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Monday 27 June 2022

*NEW RESEARCH* Transport Technology Frameworks Review: 2021-22

CCS logoTechMarketView has been working with the Crown Commercial Service (CCS) to explore some of its technology framework data. Today, we’re looking at the Transport Technology & Associated Services (TTAS) framework and its previous iterations, Traffic Management Technology (TMT) and Traffic Management Technology 2 (TMT2). This is the third framework review we have published, following our Digital Future and Technology Services reviews.

TTAS (RM6099) was introduced in October 2021 and is scheduled to run until October 2023 with the option to extend for a further two years. It provides public sector organisations with a larger set of transport technology products and services compared to earlier iterations and is divided into seven lots: Lot 1: Transport Professional Services; Lot 2: Transport and Pedestrian Control; Lot 3: Transport Signage and Lighting; Lot 4: Transport Data Services; Lot 5: Sustainable Transport Technologies; Lot 6: Major Transport Solutions; Lot 7: Catalogue (direct award purchases for low value, low complexity items). The agreement hosts 76 suppliers.

Report Cover ImageIn 2021-22, total spend via the Transport Technology frameworks totalled £49.1m, a decline on previous years. This decline is partly due to TTAS diversifying into Aviation, Maritime, and Rail sectors, but also a result of National Highways implementing their own framework for the next two years.

During 2021-22, The largest areas of spend were Traffic Management Professional Services (26%) and Traffic Monitoring and Traffic Enforcement Cameras (15%), which together accounted for 41% of spend during the year.

Three companies (WSP, Costain, and Mott MacDonald) broke the £5m barrier for Transport Technology income during the year. Despite the introduction of its new framework, National Highways remained the biggest spender (£22.6m) by a large margin, followed by Department for Transport (£5.8m), and Oxfordshire County Council (£4.0m).

As we discussed in last year’s Local & Regional Government Suppliers, Trends and Forecasts report, with the Government's plans to create cleaner and healthier urban environments and reduce carbon emissions, we are seeing more towns and cities introduce clean air zones (CAZ) and other low/no emission initiatives. These initiatives are increasing the need for higher quality data to inform decision making and driving demand for innovative transport solutions e.g., air quality monitoring. Carbon Net Zero targets and the need to expand electric vehicle charging infrastructure are also acting as a catalyst for growth. We also expect interest in transport technology to intensify as a result of councils being given new powers to enforce moving traffic offences.

You can find out more about TTAS here: https://www.crowncommercial.gov.uk/agreements/RM6099

If you are an existing PublicSectorViews subscriber, you can access further analysis and charts now. If you’d like to discuss an extension to your existing subscription or would like details of how to subscribe to TechMarketView, please email Deb Seth.

Posted by Dale Peters at '09:24' - Tagged: transport   procurement   government   framework   data   ccs  

Wednesday 22 June 2022

*NEW RESEARCH* Technology Services Framework Review: 2021-22

CCS logoTechMarketView has been working with the Crown Commercial Service (CCS) to explore some of its technology framework data. Today, we’re looking at Technology Services 3 (TS3) and its previous iterations, Technology Services (TS) and Technology Services 2 (TS2).

TS (RM1058) was launched in May 2015; it was succeeded by TS2 (RM3804) in September 2017; and then TS3 (RM6100) in July 2021. The frameworks are intended to provide access to technology strategy and service design, as well as services to provide support with moving to the operational running of an IT estate. It also provides support for large projects, up to top secret classification and a range of other technology services.

TS Framework Front CoverThis data-driven report takes a similar approach to our recent Digital Future Review of the G-Cloud and DOS frameworks, which was published last month. This time, we look at how spending has increased over the three iterations of the Technology Services framework, including which areas of the public sector are using it for their technology procurement, who the biggest spenders are, which suppliers are performing the best, SME spend, and much more.

If you are an existing PublicSectorViews subscriber, you can access further analysis and charts now. If you’d like to discuss an extension to your existing subscription or would like details of how to subscribe to TechMarketView, please email Deb Seth.

Posted by Dale Peters at '09:28' - Tagged: research   framework   data   ccs   technology+services  

Friday 17 June 2022

Tech stocks crash.... again....

