Ideagen is on the acquisition trail again but this time it’s set its sights on a more substantial purchase. The SME, which supplies information management software to highly regulated organisations, looks set to buy Gael, a supplier of governance, risk and compliance (GRC) software to the healthcare, manufacturing and aviation sectors, for a net cash consideration of £18m (the total consideration is £21m). Ideagen is funding the purchase via a ‘heavily oversubscribed’ placing that is set to raise £17.5m.
Gael is a similar size to Ideagen and has sound financials. It generated revenues of £8m in its last FY (to end Dec ’13) with a PBT of £1.4m, and is expected to deliver revenues of c£9m in FY14. In comparison, Ideagen turned over £9m in the year to the end of April 2014 with a PBT of £2.6m (see Ideagen’s organic growth boosted by NHS business). Both organisations are growing nicely organically – Gael has enjoyed 14% compound annual organic revenue growth between 2011 and 2014 and has recurring revenues of c£4.5m.
By bringing Gael into the fold, Ideagen will immediately gain scale, strengthen its management team (the CEO is staying on) and marketing capability, and add over 1000 customers to the Group. Just as importantly, Gael brings with it strong IP in the GRC area, enhancing Ideagen’s risk management proposition. The acquisition strengthens Ideagen’s position in the healthcare and manufacturing sectors (Gael has 130 NHS customers), and provides it with a strong entry into the aviation sector - Gael’s 300 airline customers include the likes of Emirates.
All things considered, Gael looks a good fit with Ideagen and very much in keeping with the latter’s strategy of acquiring businesses with strong IP and recurring revenues, in complementary markets. But this is a sizable acquisition – more of a merger of equals – which brings its own challenges. So far, Ideagen appears to be handling its rapid expansion via its ‘buy and build’ strategy admirably but the risks of quick expansion involving the integration of numerous acquisitions remain.
Posted by Tola Sargeant at '09:47'
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Hot on the heels of some very valuable contracts, with WPP, Thomson Reuters and ABN Amro, IBM has announced another nine data centres for its global cloud-computing network. This adds to the crescendo of activity as Amazon, Google and Microsoft all ramp up capacity. This investment will also improve IBM’s ability to store sensitive data in accordance with increasingly strict, country-specific privacy and banking regulations.
In our latest InfrastructureViews Market Trends and Forecasts report, available via this link, we predict good growth in the UK Cloud Services market. However, we shy away from the blockbuster forecasts of other commentators, suggesting a growth rate of around 10%p.a. is much more likely. Customers will require suppliers to operate in the “parallel universes” of supplying “old” infrastructure services alongside the “new” cloud-based offerings. Migration of large systems will take time, and the successful introduction of some cloud-based capacity will relieve some of the stress on legacy systems.
IBM, with its breadth of experience and customer base will be able to benefit from this trend. Cloud will bring some revenue growth and open up new customer opportunities, whereas the baseload of business in the “old” world should give margin and cash. The commitment to a cloud-based future and global coverage also ensures that IBM’s customers will be able to look to Big Blue for their longer term infrastructure strategy.
IBM has a balancing act to perform. It will not want to compete on price to fill its data centres quickly (it would almost certainly lose against AWS and Google), but rather build solid long-term business with the larger companies as they migrate their businesses over time. This strategy will not give immediate returns, but it should create a valuable silver lining longer term.
Posted by Peter Roe at '09:32'
TCS has already made it into the Top 3 in our Application Services supplier rankings (see ESAS Supplier Landscape 2014) but there is no let-up in its ambitions – it is after more growth and a more influential position within its customers. Delving into the business during an analyst event earlier this week, it was clear it has been pushing and pulling on its many business levers to align them to meet these aims.
We’ll provide a deeper dive into how TCS is faring in a report early in the new year but initial impressions from the event are favourable, with customers indicating they are viewing TCS as a strategic partner rather than purely a technology service provider and are trusting it with more transformation-style engagements. It has a strong digital proposition with an emphasis on convergence across the technologies but is also taking care of its core business while providing a bridge between the two areas. As highlighted in the ESAS Supplier Landscape 2014 report, we view this as a critical success factor in the digital transformation environment.
The higher TCS moves up the value chain, the more pressure it will be under to deliver at a pace customers need, to undertake more risk sharing, and come up with new pricing models that are appropriate for the digital environment. These are not small matters but it has resources and ambition to move them along.
Posted by Angela Eager at '09:17'
The clouds gathered at Oracle during Q215 but it was a positive gathering that showed the software giant was building this side of the business – and that the numbers of salespeople and engineers hired to boost cloud performance are delivering.
As one of the industry bellwethers, Oracle’s cloud shift is keenly watched for what it says about Oracle’s prospects as well as those of the market in general. OpenWorld this year was all about the cloud (see here) and Q2 (to November 30 2015) saw progress in cloud revenue. Combined SaaS/PaaS/IaaS revenue was up 45% but only to $516m, which is still a droplet compared to overall revenue that was up 3% to $9.6bn over the quarter. SaaS and PaaS totalled $361m, or 4% of total revenue, compared to 2% in the year ago quarter.
For Oracle, it is all about the future and beating rivals like Salesforce.com and Workday. Larry Ellison maintains Oracle is closing the gap on Salesforce and will catch up with it next year, basing the belief on new cloud bookings. “Total Q2 new cloud bookings grew at a rate of more than 140%,” according to the company. By Q4 this year it expects new cloud bookings to exceed $250m, with new cloud bookings expected to be over the billion dollars mark next year. That compares to Salesforce.com’s $1.4bn revenue in Q3 (see here) and fiscal 2105 revenue guidance of c$5.4bn - although its growth rate is slowing. There is no doubt that Oracle is making cloud progress but it has a long way to go. The main concern is that it wants customers to buy into a complete Oracle cloud stack (infrastructure to applications) which may be out of kilter with the open and mixed vendor cloud ethos.
New software licences were down 4% but support and maintenance was up 6%. Net income was down 2% to $2.5bn on the back of lower software sales, increased expenses and the effect of SaaS revenue.
Overall Q2 was a reasonable period (shares rose in after hours trading) and has restored some confidence in the company and its cloud shift.
Posted by Angela Eager at '08:45'
London may have its ‘Silicon Roundabout’ and Cambridge its ‘Silicon Fen’, but it seems that Brighton has a Silicon Beach! For that is where the headquarters is located of international social media monitoring SaaS platform, Brandwatch, which has just made it first acquisition, that of London-based analytics startup, PeerIndex. Terms were not disclosed but the rumour mill pitches the deal at some £10m, mostly in Brandwatch shares.
Founded in 2005, Brandwatch attracted a couple of ‘angel’ funding rounds before receiving $1.5m Series A investment from media monitoring group, Gorkana (recently acquired by US-based peer, Cision). This was followed in 2012 by a $6m investment from Nauta Capital and, in May 2014, a $22m Series B round led by Highland Capital Partners, with Nauta and other existing shareholders also participating.
During this time Brandwatch has opened offices in New York, San Francisco, Berlin and Stuttgart, has grown to over 200 employees, and is reported to have achieved revenues of £13m in 2013. Clearly the sea air is very good for its health!
