HotViews Archive

Skip Navigation Links.
Collapse 2016 (40)2016 (40)
Collapse February (40)February (40)
BT: a tale of two councils
11 Feb 2016
NGA HR: moving on automation, analytics and UX
11 Feb 2016
Making ThingWorx in Milton Keynes
11 Feb 2016
Proactis H1: growth slows
11 Feb 2016
Mixed Q2 results for Cisco
11 Feb 2016
Computershare beats Capita for ‘bad bank’ BPS
11 Feb 2016
Another new head for Infosys Digital
11 Feb 2016
CSC - read the words as well as the numbers
11 Feb 2016
#RIPTwitter
11 Feb 2016
System C to improve clinical comms with Careflow buy
10 Feb 2016
IFS on track with transition
10 Feb 2016
TechMarketView: Deepening our coverage in cloud, networking and security
10 Feb 2016
Francis Maude set to step into private sector
10 Feb 2016
Martin Courtney joins TechMarketView
10 Feb 2016
ARM exceeds but...
10 Feb 2016
Digital Shadows exposes $14m funding round
10 Feb 2016
FIS full year shows momentum in the UK
10 Feb 2016
TiZR gets $500k to share life’s private moments
10 Feb 2016
Indian startups have a ‘bar mitzvah’ moment
10 Feb 2016
NEW RESEARCH: NHS IT funding boost creates SITS opportunities
09 Feb 2016
NEW RESEARCH: European tech M&A deal volumes flatline
09 Feb 2016
NHS IT set for healthy investment as Hunt promises '£4.2bn'
09 Feb 2016
Sophos: working the rising security market
09 Feb 2016
PwC identifies with Praxism
09 Feb 2016
European Commission takes “first decisive step” towards Cloud
09 Feb 2016
Admedo adds $6m to the funding pot
09 Feb 2016
Prince's Trust in Space!
09 Feb 2016
Cognizant sets scene for slow year
09 Feb 2016
Yassaie steps down at Imagination
08 Feb 2016
BT CFO - a tough act to follow
08 Feb 2016
Telit opens Industrial unit as IoT market develops
08 Feb 2016
Serco ExperienceLab partners Vipera for FinTech UX
08 Feb 2016
Mortgage matchmaker Trussle brokers £1.1m funding
08 Feb 2016
Bursting of Bubble 2.0
07 Feb 2016
Blackburn no longer in-sourcing revs and bens software
05 Feb 2016
Digital and automation drive Genpact into double-digits
05 Feb 2016
Cash in, cash out at Symantec
05 Feb 2016
Tech Mahindra also pedals hard to stand still
05 Feb 2016
Nasscom downgrades forecasts – but still too high
05 Feb 2016
LinkedIn plunges - again
05 Feb 2016

UKHotViews©

 

Thursday 11 February 2016

BT: a tale of two councils

BT LogoBT is looking to fill gaps in its local government SITS revenue (see UK Local Government SITS Supplier Landscape 2015-16) and winning a contract, worth £9m, with Bromley Council will help, however criticism of its performance at Newcastle-under-Lyme Borough Council won’t.

From April BT will take responsibility for desktop services for Bromley’s 2,000 staff and the council’s 350 servers; with the aim of delivering 10% cost savings over five years. The contract was procured via the pan-London ICT framework which was set up by Westminster City Council with BT selected to deliver distributed computing and data centre services ( see Tri-borough IT services winners: BT and Agilisys).

Stephen Carr, leader of Bromley Council, commented that the framework "provides us with clear and transparent pricing and a more efficient and streamlined buying process, helping us to speed up the delivery of projects and save money." We expect BT will win more business via this framework because London’s councils have a history of collaboration, for example establishing the London Grid for Learning.

But the contract at Newcastle-under-Lyme Borough Council is more challenging. Normally a three year contract extension, worth £272K, would be cause for celebration. But when it awarded the contract, the council announced in an Official Journal of the European Union publication (see here) that ‘the original contract was not executed as anticipated due to technical obstacles’ but that terminating the current contract ‘would constrain other economic operators in delivering a better value for money solution’.  The council awarded BT the original contract (covering telecoms, data, wide area network and tier 1 internet feeds across multiple, geographically disparate sites and worth £302K) in April 2013.

While BT looks to win lucrative transformation deals it must try to ensure it doesn’t hinder its chances with performance issues elsewhere in its client base.

Posted by Michael Larner at '10:06' - Tagged: localgovernment   contracts   infrastructureservices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

NGA HR: moving on automation, analytics and UX

LogoWith the opening of its HR engineering and support hub in Bristol and the release of the latest version of its ResourceLink HR and payroll solution, it’s been a busy week for NGA HR. From our discussions with management it is clear there is more to come as it pushes forward with investment in automation, analytics and the all important UX area.

In our view ResourceLink is starting to come into its own – and the SaaS model has taken off. (Workday’s progress in the wider market and within NGA HR’s portfolio will have helped here). Available in on-premise, SaaS and managed service variants (using the same code base) there is about a 50/50 split between on-premise and SaaS among the customer base but NGA HR says it has not sold any on-premise solutions over the past 12 months in the UK. The SaaS HR market is crowded but NGA HR’s expertise is working in its favour.

The ResourceLink roadmap is rich in the important areas of reporting and analytics, user experience and integration which is another pointer to its strengthening proposition. A push towards standardisation is an important part of the execution plan and automation movement (see here). We can see progress here with work on defining 5 levels of detailed standardisation across its services and offerings, and releases such as the pre-configured/best practice ResourceLink Express which is a ready-to-roll solution. It is slower to bring analytics advances to the market but we would expect movement later this year as its starts to make use of the Jasper technology chosen as the analytics base.

Also noticeable, is an intensification of activity around the SME Moorepay business, which has a clear place in the overall NGA HR strategy. There is certainly opportunity in the SME market - as Access Group, Advanced Computer Software and Fairsail are finding. With its deep HR and payroll heritage NGA HR could expand significantly here - and without having to go up against the major SIs and consultancies - but it will still be tough going. 

Posted by Angela Eager at '09:58' - Tagged: software   bpaas   ApplicationServices  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

Making ThingWorx in Milton Keynes

ThingWorx logoInternet of things (IoT) specialist ThingWorx, based in Exton Pennsylvania, has been selected by MK:Smart to help facilitate the delivery of IoT applications from its data hub.

MK:Smart is an initiative, partly funded by HEFCE (the Higher Education Funding Council for England) and led by The Open University with BT, University Campus Milton Keynes and Milton Keynes Council. The initiative’s objective is to support economic growth in Milton Keynes with the utilisation of IoT technology.

BT and the Open University developed the MK Data Hub to process information being generated by sensors across the city. ThingWorx will transform the hub from data repository to a platform that will enable SMEs to develop apps and services based on the data being collected.

Milton Keynes is at the forefront of developing smart city solutions. Enabling SITS suppliers to rapidly create applications from data being collected will be critical to taking ideas from concept to reality.

Posted by Michael Larner at '09:54' - Tagged: ApplicationServices   SmartCity  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

Proactis H1: growth slows

Proactis logoSpecialist spend control and eProcurement solutions provider, Proactis, had a reasonably solid first half (to end January 2016). It signed 23 new logos (up from 20 in H115) and states that its order book and pipeline remains strong. Moreover, revenue growth continued – up from £8.4m to £8.7m, representing growth of 3-4%. Notably, though, this is a far cry from the level of growth achieved over its previous financial year. In FY15, organic revenue growth was 12%; and growth in the first half of that year was an impressive 18% (see Proactis – transformational first half).