Chart since Jan 2022It has been a rough ride for tech stocks - and indeed for all stocks - in recent days with the mini-rally of late May/early June more than wiped out by fresh losses. The NASDAQ is now down 31.9% year-to-date (YTD), with the FTSE Software and Computer Services (SCS) index down 31.2% in the same time period. Even the FTSE 100, which had held steady during the tech stock rout of April and May as investors flocked out of growth and into value stocks, has taken a tumble and is now down 6.1% YTD.

Worse than expected inflation data

Consumer price inflation data released in the US on Friday 10th was ahead of the prior month number and well above economists' forecasts. That was followed on Tuesday 14th by the announcement of an increase in US producer price inflation, which was again ahead of the prior month figure. The US Federal Reserve (Fed) reacted on Wednesday 15th by increasing its benchmark rate by 0.75%, the largest increase since 1994. This was seen as a clear signal of intent to be tough on inflation, even at the risk of recession.

US markets actually recovered slightly after the Fed's announcement, as the central bank made clear that such sizeable rate rises are not planned for the future. However, yesterday the Bank of England (BoE) and the Swiss National Bank (SNB) followed suit, along with other central banks, with raises of 0.25% and 0.5% respectively. Whilst the BoE move had been widely touted, the SNB increase was unexpected, representing its first rate rise since 2007 - and global markets tumbled.

Investor nervousness has now caught up with the FTSE 100. The continued weakness of Sterling against the US Dollar had benefitted those of its constituents with revenue streams denominated in dollars. But even the heavyweight household names in that index are not immune to falling investor confidence.

But all is not lost for tech

Chart since Jan 2022Tech stocks have fared particularly badly in recent months, as rising interest rates increase the discount rates applied to the future cash flows on which their valuations are based. But as the chart opposite shows, over a longer time horizon, the NASDAQ is still far outperforming the FTSE 100, the former up more than 50% since January 2018 and the latter some 9% down in the same period. (January 2018 was chosen as the starting point to split the timeline roughly evenly before and after the impact of Covid on the markets).

So all is not lost for tech, particularly when we think of the "value" (in the colloquial, non-cashflow sense of the word) that it has provided to consumers and businesses in recent years and especially during the pandemic. Tech is an increasingly embedded part of our personal and commercial lives and tech companies able to generate recurring revenues and articulate a path to profitability will see a way through the current economic cycle.

But meanwhile, inflation increasing ahead of expectations means the volatility is likely to continue for some time, no matter what sector you look at.

Posted by Tania Wilson at '07:32' - Tagged: markets   macro  

Wednesday 15 June 2022

*UKHotViewsExtra* Employment data signal clear need for skills and retention in the tech sector

generic skillsThe latest jobs and employment figures were released by the Office for National Statistics (ONS) on Tuesday, with the following headlines widely reported in the media:

  • Pay excluding bonuses is down 2.2% from a year earlier, after adjustment for inflation, whilst pay including bonuses is just outpacing inflation;
  • The employment rate increased slightly compared to the prior 3-month period but remains lower than before the pandemic and the unemployment rate was also up slightly;
  • The latest available figure for number of jobs (seasonally adjusted) at March 2022 stood at 35.6 million, the highest level since March 2020 and a record increase of 412,000 from the prior figure at December 2021;
  • The number of job vacancies stood at a new record of 1.3 million from March to May, although the rate of growth in vacancies continues to slow - and whilst the number of vacancies outstripped the number of unemployed for the first time in the May data, this was reversed to a small extent in June;
  • And although the number of economically inactive fell slightly on the prior three months, it remains well above its pre-Covid level.

Despite the high figures for both jobs and vacancies, the data prompted speculation on whether the employment market is finally starting to cool and what that may mean for the Bank of England's interest rate decision on Thursday.

But beyond the big picture headlines, there are interesting insights for the tech sector in the data, disaggregated by industry.hv logo

Although jobs in the Information & Communications sector (in which technology firms are included) continue to rise, so too does the number of vacancies. Moreover the sector has the second highest vacancy rate (vacancies per 100 jobs) across all industries. This will not come as a surprise to many tech sector leaders, who are struggling to recruit and retain staff - but it reinforces the urgent need for both skills training and a more creative approach to retention.

More details of all the analysis for the tech sector is available here for HotViews Premium readers. If you are not a subscriber or are unsure if your organisation holds a corporate subscription, pleae contact Deb Seth. You can find ONS summary data on employment, unemployment and economic inactivity here and details of jobs and vacancies here, with links to all publicly-available data-sets.

