Search through our UKHotViews and UKHotViewExtra articles plus complete research reports
At Fidessa's results meeting yesterday (see Fidessa interims for our initial coverage), management gave details of recent traing and of their expectations going forward. The event also provided the opportunity to meet Steve Grober, Fidessa's Director of Group Strategy.
In UKHotViewsExtra, Peter Roe provides additional insight into the comany's results, strategic position and outlook. TechMarketView subscribers can access the piece here. If you are not yet a subscriber, please contact Deb Seth to gain access.
Posted by HotViews Editor at '10:26' - Tagged: results software financialservices
Workforce and compliance optimisation software provider, Allocate Software had a better FY13 than the headline figures from its financial results released recently suggest (see Allocate’s mixed year). Despite reporting just 1% revenue growth to £37.1m (a 5% decline on an organic basis) and a 25% drop in EBITDA to £4.8m, there are bright spots within the results that suggest Allocate Software has the foundations it needs for future growth. We spoke to CEO Ian Bowles to discuss the company’s performance and strategy in more detail.
Eligible TechMarketView subscription service clients can read our analysis in our latest research note, Allocate Software: Foundations for future growth, which is available for download from today. If you don’t yet have access to our subscription research and you’d like to learn more simply email info@techmarketview.com.
Posted by Tola Sargeant at '14:00'
The last few weeks has seen a flurry of activity at TechMarketView culminating in our ‘big night out’ which took place on 26th June in the form of Make or Break: An Evening with TechMarketView. Hot on the heels of this we launched our two flagship reports; UK Software & IT Services Market Trends & Forecasts 2013, and UK Software & IT Services Rankings 2013.
These reports generated a buzz of media interest with articles appearing in a range of publications. In ComputerWorldUK’s article ‘UK outsourcing market to decline, opportunities for SMEs to grow’, for example, TechMarketView was quoted as saying ‘despite the difficult market, there is a "golden opportunity” for SMEs to snatch business from larger players.’ While ChannelWebUK’s article ‘Cloud is shrinking IT service Market’ picked up on the idea that software and IT services providers could soon be left out of pocket by the move to the cloud.
On a different tack, Richard Holway was quoted in Computing’s article on Google's Waze acquisition, saying there should not be an antitrust probe. He made another appearance in Murad Ahmed’s report in The Times on whether Facebook has reached its peak.
On another hot topic, Richard was quoted in CRN Channel Web UK article ‘See Your Way Clear’, proclaiming 2014 to be the ‘year of wearable computing’.
Elsewhere, Anthony Miller was quoted in the Financial Times article ‘Blur Group jumps 25% after securing record tender’ and in the ComputerWorldUK article ‘UK SaaS provider SocialGo on the way out’, where he commented that the new funding is a desperate attempt to keep SocialGo afloat.
Anthony is also quoted in the TechWorld article, ‘Recruitment tech start-ups get boost from investors’, offering a sceptical opinion on yet another recruitment app appearing in the market.
Also in ComputerWorldUK, in their article ‘Gartner block highlights 'increasing momentum' of government's reform agenda’, PublicSectorViews research director, Georgina O’Toole, claims that ICT suppliers should see this as a signal not to work against government IT and procurement reforms. Georgina was also quoted in ComputerWorldUK on the Ministry of Justice putting a halt to £300m PC support contract. Further controversy was reported in UKAuthority.com article Public sector IT world mystified by OFT investigation as TechMarketView were quoted saying that the announcement would “set the cat among the pigeons”.
And finally in the TechWorld article ‘Can the UK create a billion-dollar company when Silicon Valley giants prey on its best start-ups?’, Richard Holway is cited throughout giving his opinion on whether London can produce a billion dollar company or not. You decide if you agree with his pessimistic view or not!
Posted by HotViews Editor at '08:00'
Capita’s first half results show strong momentum has returned to the UK BPS market leader (see Capita delivers ‘robust’ first half). After winning a record £2bn worth of new contracts in H113, Capita has been busy replenishing its pipeline, which now stands at £4.2bn vs. £4.1bn same time last year. It had stood even higher, at £5.2bn in February before the O2 megadeal was won in May (see Capita wins O2, upgrades to at least 8% organic growth).