Sourcing, spending and eprocurement are growth areas that are benefiting from the digital transformation agenda. But competition is hotting up. Indeed, Proactis highlights the “fragmented procurement technology market” as the reason why it is positioning as a consolidator in the space (after the year end, it purchases Due North, a provider of strategic sourcing solutions to the UK public sector – see Access Intelligence shifts sourcing assets to Proactis).

One of the more interesting parts of the Proactis business is its “strategy of automating trade and relationships between its customers and their suppliers through its supplier networking technology”. In the last six months it points to a contracted commitment from Screwfix to deploy the technology. There are numerous players – both large and small (often niche) – competing in the ‘e-marketplace’ space. Since SAP acquired Ariba it has reported strong growth in the number of buyers and sellers on its network. Meanwhile, other, smaller, players citing strong growth include e-procurement web solutions provider, Wax Digital, which was recently backed by August Equity (see August Equity waxes lyrical over Wax Digital); Little British Battler and SaaS provider of e-procurement and B2B marketplaces, Valueworks (see Little British Battlers Q1 2013) and Swedish e-procurement platform provider, EU Supply (see EU Supply seeking new growth in new segments). But EU Supply, too, has pointed to tough competition in some marketplaces. It all points to a period of further consolidation in this space.

Posted by Georgina O'Toole at '09:43' - Tagged: trading   eprocurement  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

Mixed Q2 results for Cisco

CiscoCisco saw its Q2 revenue rise by 2% to $11.8bn yoy, but the headline figure masks a 1% fall in EMEA sales and declines in its enterprise and data centre businesses.

Unadjusted net income grew 8% to $2.9bn, with router sales to service providers and mobile operators up 5% globally. These were driven largely by the CRS router product line and early momentum from an ongoing partnership with Ericsson, suggesting Cisco’s core routing business remains robust. Revenue from its flagship SDN enabled Application Centric Infrastructure (ACI) platform was up 100% to hit a $2bn run rate.

Cisco’s security business grew 11% in Q2, with deferred revenue up 26%. Sales of its advanced threat security and web security solutions increased 180% and 40% respectively, with revenue from the WebEx web conferencing platform up 17%.

Much of the growth came from the APAC, BRIC regions and Mexico however, with EMEA declining and North America flat. Cisco also saw a 4% decline in its switching business, blaming uncertainty in financial markets which caused customers to pause spending in the last few weeks of January.

The enterprise business was down 2% yoy, and data centre sales down 3%. It is too early to pinpoint any long term irreversible decline in Cisco’s networking hardware sales, or a premeditated shift in its priorities. But the company is certainly seeing strong growth rates in its software orientated businesses and is steadily broadening its product and service portfolio to expand its security, analytics, IoT (see Cisco buys Jasper for IoT management) and SaaS capabilities.

Q3 guidance is for similar 1-4% yoy growth, adjusted to exclude sales from Cisco’s now divested SP Video CPE business and account for a 2%, $250m-275m, bump from an extra week in Cisco’s reporting schedule.

Posted by Martin Courtney at '09:41' - Tagged: results   datacentre   Cisco   routers   switches  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

Computershare beats Capita for ‘bad bank’ BPS

lAustralian share registrar Computershare has won a major new business process services (BPS) contract, beating Capita to secure preferred supplier status on the UK Government’s ‘bad bank’ UK Asset Resolution scheme.

This is a breakthrough win for Computershare in the UK BPS market. Although the terms haven’t (yet) been disclosed it is potentially one of the largest BPS deals we have seen from UK Gov for some time.

The deal, expected to be signed by May, will see 1,700 UK AR employees based in Sunderland and West Yorkshire transfer to Computershare. It will then be responsible for administering £30bn worth of closed book mortgages from Bradford & Bingley (B&B), Mortgage Express and Northern Rock Asset Management (NRAM) over the next seven-years.

UKAR was formed in October 2010, following the taxpayer funded bank bailouts post 2008, to ‘facilitate the orderly management of the closed mortgage books of both B&B and NRAM to maximise value for taxpayers’.

The Computershare deal is very much a traditional non-platform ‘lift-and-shift’ BPO deal in that it involves the staff transfer, but does not require system re-platforming, as would be the case in platform BPO (see UK Business Process Services Market Trends & Forecasts, 2016). The aim of the game is to reduce the Government’s cost base and administrative burden.

This was one of Capita’s big pipeline deals heading into 2016, so the loss will come as a blow to the UK BPS market leader. The loss of the Civil Service Learning contract at renewal in December (see here), and the failure to secure the takeover of Xchanging (see CSC takeover of Xchanging unconditional), means Capita has had a disappointing start to 2016. Computershare meanwhile, has now confirmed its position as a significant new market competitor.

Posted by John O'Brien at '09:33' - Tagged: public+sector   contract   bps  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

Another new head for Infosys Digital

logopic

The omniscient Economic Times of India reveals that ex-Razorfish chief strategy officer, Scott Sorokin, has joined Bangalore-based offshore services major, Infosys, as its Global Head of Digital. It seems that Sorokin replaces ex-Mindtree VP Consulting, Amit Varma, who took over leadership of Infosys’ Digital Transformation practice for just 3 months last year and since hopped off to Accenture.

We don’t know whether Sorokin will report directly to Infosys CEO Dr Vishal Sikka, or perhaps to Infosys Consulting head Sanjay Purohit. Nonetheless, Sorokin’s ‘digital credentials’ look pretty solid, according to LinkedIn, so let’s see if he can stay long enough to bring a digital shine to Infosys’ somewhat faded analogue lustre.

Posted by Anthony Miller at '08:57' - Tagged: offshore   management  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

CSC - read the words as well as the numbers

logoThe truth is in the numbers, as I always say. But the evidence is in the words. That’s why I urge you to read the transcript of the CSC Q3 conference call in which CEO Mike Lawrie was his usual candid self in describing what his business is really all about.

The numbers say that (newly separated) CSC’s headline revenues were down 10% to $1.75b, much the same across its two business units, Global Business Services and Global Infrastructure Services. However, Lawrie had turned the prior year’s $314m net loss into a $43m net profit; ‘true’ operating margins are wafer thin but at least positive.

But read Lawrie’s words: “Revenue was lower (yoy) than we had targeted, as we did not see a pickup in consulting, staff augmentation and project-based work”. You don’t have to read between the lines to see how dependent CSC still is on bodyshopping. CSC has been hiring 400-500 people a week – and losing c.200 a week – to try to lift its skills base to go after higher value ‘transformative’ projects.

But those projects are small. “CSC also added 93 new logos in the quarter … the majority of these … were contracts below $10m in TCV”. He didn’t say how far below, but I’d hazard a guess that very few reached $10m.

And here’s the challenge – and it’s not just CSC’s: “(W)e signed an outsourcing contract I think it was 17 years ago and the (TCV) was $2.5b. We just renewed that recently and it's $600m; same surfaces.”

As CSC moves towards closure of the acquisition of Xchanging (start here) – and, by the way, the similarly sized Aussie IT services firm UXC (see here) – and finds a replacement MD for its UK business (see here), Lawrie’s job is far from done.

