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Earlier today Computacenter announced its results for the first half of 2013, to the end of June. At the Group level, revenue was £1.43bn, up from £1.42bn in the comparable period last year, while adjusted profit before tax was £26.2m - up 1.9%. That “adjusted” Group profit number refers to (among other things) a one-off provision of £10.7m for future losses on three “onerous” German contracts. However, Computacenter says it is confident these problem deals are now under control. The “adjusted” figure also refers to a non-cash impairment of goodwill and acquired intangibles in France of £12.2m, due to “deterioration in business performance”. Unlike Germany, the situation in France is something CEO, Mike Norris, is still trying to resolve.
The UK accounts for around 40% of Computacenter’s total business in revenue terms. It grew 2.4% to £592.1m in H1, and increased adjusted operating profit by 14.2% to £20.1m. The performance of the services business specifically was better, at 5.9%. Breaking that down further, Contractual services (29% of total services revenues) grew 4.4%, while Professional services (9%) grew 11.1%. The indications are that growth levels in Professional services will continue to remain strong as enterprises look to invest to modernise workplace environments with Windows 7 and Microsoft 2010 upgrades.
The 5.9% revenue increase in H1 is not in the same league as last year (see Computacenter’s “fantastic” first half services growth). And, since the close of FY12, the leadership team has been carefully managing expectations in the knowledge that growth in the services business would not replicate what was a very strong 2012 performance. Indeed, FY12 revenue growth of c15% took Computacenter into our Top 10 (by revenue size) infrastructure services supplier ranking for the first time. The company now sits at number nine with UK services revenues of £431m.
Double-digit growth of that order is pretty exceptional compared with other leading players. In fact, by our estimates, only two other Top 10 players in the market managed to grow their infrastructure services revenue at all last year: Atos (7%) and Dell (4%). Every other player saw revenues from infrastructure services decline (see Infrastructure Services Supplier Landscape 2013 for more analysis of the ranking players).
In all, the UK services ‘engine’ is motoring along well; margins have increased four years in a row, and Norris, tells us he expects the same to be true of this year. Revenue growth is expected to “pick up a little” in H2, with an early positive indication being two “substantial” wins that are expected to close in September. However, we would highlight the following potential threats for Computacenter:
- Competition from India-heritage firms (e.g. TCS, Wipro, HCL) who are aggressively (and successfully) targeting 2nd and 3rd generation infrastructure services contracts
- Growing competition for cloud services, which compete with its C3 offerings, from a wide range of suppliers (e.g. telco, hosting, pure-play)
- Failure to counter the inevitable reduction in value of renewals in its contract base over time
- Costs associated with bidding for public sector business, and the impact on the bottom line
In addition, let us not underestimate the toughness of the infrastructure services market. We forecast that the market will be broadly flat for the coming few years at least, with significant declines in IT outsourcing and IT support – both of which are important markets for Computacenter.
Posted by Kate Hanaghan at '17:05' - Tagged: results
Serco’s H113 results got pretty well overlooked by the latest allegations of overcharging on its Prisoner Escorting and Custodial Services (PECS) contract with the Ministry of Justice (see here).
The first half results, for the period to 30 June, of course don’t show any impact from PECS or Serco’s other problems at the MoJ electronic monitoring services contract, which surfaced after the period end. The financial impact is likely to come in the second half of the year as costs are carried on cleaning up the mess, including the pay back of all profits from PECS, and any reimbursements on electronic monitoring.
Subscribers to TechMarketView’s Foundation Service can read our analysis of Serco’s H113 performance and prospects in UKHotViewsExtra here.
Posted by John O'Brien at '08:51' - Tagged: publicsector bpo bps supportservices
When two mature markets come together the dynamics change and assumptions about the role of each type of supplier come under harsh scrutiny. This is exactly what we are seeing in the ESAS market as application services providers push into the software market with their own software IP and off premise provisioning. Curiously, software suppliers have not moved as far in the opposite direction (i.e. into the services space) despite their lead in SaaS. Nor are they making the most of the potential around growth areas like big data and analytics, and mobile platforms where their expertise could be a precious asset given that these technologies stoke demand for expert knowledge and specialist services.
