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The UK mid-market is a fiercely competitive space for SITS suppliers. It's also an area of major opportunity that TechMarketView will continue to cover in the course of 2012. In the meantime, we've recently had an update on the progress and strategies of IBM in what it terms the "mid-market" and "general business" spaces. Eligible TechMarketView subscribers can read our summary and analysis in a newly-published CompanyViews note entitled IBM's big ambitions with smaller accounts.
Posted by Phil Codling at '16:55'
In the fifth and final part of our series of Predictions for 2012, John O'Brien peers into the business process services (BPS) tea leaves.
Eligible TechMarketView subscription service clients can download the full series of TechMarketView Predictions for 2012 here.
Changes ahead
The possibility of an ‘unprecedented downturn’ in 2012, could really impact the UK SITS sector as a whole. Despite this, we expect business process services (BPS) to remain pretty buoyant, because its messages of ‘cost-out’ and ‘efficiency’ remain relevant during even the toughest of times. BPS demand could accelerate faster still, if organisations, both in the public and private sector, speed up their BPS investments in response to further retrenching budgets and cut backs in 2012.
1. ‘BPS’ term will become mainstream
The term ‘business process services’ (BPS) will replace the outdated acronym ‘BPO’, very much associated with old era ‘lift and shift’ and delivering ‘your mess for less’. ‘BPS’ in our view, is BPO coming of age, using technology as an enabler, to help drive business process change, and delivering measurable service outcomes back to the customer.
2. Market leaders will cede share
Newer and more agile platform-based BPS players will see their market shares grow. Indian tier ones will continue to gain momentum through new platform innovations, and specialists such as Diligenta and The Innovation Group (TIG) in hot areas such as life and pensions and general insurance will gain further market share. However we expect a fight back by the ‘old guard’ as they embrace M&A in both vertical and platform capability, and flex their muscles on new business and renewals.
3. ‘Unusual suspects’ will disrupt the market
The construction sector is now looking to partner or acquire support service and BPS capability for ‘bundled’ BPS deals, notably in local government and the broader public sector. Costain and Interserve made moves on Mouchel during 2011, although in the end pulled out after spotting ‘something under the covers’. Nonetheless, there are plenty of other partner or M&A opportunities, so we expect one of these ‘unusual suspects’ to make their first big move in 2012.
4. ‘Big will eat small’
The big players will look to buy up platform-based BPS rivals as they attempt to close the gap. Insurance specialist TIG, and HR and public sector player Northgate will find themselves subject to M&A approaches. Weak players are also likely to be approached, albeit at far lower valuations. Embattled Mouchel for instance, is likely to sell off larger, more attractive chunks of its business in 2012 in an effort to stay afloat.
Perfect storm of disruption
These trends will create a perfect storm of disruption for the UK BPS market in 2012. The risks to large BPS incumbents like Capita, Xchanging and Serco will only increase as a result, making new business wins and retaining client relationships at renewal a far tougher prospect. ‘Staying relevant’ amidst all of this change has to be the number one priority in 2012.
Posted by John O'Brien at '08:22' - Tagged: bpo bpaas bps
In the fourth of TechMarketView's series of predictions for 2012, Phil Codling picks out the headlines for the UK infrastructure services market.
Eligible TechMarketView clients can download our full series of predictions for 2102 here.
1. Cloud-based infrastructure services will grow at double digit rates.
But where cloud is replacing an existing service, it’s a more-for-less substitution that is shrinking the overall market. 2012 is another year of clients putting costs first.
2. Public cloud won’t make it to the mainstream.
Private cloud remains the preferred option in 2012. Small businesses and niche/non-critical applications provide the exceptions to this rule.
3. Bring Your Own Technology becomes a market opportunity.
Forward-thinking players will seize the chance to help CIOs turn BYOT into a positive for their organisation. Meanwhile the technology in question will include a major new entrant, as Amazon “Fires up” competition in the tablet space.
4. Channel conflicts will increase.
Not least because product companies will keep looking for ways to monetise their technology by delivering services. Services providers that resell their kit won’t approve.
5. A Top 20 player will succumb to industry consolidation.
CSC remains a prominent candidate for acquisition, but some of the more specialist UK-based firms like 2e2 and Phoenix speculation will be the subject of M&A speculation too.
Posted by Phil Codling at '09:28' - Tagged: infrastructure
In the third of our series of Predictions for 2012, Angela Eager looks at what is in store for Enterprise Software.
Eligible TechMarketView subscription service clients can download the full series of TechMarketView Predictions for 2102 here.