Posted by Anthony Miller at '08:33' - Tagged: results  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Thursday 11 February 2016

#RIPTwitter

TwitterI’ve not been kind in my reviews of Twitter over the years. See Twitter – The order is rapidly changin’ or just do an archive search*** Sure TMV uses Twitter (for free..) and we have thousands of followers. But I have always found Twitter so cluttered that extracting anything useful from it has been impossible. I thought I might be alone but even when I went to San Francisco last year, I met many who shared my view.

I guess I didn’t help Twitter’s PR when I gave some critical comments on the BBC News yesterday about how Twitter puts top tweets and video ads at start of timeline.

Last night Twitter announced Q4 results showing a 48% growth in revenues yoy to $710m but a loss of $90m  (albeit a bit less than the £125m loss last year. Twitter has NEVER reported a profit) But the news that user growth had stalled – 307m active users was the same as last quarter - really spooked an already nervy market. Shares have fallen 70% in the last year. That should be compared with Facebook which is still experiencing massive growth and now has c1.5b active users.

Twitter does have a strong core of loyal users. But that makes the introduction of new, revenue earning features even more difficult. Even minor changes to their beloved Tweets are greeted with disdain. Can you really see them welcoming intrusive video ads when they check their Twitter feed? Facebook users have accepted these in their feeds but Facebook has longer posts as a norm. Twitter is meant to be brief and a longer video ad just destroys the experience.

No wonder #RIPTwitter is trending.

*** Just a point about the HotView Archive. It’s only available to our paying subscribers. I use the Archive many times a day. The Search facility is really good allowing everything we have written (around 12,000 items), including HotViews posts and our detailed research, on a topic or company to be available in microseconds. The Archive is now a huge resource. I never go to a meeting or answer a query without checking it. Just email Deb - dseth@techmarketview.com – if you’d like to be better informed.

Posted by Richard Holway at '08:02'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

System C to improve clinical comms with Careflow buy

System CUK health and social care software provider System C has made another canny acquisition, its second since it was acquired from McKesson by Symphony Technology Group in 2014. It’s acquired SME Careflow Connect, developer of the Careflow secure mobile communications system for clinicians and care professionals. Although (we assume) small in monetary terms, Careflow is an important strategic acquisition for System C and could be a game-changer for the group.  The move comes less than six months after its last purchase, The Learning Clinic, which also ticked the ‘mobility’ box with its VitalPAC software for recording patient vital signs on the move (see System C goes mobile with The Learning Clinic).

However, Careflow is rather different from VitalPAC. Founded by Dr Jon Shaw and fellow clinician Dr Jonathan Bloor in 2007, the company was originally known as Doctor Communication Solutions. It has developed a secure, mobile communications tool that provides clinicians with real-time clinical alerts and allows them to manage referrals and handovers between teams, conduct confidential online patient conversations, and create lists of patients. It may sound simple but Careflow is reducing reliance on pagers, phone calls and unsecure internet services such as SMS messaging and instant messaging apps. In so doing it’s been shown to make significant improvements to care quality, efficiency and Trust finances – all things that are high priorities for today’s NHS.

System C will be integrating Careflow with its complete product set, including the Medway EPR software, VitalPAC’s mobile clinical support solutions, Liquidlogic’s social care record, the CarePlus child health system and Graphnet’s shared record software.  It’s a shrewd move that should bring benefits of improved workflow and co-ordinated care across the health and social care arena in regions that use software from the System C Group. With interoperability and mobility high on the agenda as the government pushes for closer integration of health and social care, System C is well positioned to benefit as the market evolves (see also the UK Public Sector SITS Supplier Landscape report).

Both System C and Careflow are longstanding Microsoft partners and the acquisition will also strengthen System C’s presence in the Azure cloud.

Posted by Tola Sargeant at '09:54' - Tagged: health   acquisition   socialcare   mobility  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

IFS on track with transition

IFS logoSwedish ERP software provider IFS is on track with its plans to shift its revenue mix away from consulting and focus on growing its partner ecosystem (see IFS holds steady; progress within the business). In FY15 license revenue rose by 14% yoy to SKr 682m and maintenance by 6% to SKr 1.17bn, while consulting revenue grew by a modest 2% (SKr 1.52bn). Overall net revenue rose by 5% to SKr 3.4bn and adjusted EBITDA was SKr 428m. (All quoted figures are currency adjusted).

According to IFS, new partners joined its partner ecosystem every month during 2015. In addition, the Partner Academy is creating a global pool of IFS-certified consultants.

IFS reported a low level of customer churn and new customer additions during the year despite its customers being adversely affected by falling oil prices and the downturn in demand for commodities. In the UK, new customer additions (during Q4 alone) included Babcock Marine Division, Bibby Offshore and Auto Windscreens.

The fact that IFS has grown its customer base when its clients face significant challenges is a glowing endorsement of its capabilities and confirms it will continue to be a challenger to the likes of SAP and Oracle.

Posted by Michael Larner at '09:51' - Tagged: erp   strategy   resullts  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

TechMarketView: Deepening our coverage in cloud, networking and security

As the market continues to be heavily disrupted by new technologies and a desire by organisations to embrace digital transformation, TechMarketView will be deepening its analysis to help our clients understand the challenges and of course the opportunities. 

I have joined TechMarketView as Principal Analyst and will be focussing on three of the most dynamic areas of the technology market – cloud, networking and security – and their integration into IT and communications services that offer value for business customers and competitive advantage for suppliers.sdn

TechMarketView expects to see increasing demand for hybrid cloud platforms amongst UK organisations over the next few years. More IT departments will migrate existing applications and services off their legacy on-premise systems and onto cloud infrastructure which gives them the flexibility and agility they need to host and provision virtual workloads more cost effectively.

But the nature and scale of that transition makes it far from easy. Each individual organisation has different requirements around data protection, and application/service performance and reliability. Many also want to make cloud applications and services available to employees wherever they are, and from whatever device - fixed and mobile - they are using via wired or wireless connections.

The underlying network and security architecture, whether implemented in centrally hosted data centres, local customer premises and branch offices, or the end user device itself plays a crucial role in meeting those needs. And suppliers need to make sure they keep pace with innovation to stay ahead of their rivals.

Looking at how the use of software defined networking (SDN) and network function virtualisation (NFV) within data centre and network infrastructure can help to speed up application and service provisioning and reduce supplier opex is a good place for me to start.

But I will be keeping a close eye on many market trends and assessing where other emerging cloud, networking and security technologies have the potential to significantly disrupt current IT service provision and vendor go to market strategies.

I look forward to speaking with TechMarketView’s many clients and welcoming new ones on board!

Posted by Martin Courtney at '09:42' - 1 comment - Tagged: cloud   security   networking  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

Francis Maude set to step into private sector

Maude photoThe Financial Times (FT) has reported that Francis Maude is set to step down “pretty soon” from his role as Britain’s Trade Minister. Many of our readers will have their now-infamous “Maude Moments” ingrained in their minds. The Top 20 ICT suppliers to UK Government were all called in front of Maude during his time as Cabinet Office Minister. It was an experience that most do not recall fondly. Maude was tenacious in his determination to push through civil service reforms. But a large proportion of the efficiency savings achieved under the five years of the Coalition Government were largely as a result of contract cancellations, supplier renegotiations and a different approach to IT contracting.