It may seem Capita has it all sewn up. However that is not the case. Capita's margins are under pressure, it faces difficulties in a number of key divisions - notably IT services and insurance - and needs to convince it has the wherewithal to deliver some ambitious plans for recent JV deals at the Cabinet Office and Staffordshire County Council.
Subscribers to TechMarketView's Foundation Service can read the 'deep-dive' analysis in UKHotViewsExtra here.
Posted by John O'Brien at '20:45' - Tagged: bpo bps
Our newly published UK Business Process Services Market Trends and Forecasts 2013 report, paints a more optimistic outlook for the UK BPS market over the next few years.
In 2012, the UK BPS market bounced back from a depressed recent period, which saw growth rates of just 3.3% and 3.9% in 2010 and 2011. Taking a significant upward turn, 2012 added three percentage points of growth to reach 6.9%. This was driven predominantly by increased activity in private sector markets like insurance, retail, communications and life sciences, as well as UK central government.
We are now forecasting compound annual growth of 6.9% between 2012 and 2016, compared to 6.1% for the period between 2011 and 2015. Taking into account CPI inflation, this still equates to healthy 4% growth over the same period.
This improving outllook for BPS is against a continuing backdrop of UK Government spending cuts and the on-going Eurozone crisis. Nonetheless, better economic news in the UK since the start of 2013 points to a more positive outlook at home, which should benefit the private sector in particular.
We expect to see double-digit growth rates from platform BPO and significantly higher growth from emerging Business Process as a Service (BPaaS) as organisations seek more industralised and automated alternatives to straight lift and shift. Nonetheless, opportunities for non-platform BPO remain robust, and will continue to present opportunities for suppliers.
Subscribers to TechMarketView's BusinessProcessViews research service can now read our anchor report, UK Business Process Services Market Trends and Forecasts 2013 and download the accompanying XL forecast data and charts here.
Posted by John O'Brien at '17:53' - Tagged: bpo bps
Eligible TechMarketView subscription service clients can download the latest edition of IndustryViews Quoted Sector here to see our latest analysis of how the stock performance of UK software and IT services companies listed on the London Stock Exchange compares with their international peers.
Posted by HotViews Editor at '22:19'
Getronics has announced a £10m deal with Alpha LSG, a UK in-flight caterer. This is a new logo win for Getronics. The project, which has now been completed, saw Getronics integrate all of Alpha’s systems on to the Getronics cloud platform. Alpha has 75 airline customers including Thomson, Thomas Cook and Monarch, and serves 16 airports across the UK. It is a £300m business with 3,600 staff.
Getronics took three months to move Alpha’s systems onto the platform, which provides IaaS, SaaS (e.g. email and CRM) and WaaS (WorkSpace-as-a-Service). As part of the deal, Getronics:
Getronics has operated in the UK for c70 years, but one can trace its roots back to the 19th century. More recently (1999) Getronics acquired Wang Global, which itself had acquired Olivetti. In 2005, Getronics acquired fellow Dutch player, PinkRoccade, and then two years later KPN acquired Getronics. Getronics is now owned by investment firm, Aurelius (see KPN sells non-Dutch bits of Getronics).
In the UK, the Getronics brand has been synonymous with low margin infrastructure services - i.e. break/fix and IT support. In recent years, however, those types of services have reduced as a portion and now account for c10% of total revenues. Other infrastructure services include data centre services, LAN/WAN and consultancy. We estimate that in FY12, the UK registered flat IT services revenues of c£140m – the lion’s share of which is infrastructure services. At that level, it does not make it into the Top 20 ranking for infrastructure services firms, but is still a fairly significant provider of support services in the UK market (see "Make or Break": How will the IT support services firms outside the top tier fare in 2013?).
Under current UK CEO, Mark Cook, Getronics is aiming to return to growth this year. The company is mainly focused on the commercial sectors such as retail, travel, manufacturing and financial services. Recent deals include winning new client Gatwick Airport, and a £10m renewal with long-time client, Clarks. We think the above deal with Alpha is interesting on a couple fronts. Firstly, it’s a good reference customer for other potential buyers – and references are particularly important when firms are about to make significant changes to the infrastructure services model. Secondly, it shows that Getronics can deliver more than the break/fix-type services it has historically been known for.