1. More SaaS vendors will lose money
Lack of consistent profitability is a telling sign that the commercial aspect of SaaS has not been mastered by SaaS pure plays. Higher prices and better cost control are one approach to addressing the problem but few will get the opportunity because acquisition activity will ramp up in 2012..
2. Social platforms will challenge enterprise platforms
Relentless pressure from employees and customers will ensure enterprises get the social and collaboration bug despite the negative pull of rigid and hierarchical organisational structures and traditional software.
3. MEAPs will prove more ‘mobile’ than incumbents
Software suppliers will not have the mobile opportunity to themselves. They will be challenged by nimble Mobile Enterprise Application Providers (MEAPs) looking to claim a portion of the revenue software suppliers are eyeing up to help maintain growth.
4. Big Data will move from hype to reality
Large data volumes are a fact, unstructured (and structured) data is a fact. They have to be managed and interrogated and this real need will convert hype to reality in a shorter period of time than is usual.
5. Security will take centre stage
End-point security and data loss prevention will be hotbeds of activity as more businesses ramp up their use of the cloud and mobile platforms. It is not just data that is at stake, but reputations that once lost are hard to win back.
Posted by Angela Eager at '07:50' - Tagged: saas cloud socialmedia software mobility
In the second in our series of Predictions for 2012, Georgina O’Toole and Tola Sargeant peer into the public sector tea leaves.
1. Government ICT strategy will languish as new CIO team boards
The search is underway for a new UK Government CIO (to replace Joe Harley by spring 2012) and a new UK Government Deputy CIO (position currently vacant). When in place, the new Cabinet Office team will face an enormous task with a myriad risks threatening to hamper the implementation of the UK Government ICT strategy (not least the threat of a hiatus as the new CIO team finds its feet).
2. A peak in renewals will result in radical contract restructuring
2012 is the start of two years in which we will see a peak in the number of contracts coming to their natural conclusion. Contracts will be radically restructured on renewal as UK Government moves from a vertically-siloed model to a horizontal model.
3. Megaplayers will retain lion’s share of major contract renewals
Leading suppliers have worked hard to support the UK Government ICT strategy and many have ‘come off the naughty step’. In times of austerity, and a propensity for low-risk options, organisations will stick with ‘the devil they know’ if there is sound reason to do so. Suppliers will likely find their wallet share from existing clients eroded but will have the opportunity to broaden their client base by offering successfully implemented horizontal solutions to a wider range of organisations.
4. Shared services will really take off
2012 and 2013 will be remembered in the UK public sector as the period when shared services really took off. The trend towards ‘tower-based’ procurements will give departments and agencies more flexibility to buy from shared services centres in the future. The competition to be involved in the handful of hosting organisations that will eventually emerge as shared services centres will be intense.
5. SMEs will establish beachhead in government shared services
SMEs will have more opportunities as contracts are broken down, particularly where niche requirements, for example, security, are separated out and procured separately. The most successful suppliers will be those that focus on being best of breed in one or a handful of niche service lines that can be shared horizontally across multiple organisations.
6. G-Cloud will be patchy and slow-moving
New shared services organisations will give cloud adoption a push in the right direction. But shared services ventures aside, adoption of cloud services will be very slow to take off. The letting of the short 6-9 month G-Cloud framework (due early next year) indicates to us that most cloud adoption will be happening on low-risk smaller projects as UK Government dips its toe in the water to see what works and what doesn’t.
7. Mega players will further penetrate local government markets
The central government market is tough. Sectors like police (internal to external shift in spend), education (higher education in particular), and health (renewed interest due to localism agenda) are attracting increasing interest from the traditionally central government-focused suppliers. Many are investing in sector specific solutions and will be keen to see a return.
Posted by HotViews Editor at '09:17' - Tagged: predictions
In November 2011 the Chancellor announced yet more cuts to UK public sector budgets, taking money out of the public purse into 2016-17. Central government ICT contracts remain subject to strict scrutiny by the Cabinet Office and the £100m cap on IT projects is still in place. There is no denying that the UK public sector market is a challenging one for suppliers at the moment, and it is set to remain so for the foreseeable future.
But look closely and you’ll find there are still opportunities across the sector – whether that’s from ‘new’ IT and business process outsourcing deals as public sector organisations look to cut costs, as a result of investment in government priorities such as cyber security, or from ‘taking someone else’s lunch’ when contracts come up for renewal. In the second of two reports published today, our PublicSectorViews research team highlights key areas of opportunity across the public sector. ‘Public Sector Contract Opportunities: 2012 and beyond’ provides details of contracts worth more than £2.6b per annum in total that are likely to come up for renewal or go out to tender between now and 2015. We consider it essential reading for any supplier hoping to grow their UK public sector software and IT services (SITS) or business process services (BPS) business in the near term.