With a CAGR of just 1.3% (2010-16), there is an intense struggle for revenue and relevance in the ESAS market, which is analysed in the latest report from the ESASViews research stream: ESAS Market Trends & Forecast 2013, Part 1. Although both Enterprise Software and Application Services exist as separate markets, there are more and more points of overlap, which is creating a hybrid market with its own set of dynamics and characteristics. The evolution of this proto-market will be fascinating and the ESAS Market Trends & Forecast report sets the baseline for future comparison.
Eligible subscribers can access the report here. Those who have yet to sign up to our subscription services can find out more from Deborah Seth.
Posted by Angela Eager at '09:11' - Tagged: software applications
Eligible TechMarketView subscription service clients can download the latest edition of OffshoreViews, our concise review of the major India-centric IT services firms here.
Posted by HotViews Editor at '14:12' - Tagged: offshore
With enterprises increasingly demanding that services suppliers prove the link between their offerings and specific business outcomes, the bid process has become much more complex. Meanwhile declining demand for traditional life and shift outsourcing is putting pressure on prices yet providers are still under pressure to add value to proposals. Decisions made around the scope of the offering vs. cost of supply are getting more complex and have a direct impact on margins – or even whether a contract is worth pursuing. We caught up with MooD International to hear how it is tackling these sorts of issues in the outsourcing market. If you are a subscriber you can read what we think in Mood International: optimising the outsourcing market in HotViewsExtra.
Posted by Angela Eager at '09:57' - Tagged: software applications
The team here at TechMarketView have been pretty busy in recent weeks as seen by a number of appearances in the press.
In Charles Arthur’s article Move to mobiles and share rebound leaves Facebook sitting pretty for The Observer, TechMarketView chairman Richard Holway, who has until now called Facebook a “passing fad”, says he is "in awe of what they have achieved in the past six months". In particular, as regular UKHotViews readers will know, he's impressed at how Facebook has converted its growing base of mobile users into a source of advertising revenue.
In the Financial Times article Growth in IT jobs confounds offshore fears by Henry Mance, Richard Holway is quoted as saying “We’ve turned the corner. In the 2000s, if you wanted to get a job, going into computer sciences was not the thing to do. There is now a significant increase in the number of jobs that can be offered to people with A-levels or university degrees.”
Whilst in The Times article Quindell has last word with rising profits, TechMarketView managing partner, Anthony Miller is quoted saying, “I've long since given up making head nor tail of Quindell" as they announced profits in the first half.
Richard is again quoted heavily on all aspects of Apple in CRN ChanelWeb News article Is Apple losing its Midas touch?. On wearable computing he says, “Let's imagine that they brought out an iWatch in September at £100 a go - it would be an absolute star. The demand is there if the price is right."
Richard also adds valuable insight into UK investment in PCAdvisor article CentralNic lists on LSE to raise funds for next generation domains. While he is ‘delighted’ to see CentralNic choose AIM he points out that it's only a "tiddler", going on to say, "What we need is a flow of $1bn plus IPOs like they get in the US," he said. "Indeed, the $1bn prospects from the UK - like Shazam, Sophos etc - all seem to be eyeing Nasdaq instead. We need big IPOs to get the media, the analysts, the funds and the investors really interested."
Elsewhere in PCAdvisor, BusinessProcessViews research director, John O’Brien, is quoted in Penny drops' and G4S pulls out of electronic tagging contract bid, saying he is surprised it took G4S so long to pull out of the procurement process. John is also quoted in CRN ChannelNews article Civica wins Worcestershire shared services deal when he characterised the Worcestershire win as “a small, but significant new deal for its platform BPS offering”.
In ComputerWorldUK article UK digital payments provider Skrill snapped up by private equity firm research director Peter Roe commented that the deal would benefit all parties. And from PublicSectorViews, research director Georgina O’Toole states in PublicTechnology article Skyscape unveils new G-Cloud 4 partner programme that the new scheme will deliver results for Skyscape. She says, “It looks like another canny move…”.
Finally in BusinessCloud9, ESASViews research director Angela Eager comments on the price ‘hike’ from AppExchange in Developers face 900% hike in AppExchange security review prices.
Thanks once again to our PR agency Brands2Life, who do a fantastic job for us.
With the on-going release of our stream Market Trends & Forecast 2013 and Supplier Landscape reports no doubt you’ll be hearing a lot more from TechMarketView in the press over the forthcoming weeks!