Our insight into the pipeline would suggest Getronics UK could be about to ink more such deals. Furthermore, opportunities for mid-sized cloud platform deals are going to remain strong. This is a ‘busy’ area from the suppliers’ perspective. Players from various backgrounds (e.g. reseller, hosting focused, traditional IT services) are all converging on this fragmented market, which for many is proving to be a very good hunting ground indeed (see ControlCircle: Invest to grow, Pulsant completes strong FY12).
Posted by Kate Hanaghan at '09:40' - Tagged: contract cloud infrastructure
Last night, IBM CFO, Mark Loughridge, talked analysts through Big Blue’s performance for the three months to the end of June. In all, the underlying indicators of the services business are positive. Total IBM revenue for Q2 was down 1% to $24.9bn, while net income was hit (down 17% to $3.2bn) by a $1bn “workforce rebalancing” charge.
Drilling down into the services numbers specifically, combined revenue from IBM’s two segments - Global Technology Services (GTS) and Global Business Services (GBS) – dipped 1% to $14bn. Pre-tax profit was down 17%, reflecting the impact of the workforce rebalancing charge. Take that charge out and services profit increased 2%, with the pre-tax margin expanding by just over a point.
During the period, IBM inked 15 deals worth over $100m, including a “megadeal “in Europe. Loughbridge highlighted that the performance of the UK business as a whole (i.e. not just services) “not only improved but grew”. By extrapolating the patterns at the corporate level, we think it is more than likely that services played a role in this. Last month IBM acquired SoftLayer (see Salesforce and IBM: $4bn on cloud acquisitions in one day) to continue the expansion of its public cloud infrastructure. Along with IBM’s own amalgamation of SmartCloud offerings, SoftLayer will form the base of a new Cloud Service division within IBM GTS.
GBS revenue was up 2% to $4.6bn, with the European business slowing its rate of decline over last quarter. The pre-tax margin expanded by half a point. Software revenue increased 5% to $6.4bn with adjusted pre-tax income up 6% to $2.7bn.
The GTS business declined 2% to $9.5bn, with the outsourcing business down 3%. IBM claims the bulk of this decline has been driven by the work it has been doing to restructure lower margin contracts. This programme is now almost finished, and IBM enters H2 with “the strongest backlog growth in years” - so we expect good things from the outsourcing business in the coming quarters! Excluding the workforce rebalancing charge, GTS pre-tax margin improved by 1.3 points based on improved efficiency and productivity as well as what Loughbridge calls “tough minded spend actions”.
In the past six months, IBM’s UK Strategic Outsourcing business has put additional effort into the business development process to build the pipeline for large IT outsourcing deals. However, it faces huge competitive pressure to close these deals as all of the IT outsourcing suppliers fight it out in a shrinking market. What’s more, the Indian firms have become a lot more aggressive in the infrastructure services market in the past 18 months and are targeting existing IBM contracts where they perceive there to be customer dissatisfaction. This will put undoubted pressure on some IBM accounts where it is the longstanding incumbent supplier.
Read our latest analysis on IBM in the context of the supplier landscape here: UK SITS Rankings 2013.
Posted by Kate Hanaghan at '09:40' - Tagged: results outsourcing infrastructure
In April 2012, our TechMarketView’s InfrastructureViews stream published a report entitled, “BYOT: opportunities and threats from disruption”. In this latest PublicSectorViews report, we look more specifically at the adoption of ‘Bring Your Own Device/Bring Your Own Technology’ in the UK public sector market. Has BYOD really taken off? Are there specific issues by subsector? What are the barriers and challenges preventing faster adoption? And what are the related opportunites for SITS suppliers? If you are a PublicSectorViews subscriber you can download the report here - UK public sector: BYOD adoption. Otherwise please contact Deb Seth and she will be able to rectify the issue!
