across to Liberty is going to be critical to success, as is the development and/or acquisition of new functionality to ensure Netcall stays ahead of the competition (see Netcall takes on social media Sentiment).

Posted by John O'Brien at '08:23' - Tagged: saas   software  

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Sunday 25 January 2015

Fight to save Entrepreneurs Tax Relief

CGTI’ve run many campaigns in my time, but the one I claim was most successful concerned the introduction of what is now referred to as the Entrepreneurs Tax Relief. Before 1997, the CGT you paid when you sold your business was the top rate of CGT you would pay on the sale of any other assets like shares. Indeed it was >60% at one time. My campaign, in part, resulted in Gordon Brown introducing a reduced 20% tax in his first budget which reduced to 10% a couple of years later. This was applied to the business founders and also applied to certain staff who had invested or obtained shares via options for which they worked. You had to own more than 5% of the equity but there was no limit on amount of relief you could claim. Against what one might have expected, in 2010 the Conservatives introduced a lifetime limit of £2m for the 10% rate – which, after much protest was raised to the £10m limit it is today. But that still provided great incentives for most entrepreneurs.

I admit I took advantage of that rate when I sold Richard Holway Ltd. At 10% it was just not worth trying to mitigate it as some of my friends had done in the 1990s by moving to tax havens when they sold their companies. Surely better to get 10% than nothing at all?

Anyway, it now looks as if the Entrepreneurs Tax Relief might be under threat again. The cost has increased from £475m in 2007-8 to £2.9b in 2013-14 according to the NAO. This is many times more than expected. The Lib Dems have already said they would curb the relief. A future Labour Govt is likely to either curb or tighten the rules. Even the Tories might see this as a revenue earner.

We really must resist this. I’ve started five businesses from scratch in my lifetime and I’ve never had any certainty at the start about what tax I might pay in decades to come when I realise the hard work and risk involved. Although I doubt entrepreneurs give much thought to tax at the start, they certainly think about it when they consider a sale. Any uncertainty about the future of Entrepreneurs Tax Relief will encourage owners to bring forward sales so they qualify for the existing rules rather than take the risk of a higher tax that might apply in a year’s time.

If we want a ‘Scale-up Britain’ then entrepreneurs need to have some certainty of future CGT rates.

Posted by Richard Holway at '10:05' - 1 comment

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Saturday 24 January 2015

Box - World Gone Mad

BOX15 years ago, in Jan 2000, I wrote an article entitled ‘The Emperor’s New Clothes’. It could just as easily have been entitled “Holway declares World Gone Mad”. Valuations of internet IPOs were ‘North of Stupid’ and had given up any link with normal valuation metrics. Indeed if you did make profits or generate cash, that was a big bad mark against you. Growth in ‘eyeballs’ was all that mattered.

I feel the same today about many so-called tech IPOs. But Box has surpassed even normal levels of lunacy. Their $14 IPO price had already put a $1.4b valuation on a company which has recorded a loss of $129m on revenues of $154m in the last 9 months. But investors went nuts for the IPO and the shares rose 66% on Friday giving Box a valuation of $2.7b.

This, if you remember, was the company that last week suggested that analysts disregard Sales & Marketing costs as these could easily be switched off to generate profits. Problem is that I’ve heard that from SaaS providers too – and they have suggested we ignore Development costs too! It’s all getting far too reminiscent of early 2000.

Now it’s not as if Box has a unique offering in the market. DropBox (planning its own IPO) is very widely used. Then there are the huge players like Microsoft, Amazon, Google and Apple who would all rather like you to use their cloud storage too and are quite prepared to offer it as a loss-leader. Nothing very technically special about cloud storage either. Indeed, most would consider it a ‘commodity’ now.

No better case of ‘caveat emptor”.

Posted by Richard Holway at '18:07'

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Saturday 24 January 2015

Disruption to hit Estate Agents

for saleWe have oft-written about the over-arching theme for our sector – Disruption. Technology, the internet in particular, has presaged huge change in almost every sector of our economy. In most cases the incumbent companies have either been ejected by the disrupters or have had to change massively just to stay in business.

When I bought a property in 2000, I signed up with every local estate agent who sent me printed brochures in the post. I also bought the local paper specifically for the property ads. I then arranged to visit via that estate agent who eventually agreed my offer with the vendor.

In 2013 when I sold that property and bought a new one, all my house hunting was online having registered with both Rightmove and Zoopla. But for the sale, I still used an estate agent who took the photos and arranged the viewings. But the cost of this was 1 ½% of the property price – about £12K. Amazingly this was about 6x my solicitor’s bill who undoubtedly did rather more work for my money.

On Monday, a new website, OnTheMarket will be launched. But it really does look like an anti competitive cartel. Setup by a group of leading estate agents, any property on their website cannot also be on both Rightmove and Zoopla.

At the same time a new online estate agency - HouseSimple – is launched with backing from Sir Charles Dunstone. HouseSimple has been banned from advertising on OnTheMarket. Only estate agents with physical offices can advertise.

There are many other new online estate agents – Emoov is the leader but also includes Purplebricks, Tepilo and easyProperty. Although < 5% of the UK market, their share doubled last year.

 HouseSimple charges an upfront fee of £475+VAT per property – which includes photos, advertising on Rightmove & Zoopla, viewings organisation and negotiations.  

I must admit it sounds appealing. With this kind of saving – and the generally low regard many have for estate agents – I suspect their cosy world is up for major disruption. And not before time.