Posted by Anthony Miller at '08:19'
Although I have much of the latest technology from Apple and now Windows 8.1, I still use my tried and tested Blackberry Bold. I find my iPad +Blackberry the perfect traveling companions. I much prefer the physical keyboard for emailing over any touchscreen. I also like the long battery life. Of course, everything else on the Bold is rubbish - hence the iPad!
I’ve been waiting a long time for today’s launch of the new Blackberry Classic and it looks good. Almost identical to the Bold but with a 3.5inch touchscreen as well as the physical keyboard, two cameras, faster processor, 16gb and a much faster web browser (well, it couldn’t be any slower!) It claims an impressive 22 hrs battery life too. Price is c£350.
The FT states "At its peak in 2008, BlackBerry accounted for one in every five smartphone sales and had a market value of $80b, compared to $5b today'. I don't think the Classic is going to change that in any significant way. As The Telegraph finished its review ‘If you have to have a Blackberry, the Classic is brilliant. If you don’t, it’s an irrelevance’.
Posted by Richard Holway at '16:37'
Many of you know, or might even belong to, the Worshipful Company of Information Technologists – the 100th City Livery Company. I’ve been a Freeman since the 1990s and became a Liveryman a few months back.
I was therefore delighted to accept an invitation from the new Master – Nic Birtles – to address the next Business Lunch to be held @ 12.15pm on Wednesday 11th Feb 15 at Saddlers Hall – the magnificent mansion house a few yards from St Paul’s Cathedral.
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. Nic has particularly asked speakers to address future trends for the industry and I intend to do that in a Year 2000, Year 2015 and Year 2030 format or “Where we were, Where we are and Where we are going”.
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 '14:53'
Education systems and solutions provider Tribal looks set to miss its profit target for the full year having failed to achieve key contract milestones and completions before the year end. Only last month Tribal seemed confident of meeting expectations (see Tribal in line for full year). The Group’s shares fell 11% in early trading on the news and are currently trading at around 145p.
On the bright side, it seems to be largely an issue of timing - Tribal expects to benefit from the deferred contract milestones and completions early next year, setting it up for 2015. Tribal also reports contract successes in two of its international markets. It has signed an AUD$19m (c£10m)/5-year deal to deliver its student management system across all Technical and Further Education Institutes in the state of Queensland in Australia. And secured its second major student management system customer in Canada, the University of Alberta in Edmonton.
Despite the ‘extendable’ contract award timelines, international education markets continue to offer attractive growth prospects for Tribal. There was no news today, however, of its progress in the UK market, which accounts for around three-quarters of its turnover. Tribal currently sits at #4 in TechMarketView’s UK Education SITS supplier rankings but risks losing market share if management is too focused on international ambitions.
PublicSectorViews subscribers can download the UK Education SITS Supplier Landscape Report 2014-15 here for more detailed analysis of Tribal and its rivals. If your organisation doesn’t yet subscribe to PublicSectorViews and you’d like details of our subscription packages just drop a quick email to Deborah Seth in our Client Services team.
Posted by Tola Sargeant at '09:42'
It is reassuring to see stalwart EDP changing with the times as it transitions to recurring revenue and hosted provision but the changes put pressure on the company in FY14 (to September 30 2014) with more to come in FY15.
Revenue for the provider of software and services to the UK wholesale distribution industry and of more horizontally targeted sales software solutions was down yoy from £5.8m to £5.5m, due to delays to orders in H1 (see here). Pre-tax profit was down sharply to £40k (from £794k) however.
EDP was impacted by the shift to recurring revenue - now 80% of the total vs. 77% - but management says the effects will be more evident in 2015. Add that to pricing pressure on its products and the expected loss of £300k in 2015 following the move by a major customer to acquire a competitor software business, and the rest of the current financial year is looking tough. EDP has responded by cutting £200K in costs, and investing in lead generation. It is also growing its hosting service which now represents over 50% of revenue for the first time. While the outlook does not look comfortable, EDP has survived major industry changes during its long life, so may well have the experience to do it again.
Posted by Angela Eager at '09:35'
Unisys has said that Peter Altabef will join the company as President and CEO from January 1st. In a previous life, Altabef was CEO of both Perot Systems and MICROS Systems (acquired by Oracle), and President of Dell Services.
Altabef takes the place of Ed Coleman who left earlier this month. On Coleman’s watch, the company frequently dipped in and out of quarterly losses – but always managed to close each year since 2009 with a net profit. However, during Coleman’s time, Unisys shrank quite notably. In 2008 revenue was $5.23bn (net loss of $130m), but just $3.46bn in FY13 ($92m net profit). During that period, services revenues slumped a chunky 35% to $4.6bn. And the ups and downs have continued this year. Take its Q3 for example; not a bad performance, but one that was blighted by a weak H1. It is this inconsistency that is the company’s core challenge - and the likely undoing of Coleman.
There are certainly some gems inside of Unisys, for example see Unisys has early success with next-gen HOLMES. But it is its overall performance that needs fixing. Altabef must like a challenge because getting Unisys into a shape that will enable it to produce consistency of performance is going to be one tough job.
Posted by Kate Hanaghan at '09:21'
Capita’s shares unexpectedly rose over 6% yesterday. Shares in the UK BPS market leader have been on a downward path since their high of £12+ in September, and concerns about 2015 growth in public sector have not helped (see here).
There are a few encouraging announcements that may have helped. Capita’s under-performing insurance services business announced an important three-year renewal with insurance customer Hiscox, which should help restore some confidence to the division, which has been in continual decline now for some time (see Capita continues to outperform ‘the rest’ (update)). Capita may also be experiencing some uplift from rival insurance BPS player Quindell’s ongoing crises (see Quindell hits the skids).
Capita also acquired managed print services player Complete Imaging Ltd (Complete) for an undisclosed sum last week, which has customers including Money Advice Trust, Kings College Cambridge and South & City College Birmingham. According to accounts filed with Companies House, Complete had revenue of £10.1m in FY13, up 17.8% on FY12, and pre-tax profits of £1.3m.
Then there is the website Create Tomorrow, which is a real change of direction for Capita into tech innovation (see here), showing where it is placing its bets, and in some cases already working for customers. It explores wearables, customer experience-led service design, payment innovation, game science, behavioural science and analytics, robotic process automation and mobile innovation. The most recent update is RPA. Alongside technology from Blue Prism, Capita is referencing case examples by our Little British Battlers (LBBs) Genfour and Celaton, which are clearly now on its radar (see Little British Batters - the Fourth Generation).
Most of these innovations are themes we are predicting for 2015 (see Predictions 2015: Business Process Services). But as we point out, the key to success is all in ‘Joining the Dots’.
Posted by John O'Brien at '08:54'
The word tripping off the tongues of most suppliers these days is ‘digital’. It means different things to different people but one thing is clear – supplier activity is driven by the race for change around digital transformation. The latest report from the ESASViews research stream - Enterprise Software & Application Services Supplier Landscape 2014 – assesses the progress of the leading suppliers to the UK market and the critical digital success factors.