Maude has been Trade Minister for less than a year. He was appointed in May 2015 after he moved from the Commons to the Lords (see Maude will be tough act to follow). He will now take on roles in the private and not-for-profit sectors. The FT has already called into question why he is leaving now. Last year the UK’s trade gap in goods widened “to a record £125b” (though this was partially offset by a £90b surplus in services). Maude, himself, told the FT this was “not good”. However, Maude claims he had “done the diagnosis and prescription piece of the job” and it is the right time to move on. It all sounds very familiar. Maude moved on from his role as Cabinet Office Minister just as things were getting tough; the low hanging fruit had been picked. Many of the foundations had been put in place but there was still much to be done.... Surely others will also question Maude’s timing.

Posted by Georgina O'Toole at '09:26' - Tagged: public+sector   centralgovernment   appointment  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

Martin Courtney joins TechMarketView

martinWe are incredibly excited to announce that Martin Courtney has joined TechMarketView as a Principal Analyst.

Martin has covered the ICT market for many years, working as both a journalist and an analyst. He has deep knowledge of cloud services and enterprise/telecommunications networks and their underlying security infrastructure.

TechMarketView’s research theme for this year is “Surfing the Waves of Disruption” and Martin will be helping our clients understand what is an incredibly dynamic and of course highly disrupted market setting. He’ll be pointing out the opportunities to address and the pitfalls to avoid, and providing in-depth competitive intelligence.  

If you’re already a TechMarketView client, Martin is on hand to answer any questions you might have.

In the mean time, you can read Martin’s own introduction to TechMarketView here, see his profile here; or read his recent report: SDN/NFV to boost cloud service profit margins.

Posted by HotViews Editor at '09:24'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

ARM exceeds but...

armI’ve been an ARM fan and shareholder for over a decade during which my investment is up ten-fold. I oft refer to them as the UK’s best tech company. But the sentiment surrounding Apple and its ‘slowdown’ in iPhone sales infects ARM too.

ARM’s results this morning were both good and exceeded expectations – despite that ARM shares are down c5% this morning or 14% YTD. Q4 profits were up 17% at £138.7m and annual PBT rose 31% to £414.8m. Revenues up 14% at $407.9m in Q4 and 15% up in the year to $1,488m (ARM reports profits in £ and revenues in $). 4b chips containing ARM technology were shipped in Q4 – up 16% yoy.

ARM had anticipated the much written about slowdown in smartphone sales. 55% of sales are now for non-mobile usage like to IoTs. But CEO Simon Seagars said on CNBC that ‘Smartphones are getting more sophisticated and the opportunity to put more power in these products is going up’. This is clearly an opportunity for ARM as the top end of the market is where all the profits are for ARM and Apple.

So, there you have a world-beating UK HQed tech company producing excellent results with an equally impressive outlook…and the shares still tank. I think it gives a bad name to markets and more significantly the so called experts who call the shots. Yet again, they seem incapable of differentiating the good from the bad so follow the herd and categorise everything tech as ‘bad’ - because that is the sentiment of the day. If ARM is ‘bad’ then God help the rest.

Posted by Richard Holway at '09:08'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

Digital Shadows exposes $14m funding round

logoLondon-based startup Digital Shadows, apparently ‘the only company to offer organizations cyber situational awareness’, has raised $14m in a Series B funding round led by Menlo Park-based prolific investor, Trinity Ventures. Existing investors Storm Ventures, TenEleven Ventures and Passion Capital also participated, along with new investor Paladin Capital Group. Storm led an $8m Series A round for Digital Shadows in February last year.

Digital Shadows scans the web (light, dark, all shades between) to see if a company’s confidential data has been posted online. It also checks for chatter about potential security threats. This is not entirely automatic – Digital Shadows has a team of analysts “filtering and vetting the harvested intel to cut out any false positives”, according to a TechCrunch interview with Digital Shadows co-founder and CEO Alastair Paterson.

One wonders, then, whether it is this reliance on human intervention that will provide Digital Shadows with its biggest challenge to scale up quickly. Clearly they will need to beef up the ‘smarts’ in their software faster than they bring new clients on board if they are to beat the people-based ‘linear growth’ problem.

Posted by Anthony Miller at '09:03'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

FIS full year shows momentum in the UK

logoFIS, the US-headquartered banking services and software provider, announced 2015 results showing revenue up 7% to US$6.6bn, generating EBITDA of US$2bn (up 5.5%), with EBITDA margins down 2 percentage points to 30.6%.

The highlight of 2015 was the acquisition of Sungard which was completed at the end of November, expanding the Group into the adjacent markets of wealth management and investment banking and broadening the addressable market. Sungard will add around US$2.8bn in the next full year, without a major hit on EBITDA margins according to company guidance. FIS expects to exceed US$100m of synergies this year and US$200m next.

Integrated Financial Solutions (60% of the total) grew by 2% in 2015 as payments solutions declined slightly but the banking business did better. Recurring revenue accounted for 88% of this division’s total which returned a 40% EBITDA margin.

Global Financial Solutions grew by 15.7% in constant currencies (+6% reported), with a 23% EBITDA margin. Europe (c.13% of the Group total) grew by 25%. This was despite the problems in the CapCo consulting operation (with a large London operation) which returned mid-single-digit growth and margins were hit due to a poor revenue mix. Management changes have apparently addressed the problem, but the upturn will only surface in the second half of 2016.

Elsewhere in the UK, Sainsbury’s is rolling out a new FIS bank platform (FIS has been Sainsbury’s banking technology provider since 2013) and Atom Bank, launching this year, will use FIS’s systems to support a new twist on customer engagement.

As our September HotViewsExtra discussed, FIS is looking to make significant advances in the UK where the head of steam already built up will be boosted both by the Sungard deal and the need for change across the banking sector.

Posted by Peter Roe at '08:39' - Tagged: software   platformbasedBPO   legacy   banking  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

TiZR gets $500k to share life’s private moments

logoThe tagline on its website reads “You’re at a sick party, watching your favorite band LIVE, having a #greattime with your #bestfriend…” which is apparently exhortation enough to motivate you to livestream the occasion through the app developed by London-based startup TiZR.

Or you could use Periscope, Meerkat, Facebook, and who knows how many other livestreaming smartphone apps.

But clearly there are investors who think that there’s space for TiZR too, one such being EDM (electronic dance music, of which I am a bit of a fan) record label Spinnin’ Records, which has led a $500k funding round for the startup.

There was no hint of irony in Jean-Michel Reynoird, co-founder and CEO of TiZR’s comment in an interview with TechCrunch: “We are a place to share private life moments”.

‘Nuff said!

Posted by Anthony Miller at '08:24' - Tagged: funding   startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Wednesday 10 February 2016

Indian startups have a ‘bar mitzvah’ moment

picAn unusual metaphoric use of the Jewish male coming-of-age ceremony can be surprisingly found in an article in today’s Financial Times entitled Indian start-ups look to make money rather than raise it. The quote, from Aswath Damodaran, finance professor at the NYU Stern School of Business and ‘an expert on tech company valuations’ reads as follows: “There is a bar mitzvah moment for all these companies, the moment where investors wake up and say ‘You’ve got users, when are you going to start making money?’” He was alluding to Indian tech startups, some of which are coming under the cosh by investors to ‘show them the money’.

The article name-checked Indian startups, and Indian offshoots of foreign startups, that were reportedly scaling down their businesses, notably in the food services market, including the Indian arm of Rocket Internet’s Foodpanda and New Delhi-based ‘unicorn’, Zomato. The article also refers to ‘swingeing job cuts’ at Indian online property portal, Housing.com, part owned by Japanese telecoms giant, Softbank.