Posted by Georgina O'Toole at '16:24' - Tagged: publicsector trends BYOT
We recently caught up with Mark Starkey, UK MD of reseller and services player, Logicalis (see New UK MD at Logicalis named). One of the central pillars of Starkey’s strategy is the growth of a “high quality” IT services revenue stream that ultimately accounts for 40% of total revenues. High quality turnover, in Starkey’s view, is higher margin annuity revenues. In other words, the intention is not to grow the proportion of IT services revenue just for the sake of it.
Starkey gave us a little more insight into how the UK services business performed in the last financial year (to end February). Services revenue was £71m (i.e. 36% of total revenue), representing 6% growth on the previous year. That’s a little lower than our estimated growth rate of 10%, but still not bad in today’s market. Starkey says that 85% of this is annuity revenue. In all, that’s a solid performance and shows Logicalis is edging towards its objective of a 60/40 balance of product versus services. Indeed, a steady pace of change is important in order to ensure the existing business stays healthy while the new business grows on the best foundations.
A key investment area in the past few years has been the Logicalis cloud platform (see more here Logicalis UK: Growth and evolution). In particular, the company is gaining traction with mid-sized companies who want to buy a service and not own infrastructure assets. Since we last caught up with Starkey, there has been progress made around the creation of a methodology to help transition customers from their existing infrastructure to the Logicalis platform.
My view is that any firm attempting to transition revenue (whether they be a reseller, a telco or a low margin IT services provider) needs to combine a very focused strategy (i.e. which customers and contracts to target, and which to walk away from) with a realistic investment strategy (i.e. have you underestimated the financial cost?). Change requires the rights assets and people – not to mention confidence and patience. Thus far, Logicalis appears to be getting the balance right.
Posted by Kate Hanaghan at '08:51' - Tagged: results infrastructure
Eligible TechMarketView subscription service clients can download IndustryViews Corporate Activity Q2 2013, to read our regular summary of the UK software and IT services corporate activity scene.
Posted by HotViews Editor at '17:03' - Tagged: acquisition
While social media is a roaring success in the consumer world and has found a worthwhile role in the B2C environment, it is still struggling to find a position within business. Its consumer roots have tainted its perception as a business tool despite its obvious ability to support group collaboration and interaction within businesses and their ecosystems – and do it securely.
One of the problems is that the loose and unstructured nature of social media is not a good fit within business where there are things that need to be done, on schedule and in a particular way. The latest insight from the ESASViews research stream - Is social software an enterprise proposition? - looks at social collaboration software – collaboration software with social capabilities layered through it – and its impact within business. This is an active area for suppliers and the key is to add structure and integrate social with line of business applications and business processes, without losing sight of the ad hoc discovery aspects that make social media what it is.
The combination of social software and business process management software and services could be a potent combination for suppliers looking to generate revenue from the social scene. Actual revenue from social software is low, social BPM could provide the reason for businesses to unlock their social budgets. Eligible subscribers can read the research here. Those of you who don’t have an subscription will find that Deborah Seth (dseth@techmarketview.com) will be happy to provide you with information on how you can get one.
Posted by Angela Eager at '10:18' - Tagged: socialmedia software
We’ve just met up with ControlCircle CEO, Carmen Carey. The name might ring a bell as Carey was COO of MessageLabs several years back. ControlCircle is based in Canary Wharf and provides a range of data centre services including managed hosting and co-location, disaster recovery and network services (via its MPLS network). New to the stable is its public cloud offering – launched last year. The company is privately held with backing from Scottish Equity Partners, which invested back in 2010 with the two co-founders (President, Damian Milkins and CFO, Simon Hancock) as the other major shareholders.
In fiscal 2012, ControlCircle had revenues of c£21m, which makes it smaller than some comparable players such as Adapt (c£45m), Pulsant (£30m) and iomart (£43m). However, its revenue growth at c20% is pretty typical for this type of firm – see iomart closes strong FY13) and (Pulsant completes strong FY12.
Mid-market organisations and departments of larger enterprises (with autonomy over IT decision making) are ControlCircle’s key targets. For example, Saga, rightmove, LUUP, KPMG and Robert Walters. Its sweetspot is contracts covering the management of complex infrastructure that is critical to the customer’s business. For example, Saga’s website where services such as insurance and holiday packages are old to the over 50 age group.