Speed, approaches and progress vary widely but there are some common themes. For suppliers, digital progress revolves around the intelligent provision of the technologies and services needed to enable digital transformation. The stakes are being raised however, because it is now also about the convergence of the various technologies (cloud, mobile, big data/analytics and social/collaboration), which is akin to keeping bucking broncos under control. This is driving diversity of performance - not just between suppliers but within suppliers. Another prominent theme is the criticality of providing bridges between legacy and digital environments – which aligns with the TechMarketView theme for 2015: Joining the Dots.
With traditional ESAS areas in a low/no growth rut, suppliers have to get digital strategies right in order to remain relevant in the market. The challenge is gauging the pace and matching investments, commercial models and the product and service business mix so that revenue continues to flow from traditional business areas, while digital-related revenues ramp up.
Subscribers to ESASViews can download the report here. If you do not take our services and would like to know more about them Deborah Seth will be happy to help.
Posted by Angela Eager at '08:46'
Following a brighter first half (see eg Solutions goes positive on all metrics in H1), AIM-listed back office optimisation software provider eg solutions (EGS) has raised cash and eliminated debt through a share placing and redemption of outstanding loan notes. The board has also reappointed founding ex-CEO, and current acting-CEO, Elizabeth Gooch, as full-time CEO once again. Get it? Got it. Good!
On the financial side, EGS is to place 4.9m shares at 65p (an 8% discount to last night’s 71p closing price) to raise £3.2m gross. The funds will be mainly used to bolster staff recruitment, sales & marketing and R&D, with what looks like the balance of about £1m going straight to the balance sheet.
In addition, the holders of the £550k of outstanding convertible loan (10%) notes – mainly EGS chairman Duncan McIntyre and Aspect Software CTO, Spencer Mallder (see eg sets poor example on profits and gains new Aspect) – will convert their entire holding at 50p per share, leaving EGS without debt. After the placing, Gooch remains EGS’ largest shareholder, though her stake will be diluted from 32.2% to 23.5%. EGS directors will then hold a total of 38.4% of the share capital.
The company also reiterated its forecast for an ‘in line’ FY.
It would be fair to say that EGS has had not the plainest of sailing in recent times, both financially and at Board level. Let’s see if the ‘refreshed’ Board and the extra cash can set them back on course.
Posted by Anthony Miller at '08:21'
Lastminute.com is synonymous with the dot.com crash of 2000. It is also synonymous with its two founders – Brent Hoberman and Martha Lane Fox. They have both gone on to great fame and, one assumes, fortune too.
But that is not exactly what one can claim for Lastminute.com. At its 2000 IPO it was valued at c£770m. It crashed soon after as the dot.com bubble burst. In 2005 Lastminute.com was bought by Sabre for £600m and today they sold it to Bravofly Rumbo Group (a Swiss travel company) for £76m – about half the rumoured price back in Sept when Oakley Capital was considering a bid.
Lastminute.com was itself a ‘disrupter’ but then found its business model was all too easy for others to copy so, in a way, the disrupter itself got disrupted. It then failed to move with the ever increasing pace in the ‘Race for Change’.
As Hotviews readers know, we have a bit of a ‘thing’ about companies that make profits and generate cash. Many seem to criticise us for having such old-fashioned ideals! As far as I can see, Lastminute.com has hardly ever made a profit. Mind you neither have most of the other disrupters either. But, one day, they will have to or join the 90% Club like Lastminute.com, Bravofly itself and so many other ‘froth stocks’ you read about on Hotviews.
‘When will they ever learn? When will they ever learn’
Posted by Richard Holway at '18:56'
I’m always happy to report IT job creation in the UK – particularly at entry-level. Accenture has today announced that it will hire 1,600 in the UK in the next 12 months. Most of these are for those with established skills. But a fair number are for both graduates and apprentices. Indeed I have reported several times about Accenture’s Technology Apprenticeship programme. Today’s announcement talks of 60 apprentices – but I think these are a restatement of previous announcements eg at the launch of the Tech Partnership.
Happy to give HotViews space for any other companies creating similar numbers of new jobs in the UK. Just send me an email on firstname.lastname@example.org
Posted by Richard Holway at '18:29'
As in dashes for cash, dilutes the stock, and delays forecast break-even – not a ‘good look’ for London-headquartered ‘advanced surveillance technologies’ firm, Digital Barriers.
The company has just announced a placing of some 20m shares at 37p (no discount to last night’s close) to raise net £7m. The placing represents nearly 31% of the issued stock and will be used partly to keep the business running and partly to strengthen the balance sheet. Further, new CEO, Zak Doffman, has delayed his forecast of reaching break-even until the end of FY16 (31st March). Digital Barriers’ share price has fallen nearly 80% so far this year.
First half net losses almost doubled to £13.1m, exceeding revenues (see Digital 'Barriers' to profitability remain). At the time, Doffman was confident that they would meet FY expectations. Which FY now?
Posted by Anthony Miller at '09:14'
BT has moved quickly to choose between its two eager suitors, see BT- about to choose a bride?, and has turned its attentions exclusively onto EE. As we have suggested, this is where the hard work starts as the stakeholders work out how to combine the two businesses without destroying value. The indicative price for the deal is £12.5bn, that’s 7.9x EBITDA or over £500 per customer, so BT looks prepared to pay well to get back into mainstream mobile where growth and margins are under pressure.
BT predicts synergies from network and IT rationalisation and there should be savings available in network elements such as backhaul. However, securing IT savings on a merger is notoriously difficult. EE is already an amalgam of two companies’ systems and linking into BT’s system stack will take time and effort. We would expect the two operations to be run as separate entities for some time, unifying the brands and sorting out the systems over the next couple of years. Realising earlier savings could prove difficult and risky. This will also reduce the potential returns from any “quad play” moves, a major strategic rationale of a deal.
Of course, this dalliance may not lead to a marriage and BT still has its fall-back strategy based on its broadband hubs, but this looks unattractive in comparison with the acquisition alternative. With O2, the shunned suitor, now available after its parent Telefonica has apparently tried hard to find her a new home, we could see further changes in the mobile landscape in the New Year.
The BT and EE teams will be working hard over Christmas to make the numbers and the strategy add up, but BT’s longer term future should be much rosier with a strong mobile offering.
Posted by Peter Roe at '09:10'
Scisys, the supplier of ‘bespoke software systems, IT based solutions and support services to the media broadcast, space, government, defence and commercial sectors’, is now adding retail to that list with the acquisition of web and mobile application developer Xibis Ltd.
Scisys will pay up to £3.2m in cash and shares for Leicester-based Xibis, including £800k cash up front and further cash payments depending on performance. Scisys is paying over 3x expected FY14 revenue of £1m (25% up on last year). Xibis is also expecting a £200k PBT in FY14 vs. a £20k loss last year.
Xibis specialises in developing web-based and mobile apps for UK retailers like Halfords, Interflora, Thorntons, as well as names like Seat, NFU Mutual and Forte. It is now moving into mobile iBeacon technology for some of its retail sector customers, which Scisys sees giving it a play in emerging 'Internet of Things' applications. Chairman Mike Love said ‘These technologies will eventually be adopted by Scisys' traditional client base allowing for significant cross-fertilisation between the businesses’. We would agree that view, but of course the timing and rate of adoption will be the big unknown.