PublicSectorViews subscribers can download the report from today. If you’re not yet a subscriber and you’d like to learn more, please email Deborah Seth for details.
Posted by HotViews Editor at '20:37' - Tagged: publicsector centralgovernment localgovernment contract defence education police health
As the end of 2011 draws near, TechMarketView’s public sector team has reviewed the recent fortunes of the key suppliers to the UK public sector software and IT services market. Although many of the latest financial reports refer to 2010, some of the 2011 numbers are in. Moreover, we have spent the last few months talking to the leading suppliers about the performance of their businesses. This has allowed us to provide our views on the performance of the Top 20 suppliers in 2011 and, more importantly, look forward to what might happen in 2012.
The recent changes in the UK public sector SITS market have not yet had any major change on the supplier landscape. The Top 20 rankings remain largely unchanged with the vast majority of suppliers recording a decline in revenues from the sector in their last financial year. However, TechMarketView’s close analysis of the numbers has revealed early indications of disruption to the competitive landscape. And with the next couple of years set to see the restructuring of numerous major outsourcing deals in central government as they come up for renewal, Government will have more opportunities to consider spreading the spoils.
Existing suppliers are working hard to ensure they are well positioned to benefit. But they are also aware that the central government market will remain challenging and will be increasingly competitive. As a result they are investing heavily in other public sector markets such as local government, police and healthcare. Meanwhile, suppliers that have previously been on the sidelines are spotting chances to grab a greater slice of the pie.
TechMarketView’s latest PublicSectorViews report – UK public sector SITS supplier landscape 2011-12 – is now available to download for subscribers to the service. It includes a full analysis of the revenues of the UK public sector Top 20 as well as our view on their performance and the outlook for 2012. If you're not yet a subscriber, please contact Deborah Seth (dseth@techmarketview.com).
Posted by Georgina O'Toole at '16:18' - Tagged: publicsector
Once again the TechMarketView team has gazed into its crystal ball to bring you our predictions for 2012.
We start today with our chairman, Richard Holway, and will follow with predictions from the rest of the team over the next few days.
Eligible TechMarketView subscription service clients can download the full series here.
Richard Holway Predictions 2012
1 “It’s the economy, stupid”
Although what happens in the general economy – UK, Europe, US and globally – has always had some impact on the UK SITS scene, it has often been minimal. Indeed, UK SITS has often thrived in downturns – indeed, growth has been spurred by the need to cut costs/change business models etc.
But the UK faces the possibility of an unprecedented downturn which is just bound to affect the UK SITS sector and, indeed, consumer tech too. The Governor of the Bank of England was recently asked “What will happen to the economy in 2012?” and replied “I don’t know what will happen tomorrow, let alone next year”.
So, the greatest driver for our markets in 2012 will be the economy. The greatest problem facing the executives in the UK SITS sector will be uncertainty. Nobody – not the Governor of the BoE or any TMV analyst – can accurately predict what will happen.
2 – Consumerisation of Enterprise IT
Consumerisation of Enterprise IT is already an established trend but will become mainstream from 2012 providing huge threats and similarly huge opportunities. This will particularly apply to mobile, social and tablets.
3 – Bring Your Own Tech
Similarly, BYOT will also go mainstream. Enterprises supplying tech items such as mobiles, laptops etc to employees will become as uncommon as the supply of company cars.
BYOT will spur major growth in security systems and in desktop virtualisation. However, supply and support channels will be adversely affected by the BYOT trend in much the same way as manufacturers and suppliers of company cars were affected in the last decade or so.
4 – Social media bubble bursts
Consumer social networks have already peaked. The winners are in place. Valuations were always in bubble territory and that bubble has also burst. However, just like the internet bubble of 1999/2000, the world has changed. Social networks will have a huge effect on the next 10 years just as the internet has had on the last decade.
The real opportunities are now the adoption of social networks in the Enterprise.
5 – IT as a utility. “It’s business not IT, stupid”
For as long as I can remember, pundits have suggested that IT will become a utility – like the supply of electricity. They have made the point that nowadays nobody has an “Electricity Supply Director”. So, why do we have IT directors? Or even why do we have CIOs?
The acceptance of BPS means that in many companies that day has already arrived. Much of the previous IT budget is now controlled by user departments. Decisions are taken for business not IT reasons. CIOs are probably a dying race.