It’s comforting to see that even in faraway India, investors are finally waking entrepreneurs up to the reality that if they want to lead a ‘not for profit’ business then perhaps they should go run a charity!

Posted by Anthony Miller at '07:50' - Tagged: startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

NEW RESEARCH: NHS IT funding boost creates SITS opportunities

NHS logoThis morning we wrote that NHS IT was hitting the headlines again as momentum builds behind the government’s push to use technology to ease pressure on the NHS frontline. But we alluded to a lack of detail surrounding the £4.2bn of investment that Health Secretary Jeremy Hunt had promised would be invested in NHS technology over the next five years (see here). Since then NHS England’s director of digital technology, Beverley Bryant, has revealed more about how the money will be spent, and where it will come from.

Eligible TechMarketView subscription service clients can read the detail - and our analysis - in our latest UKHotViewsExtra article: NHS IT funding boost creates SITS opportunities.

Posted by Tola Sargeant at '20:28' - Tagged: health   funding  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

NEW RESEARCH: European tech M&A deal volumes flatline

chartThe number of European TMT deals announced in January remained at about the same level as the previous three months, according to latest data from corporate finance firm Regent Partners. However the total value of deals dropped below £10b for the first time since Q3 2012 as there were fewer large transactions. Deal valuation multiples continue to hold up with aggregate Price/Sales ratio at 1.3x and Price/EBITDA ratio at 9.8x.

There was the usual flurry of smaller deals involving UK software and IT services players, including Access Group’s acquisition of HCSS Education (see Access Group furthers its education with HCSS), Capital Markets software developer First Derivatives’ acquisition of QuantumKDB (UK) (see First Derivatives’ acquisition spree continues), and a rare excursion into the UK market for Noida-based offshore service major, HCL Technologies, which ‘did the double’ at Point to Point (see HCL gets to the point – twice - with Point to Point).

There’s more besides, and subscribers to the TechMarketView Foundation Service can read our quarterly summaries of corporate activity in the UK SITS sector in IndustryViews Corporate Activity.

Posted by HotViews Editor at '16:42' - Tagged: acquisition  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

NHS IT set for healthy investment as Hunt promises '£4.2bn'

NHS logoNHS IT is in the headlines again as momentum builds behind the government’s push to use technology to ease pressure on the NHS frontline. Over the weekend the papers were full of news that Health Secretary Jeremy Hunt had said the government will invest £4.2 billion in NHS technology over the next five years. This was followed yesterday by the launch of a review of computer systems across the NHS led by US IT expert Professor Bob Wachter.

News of higher than expected investment in NHS IT is very welcome, but it’s important to caveat that full details of the funding plans are still being finalised and it’s unclear how much of the floated £4.2 billion is truly ‘new’ money. The government had, for example, already made clear its intention to invest some £1 billion on technology over this Parliament as part of a planned £8 billion investment, some of it frontloaded, to achieve the aims of the NHS’ Five Year Forward View (see SITS suppliers should give cautious welcome to frontline NHS funding boost and Comprehensive Spending Review 2015: Delving the details for SITS opportunities if you’re a PublicSectorViews subscriber).

Nevertheless, more will be spent on making the NHS digital than previously suggested (perhaps £1.8bn rather than the £1bn) and the renewed emphasis on technology’s importance to solving the NHS’ woes will help to drive investment in NHS IT. This supports our view that healthcare will be one of the fastest growing areas of the UK public sector SITS market over the next few years (see UK Public Sector SITS Market Trends & Forecasts Report 2015-16).

In tandem, Wachter’s review - ‘Making IT work: harnessing the power of health IT to improve care in England’ - will look at where IT has worked well and where it needs improving, as well as different ways to implement IT in healthcare as the NHS works towards being paperless by 2020. The National Advisory Group on Health Information Technology in England, which includes a broad cross section of experts and patient representatives from England, Scotland, Denmark and the US, is compiling the review and will report back to the government in June.

We’ll bring you more analysis in UKHotViewsExtra in due course.

Posted by Tola Sargeant at '09:55' - Tagged: health   funding   policy  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

Sophos: working the rising security market

LogoIn a tale of two suppliers, while Symantec dropped when it reported Q3 results (see here), the Sophos Q3 trading update (to December 2015) shows a company building on its strengths. Q3 billings were up 10.6% to $141.3m yoy on a reported basis (against “significant currency headwinds”) and 17.4% like for like, and against strong comparatives too. In terms of revenue, which can be a harsher metric, at $121.4m this was was up a solid 4.7% reported and 11.9% on a constant currency basis. Sophos raised full year guidance after a strong H1 (see here), and the Q3 results enable it to reaffirm guidance of billings in the high teems to 20% range for like for like billings and a slightly increased margin of 21.3%.  

While all regions and products saw growth, the network products did particularly well with billings up 31.6% like for like/24.1% reported to $72.2m vs. an 8% like for like/1.1% reported uplift to $62.7m for end user products. There is more to the end user growth figure however, because within this new customer growth is high. In fact, across the company as whole, a quarter of business is from new customers but existing customers are also increasing their spend with Sophos.

Sophos agreed a legal settlement with Fortinet in December which will see Sophos make a payment of an unspecified amount but this and the share price hiccup when Apax reduced its holding were the worst the quarter held. Looking forward there is a lot of opportunity, from the next generation synchronised security portfolio, to its relationship with AWS whereby its UTM product is available within AWS which represents a small but burgeoning market, to using its SurfRight acquisition to to open up greenfield opportunities because of SurfRight’s ability to run in parallel with anti malware technology from Sophos competitors.

Posted by Angela Eager at '09:42' - Tagged: software   security   tradingupdate  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

PwC identifies with Praxism

PwC logoOver the past couple of years, the Big 4 consultancy firms have been busy acquiring a raft of niche consultancy firms. The latest news is of PwC’s acquisition of Edinburgh-based identity management firm, Praxism. The fifteen-person company, which was founded in 2008 and offers consulting, training, support and managed services, will be merged with PwC’s IT assurance practice.

The focus of this acquisition – cyber security – should come as no surprise. Indeed, Accountancy Age recently highlighted that most of the recent acquisition activity of the Big 4 has been focused on four areas: digital and data analytics, audit, technology and cyber. In cyber, talent is hard to come by, as was highlighted by Deloitte in its FY15 results – see Deloitte UK: Solid FY15. So, the management consultancies have joined the growing number of consolidators in this growth market place (see Cyber security suppliers – better together?).

Notably, Praxism appears to have a strong presence in the public sector, so the acquisition could be perfect timing considering Chancellor George Osborne’s announcement that UK Government is set to invest £1.9b over five years in the UK’s cyber defences (see Comprehensive Spending Review 2015: Delving the details for SITS opportunities).

Posted by Georgina O'Toole at '09:35' - Tagged: acquisition   M&A   cybersecurity   consultancy   big+4  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

European Commission takes “first decisive step” towards Cloud

ECThe European Commission has released details of the providers that will help it make what it is calling its “first decisive step ... towards the use of the Cloud...".

BT (Belgian Branch) was sole winner of Lot 1 (private cloud) and a joint winner on public cloud (Lot 2). BT referenced the wins in its Q3 results, reported earlier this month. The other successful Lot 2 bidders were IBM Belgium, Accenture, Cloud Team Alliance and Atos. The final framework deal (Lot 3 for Platform-as-a-Service), saw Telecom Italia, Accenture, Atos Belgium and IBM Belgium take the winning places. In terms of the value to the winners, there will be a maximum revenue opportunity of €10.25m on Lot 1, €13.94m on Lot 2 and €10.36m on Lot 3 - over four years.