We have met several retail technology players through our Little British Battler (LBB) programme (see LBB - the fourth generation). TagPoints, one of our Fourth Generation LBBs, which also develops beacon technology for retailers, was acquired by SmartFocus in September (see here). So we can see consolidation now starting to take place.
Scisys is taking a small bet on this emerging sector, where there are real innovations taking place. It seems one well worth taking.
Posted by John O'Brien at '09:03'
As 2014 draws to a close, we reveal our analysis on the trends that will impact the UK Infrastructure Services Market over the next three years.
While the “Race for Change” will continue to impact both the market and industry, our theme for next year - “Joining the Dots” - brings the opportunities around digital transformation into focus. In infrastructure services this about how you create better customer and end user services; how you ‘Join the Dots’ between old world legacy systems and new world services; how you bring clouds together; and how you make systems work better together through advanced automation. This is a huge opportunity for suppliers.
In "UK Infrastructure Services Market Trends & Forecasts" (authored by Research Director, Kate Hanaghan), we define and explore the key Market Shaping Trends, namely:
The infrastructure services market is large and accounts for c40% of the total UK Software and IT Services market. However, it is struggling to grow. Our forecast model helps suppliers pinpoint the areas of opportunity to 2017, and understand the areas that are in decline.
Subscribers to our popular InfrastructureViews research stream can read the report in full here: UK Infrastructure Services Market Trends and Forecasts 2014-15.
If you would like to become a subscriber, please contact Deb Seth
Posted by HotViews Editor at '08:59'
In our UK Healthcare SITS Supplier Landscape 2014-15 report we said that newly-listed Servelec, which sits at #25 in our UK healthcare SITS rankings, had no shortage of ambition and could well re-enter the top 20 next year, possibly with the help of acquisitions. Well, it now looks certain to climb the rankings following the acquisition today of social care application provider Corelogic for £23.5m (£14.5m in cash, £6m in loan notes and £3m in shares).
Corelogic is a sizable addition for Servelec as it delivers on its strategy to expand into adjacent, complementary markets. In the year to end August 2014, Corelogic had revenues of £9.6m (up 25% on the prior year) and a PBT of £1.4m. In comparison, Servelec’s healthcare business turned over around £15m in FY13. Together the two businesses have a stronger proposition for the UK market, bringing together Servelec’s offerings for community and mental health with Corelogic’s adults and children’s social care case management software, and associated financial modules. This is a good fit with government policy, which is driving closer integration of health and social care services and systems interoperability.
Of all the social care application providers in the UK market, Corelogic is a sensible choice. Its modern software seems to be proving popular with local authorities – it won 9 out of 11 tenders for which it competed last fiscal year. Corelogic now has a 20% market share in social care and is used by 50% of Local Authorities in London, where Servelec also has a strong presence. As part of a larger group, it should become an even stronger competitor to established players such as OLM and Northgate.
Posted by Tola Sargeant at '10:02'
Last week we launched TechMarketView’s theme for 2015, Joining the Dots. This theme reflects our belief that we will see a massive increase in the number things connected to other things and/or the internet. ‘Joining the dots’ will offer significant opportunities to suppliers of software and IT services to the UK market – though financial rewards will not be quite so obvious or swift.
TechMarketView’s research directors have recently presented their predictions for 2015 around this theme for their respective market segments and sectors: Infrastructure Services; Enterprise Software & Application Services; Business Process Services; Public Sector software and IT services; and Financial Services Sector software and IT services. I have extracted the essence of these predictions into some closing thoughts. The highlights are shown below, but subscribers to the TechMarketView Foundation Service can read the full screed here.
‘Mobile’ is a given – think ‘micro-mobile’
Although ‘transforming the customer experience’ through mobile devices has barely got underway, attention is already shifting to micro-mobile devices – basically, sensors – to take this to the next level. The combination of even smaller and ever cheaper technology, faster and more pervasive networks, advanced visualisation software, and massive data repositories and sophisticated analysis tools, will elevate the ‘customer experience’ to something previously only imagined in the realms of science fiction, if not fantasy.
New technology alone cannot join all the dots
Legacy back-end systems developed years (if not decades) ago were never designed to process the volume of transactions – and the ‘richness’ of transactions – initiated from millions of mobile devices let alone billions of micro-mobile devices. No amount of new ‘front-end’ technology will fix this as it is the cause of the problem. Bullets will need to be bitten – sooner, rather than later.
‘Digital’ is a symphony, not a solo
The ‘digital revolution’ has spurred the creation of a new breed of consultancy – the so-called ‘digital media agency’ – which tries to bridge the gap between IT design and marketing advisory. Some are start-ups, purpose built for the role. Many are simply rebrands of existing web design companies and PR agencies.
This mix of skills is generally not found in traditional IT systems integrators or for that matter, in traditional marketing and advertising agencies - no existing player is yet able to go truly ‘solo’ in the digital world. Therefore we are seeing a coming together of old world and new world through commercial partnerships and full-on acquisitions. Both come with risk, especially when the companies involved are of significantly different size and culture.
The more dots you join, the greater the risk of disconnection
The sense of urgency in ‘joining the dots’ – and the inherent complexity in doing so – leaves organisations open to increased risk. We have seen this many times before with legacy, mission-critical systems failing after a ‘routine’ software upgrade (no names, no pack drill). These risks are multiplied exponentially as you interconnect more systems, old and new. Radically different development and testing technologies and processes will need to be established to reduce the risk of system collapse and to make service interruptions all but invisible to its users. This is indeed rocket science.
Switch to automatic
In order to join all the (appropriate) dots without proportionally increasing the number of people involved in joining them, you just have to automate wherever you can. Automation simplifies complexity and eliminates the mundane. But only to a point.
The CIO shall reign forever and ever (Hallelujah!)
The role of the CIO is certainly not dead. Each turn of the technology screw makes the ‘IT ecosystem’ intrinsically more complex, not simpler. Someone has to actually ‘join the dots’ and that’s the CIO. By the way, someone also has to carry the can when it all goes horribly wrong; that’s the CIO too!
Show me the money
Please, do try to make some money out of all of this. Both the software industry and the IT services industry are undergoing transformative changes in commercial engagement models (e.g. ‘pay as you go’, ‘outcome-based’) and product/service delivery models (notably ‘cloud’), with dramatic - in some cases catastrophic - consequences for revenue growth and profitability. By definition there can only be one winner with ‘first mover advantage’. Everybody else needs to stick to business basics and (re)learn how to turn revenue into profit and profit into cash.
Posted by Anthony Miller at '09:58'
Cohort, the independent technology group working primarily for defence (air, land and sea), wider government and industry clients, has had delivered a strong performance in its H1 to end October 2014. But the improvement was primarily driven by one of its four market-facing subsidiary companies: MASS.
Total Group revenues were up 13% to £37.6m, while adjusted operating profit increased 34% to £2.5m. Despite making two acquisitions during the year, this also represented organic growth. MASS, which focuses on electronic warfare support and secure information systems in the defence market, accounted for 41% of revenues in the period, and increased revenues by 31% to £15.6m. Last week we reported that MASS had won three new MoD contracts – see MASS thriving in land of the giants.