Posted by Richard Holway at '08:21'

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Friday 23 January 2015

Now O2 and Three are engaged

threeo2Hot on the heels of BT and EE, O2 and Three are racing down the aisle to further transform the UK mobile landscape.  Li Ka-shing, (owner of Hutchison Whampoa and Three) is reportedly offering £10bn to Telefonica for O2.

Typically, Li Ka-shing is moving quickly, ensuring that his bid for O2 would not be seen by Ofcom as an anti-competitive step too far if the BT/EE deal had gone through. O2 and Three together would form the largest UK Mobile network. Three had already bought O2’s operation in Ireland. Telefonica which had earlier tried to get BT to buy its business rather than the Orange/Deutsche Telekom joint venture, needs additional funds to invest in Latin America and to pay down debt. So, regulator apart, this deal should progress smoothly, perhaps more so than the potentially more complex BT/EE move (see here).

The move to 4G with its significant increase in the number of cell sites and backhaul connections is driving costs up and price pressure remains intense, pressuring both margins and cash flow. Getting to scale is vital and these two moves to consolidate the business make good sense.

This latest bid could possibly slow down the whole process of change as the regulator now sits on the critical path and has much to consider. In reality, however, Ofcom has few options. Completely stopping one or both of the bids is unlikely, given the economic realities of the industry. The only alternative is probably to force either or both of the consortia to give away some spectrum – but who could use this capacity and make a decent return in the absence of scale? It looks certain that we will have a 3-way split in mobile telecoms (with Vodafone) sometime in 2015.

Posted by Peter Roe at '09:17' - Tagged: acquisition   mobile   network  

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Friday 23 January 2015

WANdisco asks investors to cough up … or else!

logoWhen application lifecycle management developer and ‘big data’ aspirant, WANdisco, reported its half-time results back in September, I ended my commentary (see WANdisco ploughs a deeper furrow) thus: “It may well be that WANdisco has two of the best products in the world in its respective segments, and if so, I guess they should plough on for as long as its banks and investors are prepared to plough in the dosh.”

A few days ago, our Enterprise Software & Application Services research director Angela Eager observed in her piece Diversity within WANdisco? that: “Something seems to be afoot at WANdisco … (despite) good wins, (it’s) burning cash and a long way from profitability”.

Today management asked investors to dig deep to the tune of (net) $25m, as the alternative “is likely to reduce the longer-term prospects of the Group.” The company is placing 4.8m shares (some 20% of WANdisco’s issued capital) at 375p, a 4% discount to yesterday’s 390p close. WANdisco’s shares listed on AIM in June 2012 at 180p (see WANdisco steps out onto the AIM dancefloor) and peaked at nearly £15 towards the end of 2013.

While newsflow on WANdisco’s ‘big data’ wins has recently been coming fast and furious (see British Gas goes live with WANdisco Big Data and work back), so have the losses. Management says it will cut costs accordingly.

The cast assisting founding CEO David Richards looks like an encore performance from Sage, with Paul Walker (ex-Sage CEO) as WANdisco non-exec chairman, Paul Harrison (ex-Sage CFO) as CFO, ably assisted by, Phil Branston, reprising his role as investor relations head. Though it’s nice to see ‘old world’ trying its hand in the ‘new world’, it would be even nicer if they could find a way for the business to make some money.

Posted by Anthony Miller at '08:59' - Tagged: fundraising  

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Friday 23 January 2015

Microgen gives up and hands out

logoJust over a year after the management of Microgen announced the results of a protracted Strategy Review, they have decided that one of their growth initiatives is going nowhere and have decided to return a significant slug of cash (£15-20m, or around 20% of market capitalisation) to shareholders.

Part of their grand plan had been to find acquisitions where they could add value. This was always going to be a big ask given valuations, Microgen’s narrow focus and the extent of competition for attractive companies. After failing to court Elektron Technology (see Elektron repels Microgen), the only success was to buy Unity Software in December for the less than princely sum of £1.3m, see here.

Elsewhere in their growth plan was the ring-fencing and re-financing of a Financial Systems business which would focus on the Wealth Management business but we remain concerned that this business is not moving fast enough to take advantage of the significant changes across this sector. Also their aspiring Big Data operation has made progress with Cloudera in Hadoop and a re-vamped accounting hub, as revealed at the nine-month stage, see here.

In any event, performance has been sufficient for the company to state that 2014 results, due late February, will be “in line with Board expectations” and that their operating business have progress towards their strategic objectives.

Notwithstanding this less than helpful statement, the management is at least to be congratulated in having a business that has been spewing out cash and for now having realised that the best option is to pay that cash back to shareholders, for them to invest. More focus on the operating companies could also lead to faster progress.

Posted by Peter Roe at '08:22' - Tagged: acquisition   big+data  

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Friday 23 January 2015

IndustryViews Corporate Activity 2014 Review

picUK software and IT services merger and acquisition activity reached a record level in 2014.

According to data from corporate finance firm, Regent Partners, M&A activity remained buoyant throughout the year despite occasional economic and geopolitical concerns. UK SITS buyers were particularly active with 377 buy-side transactions, up 11% on 2013.

Eligible TechMarketView subscription service clients can read our concise analysis of UK software and IT services trade and private equity M&A activity in 2014 by downloading our IndustryViews Corporate Activity - 2014 Review.

Posted by HotViews Editor at '07:55'

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