There are a few interesting points that come out of the decision making process on the contracts. Firstly, the Commission wanted the winning supplier to provide a dedicated link to the private cloud, which will have excluded many non-telco firms. Secondly, no hyperscale providers (e.g. Amazon Web Services) made a bid for Lot 1 with “the size of the award being too small for such operators”. In the end, the Commission said BT won because it offered the best price (offers from other providers were similar in terms of technology).

Finally, on the public cloud tender, the Commission required services that were “not available in the catalogue of hyperscale providers”. It therefore received some joint bids between hyperscalers and other players. This is an interesting point and demonstrates that the provision of ‘pure’ public cloud is not going to be enough on its own for many organisations. Interestingly, the Commission emphasised that the decision to award the public cloud Lot was based on the “quality” of the offers and not the lowest price. It’s a mature approach showing that the Commission is focused on the benefits of a multi-tenant offering, rather than the financial upside alone.

Posted by Kate Hanaghan at '09:25' - Tagged: PaaS   AWS   EuropeanCommission  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

Admedo adds $6m to the funding pot

logoWe first wrote about London-based ‘self-serve ad platform’ SaaS startup Admedo back in July 2014 after they had scored a $2m Series A funding round lead by Sussex Place Ventures (see Sussex Place serves up $2m to ‘self-serve’ Admedo). Sussex Place remained in the frame for a recently announced $6m Series B round, this time led by the ubiquitous MMC Ventures, along with ‘some high profile names in the online world’.

For those who wish to know, Admedo runs a programmatic advertising platform, which automates buying and selling of online display media (I assume there is room for human judgement too). Anyway, sounds like all good stuff.

Posted by Anthony Miller at '09:11' - Tagged: funding   startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

Prince's Trust in Space!

PeakeBritish astronaut Tim Peake tweeted a great photo from the ISS to congratulate the Prince's Trust on its 40th anniversary this year. Tim is one of our really valued ambassadors.

Any excuse to carry a picture from space and, indeed, to promote the Prince's Trust. Great organisation and thanks to so many of our readers for their support too! Some really great events etc planned for this year. Watch this Space....

Posted by Richard Holway at '08:25'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Tuesday 09 February 2016

Cognizant sets scene for slow year

logoIt wasn’t their final quarter results that anyone really cared about – they were pretty much a ‘done deal’. But ears pricked up when Francisco D’Souza, CEO of New Jersey headquartered, India-centric offshore services major, Cognizant, gave his ‘guidance’ for revenue growth in 2016 which, at the 12% midpoint, was the lowest forecast for quite some years.

This time last year D’Souza was forecasting at least 19% headline revenue growth for 2015. As was, Cognizant achieved 21%, to $12.4b, pretty much spot on its most recent guidance (see Cognizant bullish on FY outlook). This includes an expected c.$700m full year contribution from its $2.7b acquisition of US-based, healthcare IT software and solutions company, TriZetto (see Cognizant bets big on healthcare with TriZetto). This implies organic growth closer to 15%, not too far away from the top end of D’Souza’s 2016 guidance of $14.2b, representing 14.4% growth (the bottom end was 9.9% growth, by the way).

Cognizant is traditionally the fastest growing among its Indian pure-play peers, basically trading volume for margin. Indeed, 2015 operating margins, at 17.3%, were within typical range although over a point lower than in 2014 and, as usual, significantly below top-tier peers, generally in the low-mid 20’s.

But if Cognizant is having a tough time over revenue growth, woe betide the rest!

Indeed, this really does call into question Indian trade association Nasscom’s 10-12% forecast for offshore services growth in 2016/7 (see Nasscom downgrades forecasts – but still too high). So watch out for the next edition of OffshoreViews, where we will have more to say about the prospects for the Indian pure-plays in 2016 and beyond.

Posted by Anthony Miller at '08:10' - Tagged: results   offshore  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 08 February 2016

Yassaie steps down at Imagination

YassImaginationSorry to see the problems at Imagination Technologies and the departure today of Sir Hossein Yassaie. Imagination was, like ARM, one of the really bright spots in UK tech. It really did well as a supplier of graphics chips to Apple but now that very strength acts against it as Apple smartphone growth slows. They have failed to exploit other areas (like IoT).

Their Pure DAB radio business (I have several) is still loss-making. Now it will be sold as part of the restructuring plan announced this morning alongside a hefty profits warning. Imagination shares off over 50% in last year. I guess at the moment the hope is that they will be acquired. But that would be equally sad.

Posted by Richard Holway at '10:07'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 08 February 2016

BT CFO - a tough act to follow

btBT Group have confirmed that they are looking for a replacement for Tony Chanmugan, the CFO, although no decision has been made concerning the potential timing of any change. As the new structure of BT is set up, see here, to accommodate the arrival of EE and also to separate the UK Public Sector business and link it with BT Business, the timing is right for his departure after over seven successful years in this key role. In that time the share price has more than trebled.

Tony first came to prominence during his time at BT Solutions, part of Global Services, where he had to deal with complex projects and the labyrinthine issues of working inside a convoluted organisation. Finance and MD roles at BT Retail followed before being moved up to Group CFO in 2008 as Ian (now Lord) Livingston took on the CEO role.

As well as facilitating the transformation of the BT Group as it built its BT Vision business and then moved to acquire EE, Tony inspired and hammered home the more rigorous approach to cost transformation that has seen opex fall from £16bn to less than £12bn during his time in charge. Whether his tight control on capex in Global Services has adversely affected this division’s growth and margin prospects remains to be seen.

The next Group CFO will find his (or her) task significantly easier as a result of Tony’s time in charge. Well-liked by the City, decisive and with a razor-sharp grasp of the detail, he will however be an extremely hard act to follow.

Posted by Peter Roe at '09:45' - Tagged: cloud   mobile   network  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 08 February 2016

Telit opens Industrial unit as IoT market develops

logoIn January, we noted the continued progress of Telit Communications as it wrapped itself in the cloak of the Internet of Things, looking to exploit the opportunities of the connected car and building an IoT portal, see Telit continues its journey and work back.

We suggested then that expanding the IoT’s portal into other vertical markets would be important next steps and today the company has announced the creation of a new business unit, IoT Factory Solutions. This sets out to leverage the Group’s Platform as a Service capabilities into the growth market of Industrial IoT (“Industrie 4.0”) as well as developing Telit’s expertise in machine-to-machine (m2m) communications and existing Industrial Automation Platform.

In TechMarketView’s Predictions 2016, (subscribers can see our extensive report here) we highlight that much needs to be done before organisations can bring together and take full advantage of the various IoT technologies that are in play. We see lots of opportunities for companies such as Telit with a grasp of the underlying technology and an understanding of the target vertical.

stwodAs part of our theme of “Surfing the Waves of Disruption” we see that the deployment of IoT and the realisation of its potential will have wider repercussions for the Infrastructure Services market. Suppliers can benefit from the greater number of openings for consultancy and infrastructure integration services as the connected workplace becomes more complex and more critical to a user’s success.