Across the other divisions, performance was not quite as rosy – revenues at SCS, the defence technical advisory business, were slightly down; and SEA, the advanced surveillance systems and software house, also had lower revenue (£12.2m vs. £14.0m) after disposing of its space business but adding system and in-service support provider, J+S, into the fold. Meanwhile, MCL (Marlborough Communications Ltd) was new to the Group (acquired in July) and made an initial contribution.
The outlook is good. Order intake (in addition to orders acquired) is up 80% at £64.5m. And crucially, £44.1m of the order book is deliverable in H2. When added to the recently announced MASS contract wins, that means 88% of the consensus forecast revenue is underpinned for the full year
Posted by Georgina O'Toole at '09:45'
A post from Mobile Cloud Labs (MCL), a specialist developer of software for mobiles and tablets caught our eye this morning. The announcement itself was just that management has approved the audited accounts for 2014 for the company, who listed on the GXG Market in 2013. The consolidated results were a sea of red in terms of profit and loss, although FY14 losses reduced substantially €261K vs. €675K) despite it being a year of hard work setting up its back-end infrastructure, and revenue figures were not included. The back-end work is preparatory to a “spectacular roll-out” in 2015 according to CEO Richard Sylvester.
At the moment MCL is building mobile applications covering identity theft prevention and location based apps – but they are only a means to an end. It will use the data gathered from these applications to support its aim of transitioning to a targeted mobile ad company. Its goal is to enable advertisers to target their ads to pinpoint locations, at the right time, via the planned AdAbouts platform, and track the process from ad impression to point of sale.
This is an interesting interpretation of a data driven business we have written about previously in ESASViews and hooks into the expected demand for location based mobile apps and ‘micro-moments’ (see Predictions 2015 - ESAS). While the use of mobile apps as a means to gather data to create a mobile ad operation makes me uncomfortable (although the company is clear about its plans on its web site, I wonder whether users who sign up to its apps will be so aware), MCL is not the only company collecting mobile data and offering targeted mobile ads. It will be interesting to see how it develops and if it can differentiate itself from both direct competition and the digital marketing agencies who are moving into the ESAS market.
Posted by Angela Eager at '09:44'
IBM has been chosen as the preferred supplier for the NHS’ Electronic Staff Record (ESR) contract ahead of Steria and CSC, which were also shortlisted. Upon contract award, the ESR service, which is critical for the NHS’ payroll, will transition from incumbent supplier McKesson to IBM. McKesson unexpectedly withdrew from the re-procurement of the £200m-£400m ESR contract in June having announced plans to divest of its UK businesses (see McKesson exits ESR bid process).
This a significant win for IBM, which is likely to push it from 12th place in TechMarketView’s UK Healthcare SITS rankings into the Top 10 (see the UK Healthcare SITS Supplier Landscape 2014-15 Report if you’re a PublicSectorViews subscriber). IBM is no stranger to the UK healthcare market but it took a step back from the sector when it failed to win any National Programme contracts (in hindsight many would see this as a lucky escape!). It has been quietly building up its UK healthcare business again since 2009 and had success at the local level in 2012, signing an IM&T deal with University Hospitals of Leicester NHS Trust.
The ESR contract is a sizeable central deal in the health sector and strategically important to IBM, but transitioning such a critical system to a new supplier is not without risk. It’s interesting that the Department of Health has felt moved to reassure users that the transition will be ‘carefully planned’ to ‘ensure a seamless transition’. Let’s hope that Steria and CSC don’t have reason to consider they’ve had a lucky escape further down the line.
Posted by Tola Sargeant at '09:30'
In an investor concall last Friday, TCS signalled a weaker UK market, although Europe as a whole was growing ‘better than average’. Management attributed the weakening to ‘seasonality and impact of Insurance’.
According to my estimates, TCS UK grew by 12.2% yoy in Rupee terms last quarter (to 30th Sept) vs 16.6% in Continental Europe. This translates to 9.4% yoy growth in GBP, and is the seventh consecutive quarterly decline in UK growth from its 30.8% peak in the Dec. 2012 quarter. Over the past 12 months, TCS UK revenues have grown by 12% to reach £1.54bn, making it the largest of India-base peers by far (see OffshoreViews).
The underlying issue is with Diligenta, TCS’ UK life and pensions (L&P) business process services subsidiary, established in 2006 on the back of the £486m, 12-year landmark contract with Pearl to manage its closed book policy business. TCS went on to win a similar deal at Friends Life in 2011, worth £1.4bn over 15 years (see here).
But the thing about closed book contracts is that policies (and therefore revenues) run off, so we can only assume that TCS has not been winning enough new business to top it up. Indeed, a subsequent contract to support Friends Life’s international L&P activities (see TCS scores first ‘international’ deal at Diligenta) was solely for the use of TCS’ banking software, BaNCS, not for business process services, though the application will be hosted by TCS in the UK.
TCS is not the only game in town in UK L&P, with Capita and WNS very much in the frame. Subscribers to TechMarketView’s BusinessProcessViews research can read much more about the players in the UK market in our recently published report, UK Business Process Services Supplier Landscape 2014.
Posted by Anthony Miller at '09:04'
Audioboom is the SaaS based digital social media audio platform listed on AIM with the marvellous ticker of “BOOM”. The company has recently made a series of announcements showing rapid progress in building its network of content partners and in opening up new opportunities to increase its revenue potential.
At the half-year results in August, Audioboom had 2.8m registered users of its App (now available on iOS and Android) with content partner websites increasing the number of active users to 12m. The number of content partners now tops the 2,000 mark, covering an eclectic mix of music, sport and news with rapid growth in the US. Audioboom works with its partners to deliver their content through media platforms such as Facebook and Twitter. The management expects that the principal revenue driver will be the delivery of advertising which is tailored to the individual user in terms of his location and what he/she is listening to.
Audioboom’s “cleverness” is in its ability to learn the preferences of its listeners and to tailor content accordingly and it is this capability that will be used by Audible Books (an Amazon subsidiary) to present book recommendations to users, with Audioboom receiving a revenue share.
At the interims, revenue was just £24k, with losses of £698k. In October the company raised £8m via a placing to fund future growth.
As with many such platform plays, the secret of success is not necessarily in the technology, but in the ability to build a connected ecosystem quickly and to deliver a service effectively to large numbers of users, taking a relatively small turn on each transaction (you can see this approach in what Monitise is doing in e-commerce). Audioboom seems to have made a sound start.
Posted by Peter Roe at '08:37'
It is less than three weeks since BT revealed that it is talking about taking over a mobile business (see our HotView, BT- One ring to bind them all), sending the shares up 10%. Rumours have since circulated about Board decisions and the willingness of both potential partners (O2 and EE) to take BT shares. Now the head of Telefonica is reported to have flown to London for crunch talks (as seen on Reuters). According to unnamed sources quoted in the Reuters article, BT is on the verge of choosing a preferred partner.
It would not be a surprise if BT were to announce the move to detailed discussions with one of the candidates. However, a lot of work will have to be done before any deal is agreed. Telecoms companies are complex beasts. In addition, O2 has had 12 years within the Telefonica Group and will have built many internal links and dependencies. EE, jointly owned by Orange and Deutsche Telekom is probably an even more complex spaghetti of internal relationships.