Posted by Tania Wilson at '15:18' - Tagged: employment   resilience   macro  

Thursday 09 June 2022

*UKHotViewsExtra* MOD sets Science & Technology agenda

Ministry of Defence logo (black and white)In the Ministry of Defence’s Defence Command Paper, published in March last year, we saw a commitment to an investment of £6.6b on research and development to support “game-changing technology” across Strategic Command (the organisation that manages allocated joint capabilities from the three armed services). Yesterday, the Defence Science & Technology Portfolio was launched, confirming that £2b of the £6.6b would be directed to R&D funding between now and 2026. That funding will support a series of ambitious new programmes across defence, with a pivot towards “key capability challenges” and “high-risk generation-after-next research in emerging and little understood technologies”. 

UKHotViewsPremium logo (looks like gold medal "a subscription for individuals"In our latest UKHotViewsExtra article - MOD reveals Science & Technology agenda - TechMarketView subscribers can read our assessment of the opportunities that are set to transpire, the implications of a blurring of the boundaries between the battlefield and the HQ or back office, and the potential challenges ahead. If you are not yet a subscriber or are unsure whether your company has a corporate subscription with us, please contact Deb Seth to find out how to access this and more.

Posted by Georgina O'Toole at '09:21' - Tagged: defence   strategy   innovation   iot   robotics   connectivity   cyber   AI   datascience   sustainability   public+sector  

Thursday 02 June 2022

*NEW RESEARCH* Share Performance in May 2022

Summary

chart v3After a month to forget for tech stocks in April, it looked in the first half of May as though that month might shape up similarly.

But the markets rallied towards the end of May. The NASDAQ still finished down 2.1% month-on-month (MoM) at 31 May, leaving it 22.8% down year-to-date (YTD). But compared to its 13.3% drop MoM during April, this is not as bad as some might have feared.

On the UK tech markets some specialist tech indices managed to post small gains during May, although the FTSE Software and Computer Services (SCS) index fell further in May than it did during April, with its YTD losses now exceeding those of the NASDAQ. And away from tech, the flight to value stocks so well represented on the FTSE 100 means that index put on 0.8% in May and is now 3.0% up YTD.

Winners and Losers

There was a mixed bag of winners in May, with THG (formerly The Hut Group), DXC Technology, VMware, Eagle Eye Solutions, Serco, Advanced Micro Devices, IDE Group and Oxford Nanopore Technologies all posting gains, though in several cases it was not sufficient to reverse losses earlier in the year.

Big Tech (the FAANGs plus Microsoft) had a calmer month compared to April, helping the NASDAQ to stablilise.

Companies losing out during May included LYFT, SNAP, Loopup Group, Induction Healthcare Group, Workday, TPX (formerly The Panoply), Darktrace and Twitter.HVP Logo

More detail on the Winners and Losers is available in Share Performance in May 2022 for HotViews Premium readers.

Outlook

The Bank of England the Federal Reserve both raised interest rates during May and the markets now seem to have priced in the expectation that further rate rises are to come. If these rises are enough to bring inflation under control, then markets should become less volatile.

But the era of cheap financing, which served the tech growth stock boom for so long, is unlikely to return anytime soon. Much of the inflationary pressure being felt across major economies is due to the conflict in Ukraine and strict Covid lockdowns in China and the consequent commodity supply shocks, which central banks can do nothing to control. (For a more detailed discussion of how inflationary pressures and in turn interest rates have influenced the technology stock markets recently, see my mid-May market round-up). Added to that, there is a significant quantitative easing programme to unwind in both the UK and US (and elsewhere), which has been partly responsible for keeping interest rates so low for so long and which the Bank and the Fed haven't really begun to tackle yet. 

The result of all of this is likely to be investors becoming much choosier with their equity financing decisions and we will see tech companies under new pressure to deliver on cost management, growth forecasts, recurring revenue streams and ultimately profitability. Those companies that can do so will differentiate themselves from their peers and should see share price rewarded accordingly, as the tech stock wheat is sorted from the chaff.

In the meantime though, expect tech markets to react further if news on inflation gets significantly worse than expected - and watch out for PE-backed bids for high quality assets which they consider excessively undervalued by the recent sell-off.

Posted by Tania Wilson at '11:08' - Tagged: markets   macro