Posted by Peter Roe at '09:39' - Tagged: PaaS   infrastructureservices   iot  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 08 February 2016

Serco ExperienceLab partners Vipera for FinTech UX

lSerco is attempting to make much more of one its hidden jewels, its user-centred design operation ExperienceLab, via a partnership with AIM-listed FinTech player Vipera.

This is a non-exclusive partnership that will see ExperienceLab and Vipera ‘collaborate on next generation, mobile centric, user experience design’. One of the services ExperienceLab performs is co-design with its customers to help them solve problems and improve the overall user experience (UX).

In the mobile banking world, it’s all about the UX, but as we discuss in our FinancialServicesViews research stream, providers face multiple challenges as customers demand better service, through more channels and devices, and as regulators impose ever more scrutiny. Vipera’s latest results show that it isn’t gaining the ground it would like (see here), and no doubt needs assistance from ExperienceLab building the use cases around its mobile middleware platform MOTIF.

We were fortunate enough to have a tour of ExperienceLab from director Gavin Sambles, towards the end of last year. ExperienceLabs was born out of the National Physical Laboratory, where it started life as an academic research function, and where Serco quickly recognised the value of bring the capability to its customers.

Under Serco, ExperienceLab has focused mainly on the public sector, working with local authorities like Peterborough, hospital patients and prison inmates. It does also have a track record working with private sector clients, such as BBC, Google and American Express.

ExperienceLab works by combining a variety of 'experience design techniques' such as in-context research, customer journey mapping, user testing, focus groups and expert reviews to provide a holisitc view of the user experience, and all-important recommendations.

We believe ExperienceLab is a differentiator for Serco that could help position it higher up the value chain with customers. Fortunately, ExperienceLab is now getting the management attention it deserves as part of Serco's turnaround strategy.

Posted by John O'Brien at '09:15' - Tagged: bps   customerexperience  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Monday 08 February 2016

Mortgage matchmaker Trussle brokers £1.1m funding

logoIt’s always worth reading the fine print at the bottom of a website, especially one that deals in financial services, just so you know who you are actually doing business with.

London-based online mortgage broker startup Trussle is a case in point. The fine print on its home page makes it perfectly clear that it is an appointed representative of Pink Home Loans, a trading name of FCA-registered Advance Mortgage Funding Limited. Follow the chain and you’ll find that AMFL is a wholly owned subsidiary of the highly acquisitive, LSE-listed LSL Property Services Group, which does what it says on the tin. LSL’s services span residential sales, lettings, surveying, conveyancing, advice on mortgages and non-investment insurance products, valuations, panel management services, asset management and property management services. LSL also holds a small stake in property website Zoopla.

According to TechCrunch, Trussle has just raised £1.1m in a funding round led by Localglobe, the new VC fund from father and son, Robin and Saul Klein, along with Ed Wray, co-founder of Betfair, Dan Cobley, ex-Google U.K MD, and Ian Hogarth, co-founder and chairman of Songkick. Trussle was a recipient of seed funding through the Seedcamp III fund.

It’s the sentence at the very bottom of Trussle’s home page that makes the point, as it does for all residential mortgage providers: Your home may be repossessed if you do not keep up repayments on your mortgage. Important financial services decisions - especailly those made via 'we make it easy for free' websites - really do warrant ‘doing the research’. After all, you are the product!

Posted by Anthony Miller at '08:20' - Tagged: funding   startup  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Sunday 07 February 2016

Bursting of Bubble 2.0

BurstI was scanning the news media over the weekend and came across a really interesting article from John Shinal on USA Today – Bye-Bye Internet Bubble 2.0. It was occasioned by the massive 44% drop in LinkedIn shares. See my post -  LinkedIn plunges again.

Even so, Shinal made the point that LinkedIn was one of the very few internet stocks which was still above its IPO price. ‘By sharp contrast Alibaba, Twitter, Groupon, Zynga, Match.com,  Box, HortonWorks, FitBit, GoPro and Square are all below their IPO price’. Even Facebook had fallen 50% in the first 6 months after their IPO – but had recovered well since. ‘Leaving LinkedIn as the only share never (so far) to have traded below its IPO price of $45.’

HotViews readers should hardly be surprised. We have warned of this on so many occasions. We are unapologetic in liking companies that make profits, generate cash and have high recurring revenue streams. If they can couple that with high growth rates, we love them even more. Facebook, Google, Apple have all proved they can achieve that and shareholders have been richly rewarded as a result.

We have long been sceptical about many of the loss-making SaaS providers. On Friday Salesforce.com lost 12% making a c25% loss in the first 5 weeks of 2016. Workday was off 16%. Looks like investors too are now looking for those profitable, cash-generative compnaies that we love so much. If they could prove they could be both profitable AND still continue their high growth, we would accord them every accolade too.

The ’problem’ at the moment is that investors have ploughed funds into many companies on the basis of growth without profits. Most of those valuations are unsustainable - as we saw on Friday. When private valuations are higher than public valuations you just know that something is seriously wrong. But what we fear – and, for goodness sake, have also been concerned about for yonks – is that the Bursting of Bubble 2.0 would also affect valuations of the sound profit-making stocks that we love. It happened last time (in 2000-2003). Please let’s not let it happen again. The profit-making companies in our sector are, by and large, ‘fairly’ priced at the moment.

Posted by Richard Holway at '14:53'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 05 February 2016

Blackburn no longer in-sourcing revs and bens software

Logo for Northgate Public ServicesOrdinarily a £1.6m contract win for Northgate Public Services (NPS) to provide Blackburn with Darwen Council revenues and benefits software would be business as normal. However the announcement shows how the local government SITS market is evolving.

The council has a 15 year contract with Capita, worth £200m, that is due to end in June this year. Like many others (see here and here), the council decided last year to insource the services covered in the contract (including revenues and benefits, parking, design and print services as well as accounts). Payroll and personnel services were taken back in-house in July 2012.

The staff delivering the revenues and benefit service will return to the council from April 2016 and the plan was for the associated software and systems to return at the end of June. But ‘following information from the market’, the council decided that a cloud based revenues and benefits and document management system would deliver better value.

Despite the political desire to return services in-house local authorities need to pragmatic; especially given the complexity and importance of the revenues and benefits service. The contract demonstrates that councils can change their minds and that SITS suppliers should continue to engage with councils who announce that they will insource services.

SITS suppliers need to adapt to a market place where former BPO contracts are smaller and constructed differently (see UK Local Government SITS Supplier Landscape 2015-16). Local government specialists, such as NPS, will continue to prosper but will need to clearly articulate the value they deliver to win over sceptics.

Posted by Michael Larner at '09:42' - Tagged: contract   localgovernment+bpo+markettrends  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 05 February 2016

Digital and automation drive Genpact into double-digits

lOffshore-centric business process services (BPS) provider Genpact has returned to double-digit constant currency (ccy) growth in FY15 (see here) vs. 6.7% in FY14, after a successful year driven by new digital transformation and BPO initiatives.

Revenue grew 10% in constant currency (ccy) in both Q4 (to $646.5m) and FY15 (to $2.46bn). Adjusted operating margins meanwhile dipped 50 bps in Q4 to 14.8%, and were flat in the full year at 15% (see Genpact building out ‘Lean Digital’ strategy).

Genpact’s largest division BPO is driving the growth, with yoy revenue up 11% to $1.93bn. The smaller IT services division, is however under pressure, with revenues down 3%. Genpact’s other ‘negative’ is former parent GE, whose own disposal programme is going to impact Genpact’s revenue more significantly in 2016.