The regulator will also have something to say, although his hands are somewhat tied due to his earlier decisions. Ofcom had always taken the perverse view that the mobile and fixed markets are separate when determining the extent of BT’s dominance in fixed-line and broadband.
We look as if we will be witness to a crescendo of speculation and activity in the run-up to Christmas, but it is worth remembering that these are likely to be only the first steps in a long process. All-in-all however, getting back into Mobile with a scale offer certainly makes long term sense for BT, so it should be worth the effort.
Posted by Peter Roe at '09:47'
Adobe has moved past the pain point in its bold move into subscriptions and is showing signs of much better health as the number of subscribers to Creative Cloud and Digital Media continues to accelerate.
In Q4 (to November 28 2014) recurring revenue was up to 66% of the total, vs. 44% in the year ago quarter. At $1.07bn, revenue was at the high end of guidance and net income rose from $65.3m to $73.3m. Raising income is quite an achievement in a subscription-heavy environment, and Adobe also had $1.15m of deferred revenue. For the full year revenue hit $4.1bn vs. 4.0bn although net profit dropped back somewhat from $289m to $253m. Adobe’s confidence is starting to come through, as it expects revenue to grow sequentially in every quarter during FY15, where it had been in decline across much of 2014 and 2013 (see here).
The company is also making moves to build closer relationships with its subscribers with the $800m cash acquisition of stock photo provider Fotolia. With stacks of designers and photographers within Adobe’s customer base, the addition of this photo marketplace and will make Adobe’s Creative Cloud a ‘sticker’ place – and show the value of providing content alongside software functionality. Autodesk also moved into the stock photo content market in early 2014 - and stepped up its competitive stance against Adobe - when it bought Creative Market, so Adobe’s move is also part of the competitive arms race.
Posted by Angela Eager at '09:45'
Arria NLG, a company developing Natural Language Generation Technologies, has just completed its first year as an AIM-listed company. Revenue for the year was steady at around £0.8m with EBITDA losses of £6.5m, down from nearly £10m in the previous year. Shares now stand at c. 40% of their debut level.
The company signed a 3-year decision support contract with Shell in the first half, see here, and has since made significant progress, setting up a collaboration project with a major financial services company and working with the UK Met Office to provide narratives in on-line weather forecasts. Contracts have also been signed with a supplier to the aviation industry and with Farmlink, a US firm that benchmarks agricultural production.
The wide range of use cases shows the potential of Arria NLG’s technology, helping to make sense of the tsunami of data that is becoming available (and as highlighted in TechMarketView’s Joining the Dots theme). Arria NLG’s technology seeks to support conventional analysis, by embedding the analysis process in software and then using more software to communicate the information and any relevant insights using natural language, either in spoken, or written form.
The management are wisely focusing additional effort into the energy and financial services sectors as it would be very easy to chase opportunities on a broad front. A studio has also been set up to support developers and to turn leads quickly into potential deployments, with a drive towards packaged solutions.
The contracts signed will be providing some cash as will a recent £3m convertible loan deal, but funding the company’s development will need careful attention. Arria NLG appears to be making headway in a very interesting and potentially lucrative area, but patience and nerve will be necessary.
Posted by Peter Roe at '09:02'
Enterprise cloud collaboration provider Huddle has secured $51m in a Series D round of funding, which will be put to use to double the size of the London-based product development team and support further expansion in North America and Europe.
This is the largest investment round Huddle has secured – the three previous rounds totalled $38m. It was led by Zouk Capital who is better known for its investments in energy and resource efficient firms (e.g. solar panels, reusable energy) than IT. According to Zouk, “Huddle it is a great example of a company that meets Zouk’s resource efficiency investment thesis: recognizing that not only should we be doing more with less, but that resources, processes and systems are more connected than ever.” Huddle certainly fits with the TechMarketView 2015 Join the Dots theme which is all about multiple connections via the cloud, across multiple ‘things’ from devices, to datasets to process and people – see here.
It has been another double digit revenue growth year for Huddle, with sales to government and to business services companies (e.g. professional services, accountancy) expanding rapidly. The combination of high growth and the number of companies investing in the collaboration market (Microsoft, Google, Dropbox, Box), means it is an expensive place to be but Huddle believes this will be the last round of funding before it moves into profitability, which is expected to be the back end of 2015. An IPO is still on the cards for at some point after that, although Huddle is not rushing towards a public listing.
Posted by Angela Eager at '08:53'
Following an initial £3m funding round led by Scottish Equity Partners (SEP) in 2011 (see IndustryViews Private Equity Q3 2011), Nottingham-based healthcare and pharma software and IT services (SITS) company, Exco In Touch, has just raised a further £3.2m in a round this time led by Albion Ventures. SEP also participated and remains Exco’s largest shareholder. Exco was founded in 2004 by a group of doctors and now has 75 staff and sales offices in North America.
Despite the fiasco that was (and to some extent still is) the NHS National Programme for IT, the UK healthcare sector is ripe with opportunity for SITS suppliers. George Osborne’s Autumn Statement last week promised an additional £2bn of funding for the health service every year and an additional £1.5bn for GP services. This ties in with the National Information Board’s eagerly anticipated ‘framework for action’, entitled Personalised Health and Care 2020.
TechMarketView PublicSectorViews subscription service clients can read our assessment of the framework in our new report, Personalised Health & Care 2020: SITS Implications & Opportunities. It’ll be good for your health!
Posted by Anthony Miller at '08:32'
Hot Views readers will know we’ve been following the apparent rise and rise of Quindell over the past three years. But it really does seem like the wheels are now coming a bit loose on this auto insurance business process services provider (see Quindell eating humble pie and work back).
Renewals announced with Swinton an Insureinthebox were completely overshadowed by founder Rob Terry’s latest move, slashing his stake in the business from 8.7% to under 3%. Share trading was suspended numerous times yesterday as Quindell’s stock went into freefall and lost c45% of its value, to hit a new low of 25 pence. They have since recovered some ground to reach 37 pence on Friday.
Terry was ousted as exec chairman last month after directors’ ‘opaque’ share dealing came to light alongside the revelation that joint broker Cannacord Genuity had resigned a month earlier (see Richard Holway’s views Knowing ‘right’ from ‘wrong’).
If that wasn’t bad enough, former City minister Lord Myners is now calling for a Government investigation ‘relating to possible market abuse’ by Quindell (see here).
Only time will tell whether these latest incidents turn out to be just a series of minor prangs for Quindell, or a full blown RTA (road traffic accident).
Posted by John O'Brien at '08:14'
TechMarketView’s theme for 2015 of Joining the Dots is particularly appropriate for the Financial Services sector where the competitive landscape is being transformed as technology advances, devices proliferate and as more and more data is available.
Established companies need to join up the dots more quickly so that their huge IT investment can provide the type of customer experience and informed decision making that customers increasingly expect. At the same time they must deliver the cost savings, efficiencies and control demanded by the competitive and regulatory environments. In 2015 we expect faster progress– otherwise incumbents will see their markets taken over by nimble newcomers who have joined the dots in new and imaginative ways.