With EBITDA of c£1m, ControlCircle’s profitability is below some of its immediate competitors. Carey promises a “transition in EBITDA within two years” once the firm has completed its current investment phase. Recent investments include its new public cloud offering, a new customer portal, and monitoring and management platforms. There is also on-going investment in additional service offerings, such as enhanced tiered storage.
The reason for all this investment is to line the business up for future growth. At the moment, Carey and team are prioritising growth over profits and aiming for a business that will turn-over between £30m and £35m in the next few years. All of that is likely to be organic growth as Carey is ruling out acquisitions in the short term.
Against the backdrop of the overall infrastructure services market – which is large (£13.8bn in 2013) but shrinking – the market in which ControlCircle, Pulsant, Adapt, iomart and others operate is growing strongly. The opportunities are plentiful and the market fragmented, with room for all of these players. Indeed, the biggest competitor for these suppliers is typically the internal IT department.
What makes the mid-market so attractive to providers is that cost reduction is not always the main reason CIOs turn to an external supplier. In many cases these organisations have outgrown their existing infrastructure set-up and the CIO is under pressure to upgrade the performance. In this situation, it is possible that the CIO will in fact increase IT spend. What the buyer is looking for is an improved and more reliable and responsive service. This requirement can in turn provide opportunities for cross-selling services.
Within this market context, and with the improvements to its portfolio, ControlCircle has a very good chance of hitting its growth targets. To my mind, the real challenge is going to be bringing profit levels into line with its peers. But if Carey can make that happen, Scottish Equity Partners are likely to be very satisfied with their investment.
Posted by Kate Hanaghan at '07:45' - Tagged: datacentres infrastructure
Here, at TechMarketView, we publish much more than just your daily dose of UKHotViews. Loyal subscribers will be aware of the invaluable reports and insightful analysis we produce but we want to make sure you haven’t missed anything. So July sees the publication of our latest Quarterly Research Summary for April–June 2013, and what a quarter it’s been!
As we pass the half way point of this Make Or Break year we have already released our not-to-be-missed annual UK SITS Market Trends & Forecasts 2013 and UK SITS Rankings 2013 reports, as well as a host of in-depth reports and AnalystViews notes within our focus research streams. To download a copy of the Quarterly Research Summary with details of all the reports published this quarter, click here.
If you’re not sure whether your organisation has a corporate subscription, or you’d like details of our subscription packages, just drop an email to info@techmarketview.com and we’ll be happy to help.
We at TechMarketView are incredibly proud about the very positive feedback we have received on our Little British Battler initiative, especially from the small, privately held UK software and IT services companies that we have so far featured in the programme. We are also keen to support other industry initiatives which we think will help UK SMEs reach a wider audience and, notably, help them team with larger players to reach the Government market.
Such an opportunity arises on Tuesday and Wednesday this week when HP will be hosting an SMEngage Zone at Civil Service Live, to be held at London’s Olympia. There’ll be a panel workshop on 2nd July themed around “Building a sustainable supplier ecosystem” in the Public Service Delivery hub. The panel will be include representatives from HP, CBI, Intellect and the SME community. There will also be a theatre session on 3 July on “A shared goal: How government can use its influence and spend with large suppliers to help drive economic growth in the SME sector.”
You can find out more about Civil Service Live here. If you want more information about HP’s SMEngage Zone, please contact HP’s Executive Sponsor Susan Bowen (susanbowen.uki@hp.com or @susanbowenuk)
Posted by HotViews Editor at '08:23'
We are absolutely delighted to announce that Peter Roe is joining TechMarketView today as Research Director, Finance Sector.
Peter was Head of Strategy for BT Global Banking & Financial Markets, and is steeped in finance sector experience. Before joining BT, Peter spent over twenty years in senior equity research roles at some of Europe’s top brokers and investment banks.
You will start seeing Peter’s commentary on UKHotViews soon, and later in the year we will have some exciting news about the launch of our new FinanceSectorViews research stream.
We look forward to introducing Peter personally to our clients in coming weeks.
Posted by HotViews Editor at '08:01'