Posted by HotViews Editor at '08:00'
Eligible TechMarketView subscription service clients can download the latest edition of IndustryViews Venture Capital to read our concise quarterly summary of venture capital investment in UK software and IT services companies.
The current edition also includes interviews with two leading lights in the UK seed funding scene; Michael Blakey, one half of the ‘Brother Act’ known as Avonmore Developments, and Robert Dighero, former CFO of QXL ricardo and now partner in Passion Capital.
Posted by HotViews Editor at '06:00' - Tagged: funding
HP is the leading provider of Software and IT Services (SITS) in the UK market. In 2012 it generated UK SITS revenues of £3.2b, representing a 5% decline on the previous year. Excluding software and BPO, we estimate the services business saw an even deeper decline, of 7%. In addition, there have been challenges on the profit front, the distraction of the Autonomy saga and longstanding rumours around whether HP would sell off the services business.
HP has a lot to do in order to return the services business to growth and create more consistently-growing profits. In TechMarketView’s latest CompanyViews note, Kate Hanaghan and Georgina O’Toole look at the mountain it needs to climb to get there. Subscribers can download HP Enterprise Services: a mountain to climb now. If you want to gain access but can’t, please contact Deb Seth.
Posted by Georgina O'Toole at '08:27' - Tagged: strategy
We are delighted to announce that Khalda De Souza has joined TechMarketView as a Principal Analyst to support the Public Sector research stream. Khalda comes to us from Gartner, where she was a recognised and respected IT services analyst for 17 years.
At Gartner, Khalda was the European lead analyst in a number of areas, from network to business application professional services. This included having responsibility for market forecasts and trends, vendor capability analysis and user demand analysis. Khalda has extensive experience in providing strategic guidance to suppliers and to end-user companies alike, both in Europe and globally.
At TechMarketView, Khalda will be supporting Georgina O’Toole and Tola Sargeant in the PublicSectorViews research stream. Khalda will initially focus her attention on the UK local government and education sectors. Having already been with us a week, you may have spotted that Khalda has contributed her maiden HotViews articles (see Tribal shows steady growth in H1 and Amor wins its biggest consulting deal with Middlesbrough), and has also been out and about meeting some of the leading UK local government SITS suppliers. PublicSectorViews subscribers can look forward to much more in the coming weeks! .
Posted by Georgina O'Toole at '09:38'
July saw no let up for our busy team of analysts. From our Foundation Service Anthony Miller published the quarterly IndustryViews Corporate Activity - Q2 2013 report, assessing corporate activity in the UK SITS market, including both ‘trade’ M&A and private equity deals. Also released was the IndustryViews Quoted Sector - Q2 2013 report. Eligible TechMarketView Foundation Service subscription clients can download the full reports.
PublicSectorViews research director, Georgina O’Toole, released her report on UK Public Sector: BYOD adoption. Following on from our earlier InfrastructureViews report, BYOT: opportunities and threats from disruption, Georgina focuses on the adoption of ‘Bring Your Own Device/Technology’ in the UK public sector market. Has BYOD really taken off? If you are a PublicSectorViews subscriber you can find out here. Georgina also reported on the Government digital services framework tender. As pre-empted by the Prior Information Notice (PIN) in December, the UK’s Government Procurement Service (GPS) has published a tender for a nine-month “digital services” framework.
BusinessProcessViews research director, John O’Brien, published the much anticipated report UK Business Process Services Market Trends & Forecast 2013. John predicts a more optimistic outlook for the UK BPS market in the coming years. Subscribers to BusinessProcessViews can download the full report. Non-subscribers can read the overview here: UK BPS market outlook more optimistic. Also from BusinessProcessViews, John reports on Capita’s return as the UK BPS market leader after winning a record £2bn worth of new contracts in H113. To see how Capita achieved this subscribers to BusinessProcessViews can read John’s full report Capita delivers 'robust' first half (update).