In 2015 FinancialServicesViews will be exploring how suppliers can support sector participants, old and new, as they deploy all this new technology to build, or hold, market positions. We expect to see the following key themes:
- Focus on customer experience: Customers demand seamless, joined-up communications across multiple channels with their FS provider. Getting this right drives higher revenues and lower cost due to channel shifting and straight-through-processing.
- A move to “Systems of Engagement”: Replacing siloed databases and enterprise applications with “joined-up” systems enables the use of Big Data and analytics techniques and improved operational productivity
- Faster rationalisation of system portfolios: Big FS players will improve agility, improve response times and lower cost by further reducing the number of systems (and suppliers) that they use.
- Greater use of cloud: To deliver change and growth, FS players need more agile, flexible and cost-effective infrastructure. Cloud Services are the answer and 2015 will be their year.
- Greater focus on value add by the FS players: This will drive greater use of standardised software and OpenSource, with more and more functions delivered “as-a-Service”, increasingly by third-parties.
Subscribers to FinancialServicesViews and MarketViews can read about these Predictions in full here: Predictions 2015: Financial Services. You can also join the debate on Twitter using #TMVJoiningtheDots or #TMVPredictions2015.
If you do not currently have access to the FinancialServicesViews research stream and would like to, please contact Deb Seth.
Posted by Peter Roe at '08:00'
European TMT deal flow unexpectedly dropped by 26% in November according to latest data from corporate finance firm Regent Partners, but a higher number of billion-dollar-plus in Continental Europe deals resulted in an increase in the total value. Deal flow has been very strong throughout 2014 with only the usual seasonal drop in August breaking the trend until November. Valuation multiples of trade deals continued to improve, tracking the upward trend in the listed UK tech stocks as represented by the TechMark index, which gained 6% in November.
One of the largest deals on the Continent was the $3.7bn cash acquisition of US software and IT services (SITS) company, Sapient, by French marketing communications company, Publicis. This is an interesting reversal of the growing trend for SITS players acquiring (usually small) ‘digital’ marketing agencies in order to access and increase their influence with Chief Marketing Officers, perceived to be where the ‘action’ is for new IT spend.
The eye-catching deal in the UK last month was the ‘take private’ of UK buy-and-build software and IT services firm, Advanced Computer Software by Vista Equity Partners (see here). The acquisition valued ACS at £725m, over 20x its valuation when tech entrepreneurs Vin Murria and Michael Jackson relaunched the company six years ago by reversing privately held primary care software firm Adastra into an AIM shell (see OoH...Vin is back!). A result!
As ever, eligible TechMarketView subscription service clients can catch up with the UK software and IT services corporate activity scene every quarter in IndustryViews Corporate Activity.
Posted by HotViews Editor at '07:50'
Software and IT services (SITS) suppliers have been developing ‘Smart Cities’ propositions for some time. But while some have made progress in Continental Europe, opportunities in the UK have proved elusive. This is not because of lack of interest - the Smart City ‘agenda’ has been on the table for many years in the UK. But a combination of political, economic and technological factors has recently changed the discussions from the hypothetical to the possible.
In this research note we outline the Smart City strategies of three leading SITS suppliers – IBM, HP and Microsoft – and consider when they might start to see ‘Smart Cities’ contracts generating meaningful revenues in the UK.
PublicSectorViews subscribers can download the research - Smart Cities: SITS supplier propositions - here. If you don’t yet subscribe to our PublicSectorViews research stream and you’d like to know more, please contact Deb Seth for details.
Posted by Michael Larner at '16:14'
In the UK public sector, though the General Election will bring uncertainty and interrupt momentum in the early part of 2015, most organisations – whether Whitehall or in the broader public sector – are aware that more radical transformation is required if they are to continue delivering public services while constraining spending. As a result, during 2015, we will see an ‘invest to save’ ICT mentality penetrating more and more public sector organisations. However, this will all be happening in the context of an increasingly complex supplier and technology landscape, exacerbated by the fast introduction of new digital technologies. So, the Government (whoever is in power) will spend 2015 revisiting some of the assumptions put in place over the past few years, particularly in terms of commercial and procurement models.
TechMarketView’s 2015 theme ‘Joining the Dots’ will be extremely relevant in the public sector in 2015. It will be a year defined by public sector organisations trying to seek out the best approaches to enable increased collaboration – ‘joining the dots’ - between public sector organisations, with external organisations (including suppliers and the third sector), and with citizens. Finding ways to enable the sharing of data, as well as opening up Government data, to allow this ‘joining up’ to occur, will be a particular feature of the year. Here we outline what we think will happen.
The General Election & the age of austerity: Austerity continues. Transformation is required across the public sector as budgetary cuts bite harder. But more creativity is required to cut costs while improving public services. The General Election will bring uncertainty; public sector organisations will be reluctant to embark on new initiatives and this will bring more frustration for suppliers. But in the second half of 2015, focus will need to return to the ‘digitisation of government’ and the continuing move to eliminate Government silos through the joining up of people, processes and systems.
The re-rise of the systems integrator: Over the past year, we have witnessed a step change in attitude towards the large systems integrators. From collectively being on the ‘naughty step’, the Cabinet Office has accepted that they require suppliers with deep knowledge of the public sector to guide them on what will be a difficult transformational journey over the next few years. In the world of ‘digital’, systems integrators will be the bolt that holds everything together and helps the public sector ‘Join the Dots’. The large SIs are taking this approach to developing their business outside of Whitehall as well – using their integration skills to, for example, take data analytics capabilities to the table and open up new opportunities.
SMEs as subcontractors: SMEs will still have a significant role to play in the public sector. Indeed, digital transformation requires input from smaller firms with different capability sets. However, as projects scale up, i.e. move on from the pilot or proof-of-concept stages, or require more complex integration with other systems, larger providers will be asked to take SMEs in as subcontractors. This will increase the focus in 2015 on how to ‘join the dots’ between large SITS companies and SMEs and improve their working (and contracting) relationships.
Procurement & commercial models will evolve: The procurement environment in the public sector is renowned for being complex: multiple frameworks, diverse supplier arrangements and various contracting models. Suppliers and customers are often flummoxed by the array of options. Digital technologies – social, mobile, analytics, and cloud – are set to call into question some of the procurement and commercial methods currently in favour. During 2015, we expect public sector organisations to carefully consider the procurement and commercial structures currently in place and start to favour those that fit with the long-term view of the digital transformation journey, while offering the most effective route to ‘joining the dots’ between different technologies and between numerous ICT services providers.
Increased collaboration a necessity, not a luxury: ‘Joining the Dots’ between public sector organisations, even within the same region, has been one of the most problematic issues faced by the Government. Barriers to moving away from the historic silo mentality have been political, cultural and legal, rather than technical. Attempts to implement formal shared service arrangements have suffered from a lack of organisational buy-in and have not progressed as fast as hoped. The one ‘ray of light’ has been the Troubled Families programme, which by focusing on the complex needs of one citizen group, has made considerable strides in a short space of time. There now seems to be acceptance that collaboration initiatives from 2015 onwards need to have specific goals to drive momentum.