The same might well apply to some SITS companies. The need to supply a business solution already supersedes the need to supply an IT solution. I remember Paul Pindar has long objected to me ever referring to Capita as an IT company. –I suggest most other companies will object in similar fashion in the future.
Posted by HotViews Editor at '09:00' - Tagged: predictions
We have now received well over one hundred applications from small, UK-owned software and IT services companies – the proverbial ‘Little British Battlers’ – to meet the TechMarketView team on 25th January in London. As we said last week (see here), we have added another couple of slots for company meetings and will be aiming to schedule further LBB Days throughout 2012.
But it’s still not too late to apply – but it will be after tomorrow!
So, if you are the CEO of a small, UK-owned software or IT services company punching above its weight, battling to carve out your fair share of the local or overseas market, there’s no time to lose.
Please contact Deborah Seth (dseth@techmarketview.com) for an information and pre-qualification pack. The deadline for applications is Friday 16th December, and the selected companies will be notified early January.
Candidate companies must be privately held, headquartered in the UK (not subsidiaries of foreign firms), and have annual revenues typically under (usually well under) £25m.
This is an unparalleled opportunity to get your company on the radar of the UK’s premier software and IT services research firm, and gain a level of market exposure which frankly money can’t buy!
We hope to see you there!
Posted by HotViews Editor at '08:59'
The UK construction sector is taking an ever more active interest in ‘support services’ and its sub-set business process services (BPS). Support services is a broad-based market that includes facilities, security, property and highways management services – and related BPS activities such as HR, F&A, customer services, procurement and ICT.
Multi-billion pounds construction players like Balfour Beatty, Interserve, Carrillion, Costain and Kier are looking to grow support services and BPS capability both organically and through acquisition, as a means to diversify from a core UK construction market in deep decline.
Subscribers to TechMarketView's BusinessProcessViews research stream can read the implications and analysis here.
Posted by John O'Brien at '07:26' - Tagged: bpo bps supportservices
The latest edition of TechMarketView IndustryViews Private Equity includes a return interview with Simon Cook, CEO of VC firm DFJ Esprit, and we also meet up with corporate finance firm Arma Partners’ founder and managing partner, Paul-Noël Guély. Both give their perspectives on investment trends in UK software and IT services (SITS) companies.
Plus there’s our regular round-up of VC and PE activity in the UK SITS scene, highlighting what we see as some of the more significant deals.
Eligible TechMarketView subscription service clients can download IndustryViews Private Equity right here, right now!
Posted by HotViews Editor at '08:07'
We have had an absolutely overwhelming response to our invitation for ‘Little British Battlers’ to meet the TechMarketView team early next year (see Calling all ‘Little British Battlers’!). Indeed, we are already approaching ten-times oversubscribed for the slots available at the 25th January event.
So this is what we are going to do.
First, we are going to extend the day to bring in 12 companies rather than ten.
And then, we will look at running these events on a regular basis throughout 2012 to try to meet as many companies as possible.
So, if you are the CEO of a small, UK-owned software or IT services company punching above its weight, battling to carve out your fair share of the local or overseas market, don’t delay.
As we said last week, this is an unparalleled opportunity to get your company on the radar of the UK’s premier software and IT services research firm, and gain a level of market exposure which frankly money can’t buy!
Posted by HotViews Editor at '09:55'
Just to let you know that bookings are now open for the 2012 Regent Intellect Conference on Thurs 9th Feb 12 at the Lancaster London.
Now in its 17th year, either TechMarketView’s Richard Holway or Anthony Miller have spoken at every one! This time it is Anthony to be joined by:
And chaired by Nick Robinson, BBC's political editor.
Visit the event website for full details | Book now
Posted by Richard Holway at '15:17'
In the latest edition of TechMarketView OffshoreViews, we return to the topic of consulting with an interview with Mike Hunter, Cognizant’s new VP and head of consulting for Europe.
We also met up with Jonathan Clarke, CEO of Citisoft, the UK-based financial services consultancy that (now Mahindra) Satyam acquired back in 2005. His story provides many lessons for Indian-based IT services firms looking to acquire niche Western consultancies – and indeed vice versa!
Plus you’ll find our regular summary of the key financial and operating metrics of the leading Indian-based players, and we’re now back to ‘full strength’ with the ‘rebirth’ of Mahindra Satyam and of iGate Patni.
And of course there’s the handy index to recent offshore-relevant posts from the UKHotViews archive.
Eligible TechMarketView subscription service clients can download OffshoreViews right here, right now!
Posted by HotViews Editor at '16:00'