Fortunately, it looks like strong growth in digital transformation and Intelligent Automation initiatives are going to keep the BPO numbers heading in the right direction. In the call with analysts, president and CEO N.V. "Tiger" Tyagarajan explained that Genpact had entered into eight strategic partnerships to embed technologies such as cognitive intelligence, machine learning and robotic automation into our solutions.

Two examples cited were global deals for Carlsberg and Mondelez International, where Genpact is transforming core back office functions via Lean Digital consulting, and automation and analytics to create new shared service centres of excellence. Genpact innovation is around its systems of engagement (SoE) platforms, where it is building out a portfolio of own its IP and partner products, with a number of UK innovators like LBB OmPrompt (see here), Rosslyn Analytics (see here) and most recently Arria NLG (see here).

Genpact's approach ties with our view on Intelligent Automation becoming a critical new service for BPS providers to differentiate, remain relevant and competitive in the market, and deliver rapid business impact for customers (see Business Process Automation – what is Intelligent Automation?).

Posted by John O'Brien at '09:36' - Tagged: bps   digital   IntelligentAutomation  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 05 February 2016

Cash in, cash out at Symantec

LogoWe must admit to a bit of head scratching looking at the latest from Symantec. First off, there was the completion of the Veritas sale, albeit for $1bn less in cash than was originally agreed (see here), taking the whole cash/equity deal down from $8bn to $7.4bn. Then came the announcement that Silver Lake has invested $500m in the business and taken a seat on the board.

However, rather than using the proceeds to improve its position by enabling it to go shopping among the exciting security start up community for example, the cash will be pushed out to Symantec investors – to the tune of $5.5bn by March 2017. Unsurprisingly, investors liked the immediate results (activist Elliot Management among them) and responded by sending shares up c7% in after market trading,

As to Symantec’s performance, Q3 revenue dropped 6% to $909m while net income plummeted 23% to $170m. The decline was an expected part of Symantec’s three year transformation programme, that CEO Michael Brown says is focused on improving margins, prioritising R&D spend in high-growth areas, and taking the company back to its core security business. He describes the company as entering the second half of the transformation "with a stronger foundation, evidenced by new products that are gaining mindshare among customers, better top-line performance, and a clear path to long-term profitability." Freshly fed investors and Symantec watchers alike are being asked to hold the faith while the programme progresses.

A leaner and more tightly security focused company makes a lot of sense and with an ever expanding threat landscape the security market is growing, so Symantec does not have the stress of operating within narrowing opportunity. Its challenge is remaining relevant within the enterprise business segment in a much more competitive environment. R&D work is producing some promising outputs, more is to come – the business breakdown and rebuild continues. 

Posted by Angela Eager at '09:26' - Tagged: results   investment   software   security  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 05 February 2016

Tech Mahindra also pedals hard to stand still

logoPretty much reflecting the travails facing its Indian pure-play peers, Mumbai-based Tech Mahindra managed to inch ahead of the prior quarter, reporting headline revenue growth of just 0.4% for the 3 months to 31st Dec., to $1.01b. Creditably, this was not at the expense of profit; operating margins rose by 30bps qoq to 16.9%, though 3 points lower than the 20.1% result the prior year.

Tech Mahindra stands proud over its India-headquartered peers, with trailing 12 month (TTM) revenue growth of 14%, second only to New Jersey-headquartered Cognizant (see Nasscom downgrades forecasts – but still too high).

Tech Mahindra stands more stylish too, having recently acquired a controlling interest in renowned Italian automotive design house (Ferrari, Alfa et al), Pininfarina (see here). That was what you might call a ‘bold and courageous’ play, but there is apparently no truth in the rumour that Tech Mahindra will build you an app in any colour you like so long as it’s red.

By the way,if you are to believe the press speculation,Tech Mahindra seems to be the front-runner in the yet-to-be-announced race to buy HPE's renegade offshore services captive Mphasis (see Mphasis getting closer to 'zero HPE'.). If so, that would actually be a play rather less out of left field.

Posted by Anthony Miller at '08:58'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 05 February 2016

Nasscom downgrades forecasts – but still too high

logoNasscom, India’s software and services industry association, has downgraded its growth forecasts for the Indian offshore services industry for a third consecutive year, and now expects Indian ‘IT exports’ for 2016/7 (to March 2017) to grow between 10-12%. Nasscom’s forecasts for the current FY (to 31st March 2016) still sit at 12-14%, though most of the offshore services majors don’t close their books till the end of March.

Both forecasts look ambitious.

Trailing 12-month (TTM) headline revenue growth (in US dollars) for those top-tier players that have reported their results for the December quarter undershoot these numbers by far, with TCS at 8%, Infosys at 7%, Wipro at 3% and HCL at 8%. Only Tech Mahindra – the smallest of the bunch – shows TTM revenue growth in double-digits (14%), but this still leaves aggregate TTM growth for the five companies at just 7%. With Cognizant expected to report around 18% growth for the December quarter (including acquisitions), aggregate growth for the Top 6 rises to 10%.

I can see no way that ‘a miracle will occur’ this current quarter to bring the numbers up to the 12-14% growth that Nasscom had predicted.

And next year will surely be worse. The bellwether will be Cognizant which, with a calendar year-end, will be the first to give guidance on annual revenue growth when they announce results next week.

I laid out my analysis behind the dramatic slowdown in the growth of the Indian pure-plays in the lead article, ‘Be careful what you wish for,’ in OffshoreViews Q1 2015, so you might wish to refresh your memories.

Posted by Anthony Miller at '08:29' - Tagged: offshore  

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link


Friday 05 February 2016

LinkedIn plunges - again

LinkedINAny review of my posts on LinkedIn will demonstrate a person not entirely a fan. See LinkedIn disappoints and work back. I only use it to look up CVs and reconnect with people I knew ages ago. I have never used it in the interactive way I use FaceBook. I have about a 1000 LinkedIn ‘connections’ but never interact with any of them. And only very rarely does anyone try to interact with me via LinkedIn. Indeed, when they do, I tell them to send me an email.

Last night LinkedIn issued a pretty dire warning in part caused by its decision to close a B2B marketing service which wasn’t working. Its outlook was for greatly reduced growth rates and, surprise surprise, LinkedIn share price fell by 28% in after hours trading and are now down 50% on this time last year.

To be fair, Q4 was pretty good with revenues up 34% yoy at $862m with Talent Solutions up 45%, Marketing Solutions up 20% and Premium Subs up 19%. This was all ahead of expectations. But the outlook was decidedly downbeat and that spooked the market.

With all the others queuing to claim 1b+ users, after 12 years LinkedIn has ‘only’ 414m with growth rates continuing to slow. Many found LinkedIn difficult to navigate on mobiles. A new mobile app was launched last month to mixed reviews.

The LinkedIn business model appears sound. Get the job seekers to build the dataset for you ‘for free’ and charge the employers to access it. No need for advertising or sponsored posts. But many (too many) like me use the dataset for free and the employers are currently unwilling to stump up the sums to make the service really profitable (LinkedIn is still loss-making after 12 years).

There are similarities with Twitter – both have an enthusiastic fan base but both find it difficult to really monetise the service. Perhaps both will get acquired?

Posted by Richard Holway at '08:09'

Add a comment Add a comment Twitter   Facebook   LinkedIn   Email article link




© TechMarketView LLP 2007-2016: Unauthorised reproduction prohibited see full Terms and Conditions.