Subscribers to PublicSectorViews can read about these Predictions in full here: Predictions 2015: Public Sector SITS. If you do not currently have access to the PublicSectorViews research stream and would like to become a subscriber, please contact Deb Seth.
Posted by Georgina O'Toole at '09:06'
Having launched back in 2005, the pace finally seems to be hotting up at Reading-based executive search SaaS developer Invenias. The company has bagged a further $2m in funding just nine months after a similar size investment round (see SaaS headhunter Invenias recruits another $2m). Like last time, the funding was led by existing investors MMC Ventures. Invenias will use the money to expand in the US, with a new office opening on San Francisco early next year. Good stuff!
Posted by Anthony Miller at '08:55'
The staid HR market has been shaken up by bold SaaS HR newcomers and Fairsail is one of those market shakers. Despite its size, it is not afraid of going up against the giants and better-funded competitors.
It is not hard to grow on a rising tide and from a low base but revenue growth of c150% over the last financial year still stands out (recognised revenue not billings or run rate). Reflecting the level of business activity, staffing levels have tripled over the past year and CEO Adam Hale says the company could grow faster but it wants to keep cash under control. Prudent growth is refreshing from a pure SaaS company and bodes well for sustainable, and hopefully profitable, performance.
For LBB’s, financial metrics are only part of the mix. Fairsail has several ingredients in its secret sauce. It is dedicated to HR so can concentrate on usability and depth, and is tightly focussed on the mid market of 500 to 5000 employees. The smart part of its market position is that it brings an affordable solution to multi-national mid-sized companies, an expanding target market that is poorly catered for. Businesses are waking up to the need to manage their workforces strategically. Finding that traditional HR systems are becoming more unfit for purpose, they are turning to the new entrants who take a Systems of Engagement-type approach to HR.
Fairsail is a small player in a competitive market so its needs friends. Building on the Salesforce.com Force.com platform puts it within a technology ecosystem but it has also quadrupled its own partner ecosystem over the past year, working with a range of suppliers from specialist cloud integrators such as CloudSense, to larger SI’s. With a gang of SaaS-savy SI friends Fairsail’s opportunities will open up.
Posted by Angela Eager at '08:49'
Following the news that he was set to leave Computacenter after 20 years, Daisy Group has announced that Neil Muller will be joining as CEO in February. As anyone will know, leaving somewhere after such a long time for pastures new can be challenging, but we think Muller’s made a good move.
There is no doubt the new role will present some real challenges. In October, Daisy finalised a deal with a consortium of buyers consisting of Toscafund Asset Management, Penta Capital and Matthew Riley - Daisy’s CEO and founder. The plan is to take Daisy into the private domain and conduct some pretty ‘major surgery’ to transform it into a growing, profitable ICT provider. At the end of the last financial year (end March), revenue was flat at £352.7m and operating losses widened from £16.8m to £17.9m. Furthermore, since it listed in 2009, Daisy has spent c£280m buying 22 businesses. So there is a lot to be done in terms of transforming the company.
Riley will become Executive Chairman, working with Muller and the management team on the company's strategic development and growth. Muller played a key role in establishing Computacenter’s UK services business, which has been churning out good growth rates for several years. Daisy will want him to help recreate that type of performance while evolving the managed services capability.
Of course, what is also very interesting is what happens next in terms of acquisitions. We know Daisy is keen to go big and various target rumours are currently doing the rounds. Interesting but very challenging times lie ahead for Muller. But aren’t those always the most fun jobs?
Posted by Kate Hanaghan at '08:37'
Preston-based MotionLab is a digital design and marketing agency providing the typical range of branding services around e-commerce, online marketing, PR, creative design and so on. Over the past year, the company has been developing a new digital dashboard for customers, named orvelo. orvelo can pull together data relating to sales, sales enquiries and marketing to help companies understand success and demand by geography and product line. Target markets are single users who are trying to understand the success (or otherwise) of their multi-channel marketing campaigns, and national businesses that want to understand geographical sales/leads patterns.
Currently, people who want to understand the effectiveness of their marketing campaigns can login to multiple tools and build a picture by pulling together those separate components. orvelo can bring all of that information into one place, giving a real-time view of enquiries and leads. Ironically, one of MotionLab’s target markets is fellow marketing agencies who want to speed up and automate their marketing report processes.
orvelo is still in its early phase of development, and much is planned for next year in terms of developing the product and growing the business. What we like about MotionLab is that it is using its specialist knowledge as a marketing agency to create a neat solution for its customers and peers alike.
We'll have more on MotionaLab in the Little British Battlers report, out in January.
Posted by Kate Hanaghan at '08:30'
“Being an entrepreneur is tough … you have nothing but your own sheer grit and expertise to pull you through.” So begins the poignant – and perhaps final – blog entry written by Karen Paterson, founder of Jersey-headquartered HR and payroll product and services firm, Acrede, which has just been acquired by US accounting software giant, Intuit. Terms were not disclosed. Paterson founded Acrede in 2010 and now has some 80 employees, and offices in mainland UK, Singapore and Tenerife.
The HR and payroll services market is one of the oldest in the UK and is now particularly lively as the suppliers face up to the ‘digital revolution’. Subscribers to our BusinessProcessViews research stream can read what TechMarketView Research Director John O’Brien sees as the way ahead for the players in our new research note, HR Services - avoiding the traps and pitfalls in the digital world. Clicked and can’t see it? Then contact Deb Seth who will explain how to lift the veil!
Post Script: As the esteemed George O’Connor of Panmure Gordon pointed out, perhaps this was one that should have been on Sage’s radar? Very good point!
Posted by Anthony Miller at '08:15'
We didn’t think we’d get excited about the processing of expenses claims, but that is exactly how we felt after meeting Little British Battler (LBB) Software Europe last month. The team at Software Europe, led by CEO Neil Everatt, are passionate about their five cloud-based products, which each support a traditionally paper-heavy, manual back-office process and transform it into an efficient, smartphone enabled service. That passion is contagious.
Software Europe started life in 1989 reselling other peoples’ software before reinventing itself in 2000 as a ‘cloud technology solution innovator’. Its flagship product, the online expenses platform Expenses, was launched in 2002. But the real breakthrough came when it entered the UK healthcare market in 2009. Today the NHS is Software Europe’s biggest customer. It now has 155 NHS organisations as clients (c65% market share) and derives just over half its revenue from the sector.
The Lincoln-based SME has a good spread of customers in other sectors too, including household names such as Fitness First, Manchester United Football Club and River Island Clothing Co. But it is Software Europe’s work in the healthcare sector - where it’s Expenses software has a bi-directional interface with the NHS’ payroll system the Electronic Staff Record (ESR) - that really sets it apart at the moment. One of Software Europe’s aims for the future is to diversify further into other sectors, including the local government, education and legal markets.
Indeed, one thing that Software Europe is not short of is ambition. It is, for example, building on work it already does for Friends Life by launching a new business process service, Expedite, which will see it take on the expenses claims process from the scanning of paper receipts through to the payment of claims. It’s also on the lookout for acquisitions, investment and channel partners as it continues on its quest for further growth with the ultimate aim of becoming ‘a global provider of cloud technologies’.
Posted by Tola Sargeant at '07:30'
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