InfrastructureViews research director, Kate Hanaghan, released the flagship report, Infrastructure Services Supplier Landscape 2013. As infrastructure services account for 42% of the total UK IT services market this is a report you can’t afford to miss! Kate reflects on the slow growth in this mature market and lists the top 20 major players in this sector. To read more about it click here. Subscribers, of course, can read the complete report by following the link above. Earlier in the month Kate met up with ControlCircle CEO, Carment CareyRead her views in: ControlCircle: Invest to grow. Kate also met up with Mark Starkey, UK MD of Logicalis, see: Logicalis edges towards optimal services balance. Finally, roving Kate attended IBM CFO, Mark Loughridge’s talk on Big Blue’s performance for the three months to the end of June. Read Kate’s full review of the evening in: Software and services help buoy IBM Q2 revenue. Also from InfrastructureViews, Kate covers Getronic’s announcement of a £10m deal with Alpha LSG, a UK in-flight caterer. See: Getronics moves Alpha to the cloud.
From ESASViews, Angela Eager focuses the lens on IBM. Read July's two HotViewsExtra articles here: Software and services help buoy IBM Q2 revenue and IBM Q2 – software in focus. Microsoft, have a new rallying cry; ‘One Microsoft’. This refers to the company restructuring and shared goal strategy crafted to keep the company relevant in a mobile and cloud-centric technology world. Management is being reshuffled and titles changed but will this be enough? Angela considers this in: Microsoft’s restructure – a deeper dive. Angela also published a highly popular analyst views peice on Is Social Software an enterprise proposition?. In it Angela discusses how Social software is struggling to gain credibility as a tool for business. Subscribers to ESASViews can click the link to download her full report.
In Fidessa building on solid foundations, research director, Peter Roe, assesses the first half figures for this provider of trading, investment and information solutions to the world’s financial community. Peter finds that the figures were, as indicated by the company’s management, not particularly impressive.
If you’re not yet a fully paid-up TechMarketView subscriber this is merely a snapshot of how much you are missing out on. You'll find details of more reports published in the first quarter in our Quarterly Research Summary, which you can download here. If you would like to find out more about our subscription packages, just drop Deborah Seth an email and she'll be happy to help.
Posted by HotViews Editor at '08:30'
Over the last few weeks, the way that UK Government, and the broader public sector, procures has been getting a lot of airtime. Indeed, it is probably the most well worn topic of conversation when we are out and about talking to the leading suppliers of software and IT services (SITS) to the sector. There have been a number of announcements that have prompted discussion.
Perhaps most notable, towards the end of July, was the announcement that a new executive agency, called the Crown Commercial Service, would be established in the autumn. Then, a few days later the DVLA held the supplier event for the re-let of its major ICT contract. It was a chance, yet again, to see how much influence the Cabinet Office is having on procurements by individual departments and agencies.
But the announcements haven’t just been focused on Whitehall. In the last few days, the NHS announced its procurement strategy and made it clear that it was in awe of the procurement savings already achieved within central government. While we also noted that local government has had support from the Cabinet Office’s Government Procurement Service as it starts the procurement process for a framework focused on ‘line of business’ applications.
In UKHotViewsExtra, Georgina O’Toole looks at recent developments and considers the implications for public sector procurement and suppliers operating in the market. TechMarketView subscribers can access ‘Musings on Government procurement’ now. If you are not yet a subscriber, please contact Deb Seth.
Posted by Georgina O'Toole at '17:56' - Tagged: publicsector centralgovernment localgovernment nhs procurement
We have just launched our latest research into the leading suppliers to the UK infrastructure services market. Subscribers to the InfrastructureViews research stream can read “Infrastructure Services Supplier Landscape 2013” here.
Infrastructure services accounts for 42% of the total UK IT services market. However, this mature market is struggling to grow, which is putting pressure on the many players that serve it. Each year we reflect on the performance of the Top 20 firms operating in the market, and assess their future prospects. One of the greatest current challenges they face is shifting their businesses towards growth areas and ‘new world’ services driven by the cloud. To be successful, players will need to change and invest. Above all, they will need to ensure their execution is impeccable.
“Infrastructure Services Supplier Landscape 2013” includes our analysis of key suppliers, as well as some of those outside of the Top 20. We look at the challenges they face, and what they might do to be successful in the future. The report includes a Top 20 ranking table.
If you would like to subscribe to our very popular InfrastructureViews stream, please contact Deb Seth (dseth@techmarketview.com). Look out for the accompanying Infrastructure Services Market Trends report, out shortly.
Posted by HotViews Editor at '09:00' - Tagged: research suppliers
